Mervyn King was captain but iceberg wasn't his fault

How on earth can Mervyn King avoid blame ? According to Merv "With the benefit of hindsight, we should have shouted from the rooftops that a system had been built in which banks were too important to fail, that banks had grown too quickly and borrowed too much, and that so-called 'light-touch' regulation hadn't prevented any of this."

Of course he wasn't out spending or overborrowing so he is not part of the collective band of culprits. So if he is not to blame is it the government and the Rt Hon member for Kirkcaldy and Cowdenbeath ? I hope he isn't pointing fingers - it may cost him a peerage. Remember , one gets rewarded for failure in this country and the bigger the cock up the greater the honour.

Anyway, back to the headline - if the ship goes , the captain is called to account. Fundamentals of economic oversight were ignored so let's court martial the man at the helm

Comments
ShirleyM's picture

I wonder ...

ShirleyM | | Permalink

... why he makes this announcement now?

I am sure he was aware of this problem all along, so why now, when he is due to retire? Maybe he has a conscience and is feeling remorse for the suffering caused.

Flying Scotsman's picture

Mervyn King

Flying Scotsman | | Permalink

I doubt it is a matter of conscience as he isn't accepting any blame. His 20:20 hindsight seems to fall short of putting his neck on the block. More likely a cathartic issue with a hidden agenda

Blindingly obvious ....

JC | | Permalink

The BOE failure has been obvious since the whole banking thing went went wrong in 2007 & the signs were apparent for a few years prior - getting sucessively worse since 2003 with sub-prime mortages etc. Basically they were asleep on watch!

According to a current Which? survey, one in five of the homeowners said that a £100 increase in their monthly mortgage payment would leave them without money for essentials – i.e. food. This indicates the magniture of border/bread line cases already existing. Now couple that with the xpected fall in house prices over the next 2 years and we have a 'perfect storm'

Nevertheless, one thing all these guys are good at is being 'teflon coated' and no fault/blame ever attaches to them

As with all banking problems the solutions become ever more ingenious and soon as instruments such as derivatives started being traded as well as off balance sheet tricks (UK Government PFP) and packaging mortgages to sell off, you know everyone is for a bumpy ride

Derivatives are by their very nature a composite of underlying good and bad items and obtain their value from them at a point in time. How many auditors had the requisite knowleged to actually do their job in this area, and it could be argued that the traditional 'sampling' approach is totally inadequate for derivatives - but again auditors also seem to be 'telfon coated' because very little actually sticks to them - i.e. RBS etc.

OR peg MK pension to GBP/USD ...

JC | | Permalink

In 2007 the rate was 2.1154 and today the rate is 1.61782 - currently down 23%

In 12 months time those in the know are advocating 1.35

So in the light of QE etc. this would be a fitting performance related pension for Mervyn King

Flying Scotsman's picture

Mervyn King

Flying Scotsman | | Permalink

What JC states is basically like flying blind with no instruments. Eventually you crash into a mountain

Performance ralted pensions - what a brilliant idea ! The country would be a net gainer ....

In Stalins' days people like Mervyn King and the bank bosses would have had a single ticket to Siberia. unfortunately all we had in charge was Mr Bean

 

Old Greying Accountant's picture

And I thought ...

Old Greying Acc... | | Permalink

... "Merv the Swerve" had tragically died, his ghost lingers on!

Not sure any of these 'experts'

justsotax | | Permalink

take responsibility for their actions/mistakes anymore (if they did in the first place)....except as you quite rightly say the benefits (knighthood/honours/golden goodbye payment etc)

Flying Scotsman's picture

Merve the serve

Flying Scotsman | | Permalink

It is always somebody else's fault. When I did politics A level we learnt about "collective responsibility and "individual responsibility". I assume in today grade inflated dumbed down soft A levels there is a concept of "nobody's responsibilty" 0r "somebody else's responsibility". One thing is for sure , the days of being a man and falling upon one's sword are but a distant memory. If it all it only happens after weeks of hounding and denial after which the gesture is somewhat hollow and lacking in grace and statesmanship

No room for argument @ flying.....

justsotax | | Permalink

you are spot on.  Unfortunately most of our MP's seem to have been on that new 'A' level course you speak of....

Flying Scotsman's picture

MPs

Flying Scotsman | | Permalink

I reckon that most of our newish MPs haven't done any "A" - levels. There is something lacking in the fibre

of the modern MP . When they are interviewed they don't seem to command the respect or have that certain gravitas of power (in the wider sense) or position. It is a fact that the people at the top are now 20 years younger than pre-Labour . 

I have not given much thought to the reason and of welcome your hypothesis . One thing that is clear is that without experience of "years" your decision making is going to be lacking . it is such inexpereince of life in general and special situations in particular that is probably why they commend less respect.

Add to that the lack of moral fibre and the blatant exercise of self-interest and you have a failing political system

When you put it like that...

justsotax | | Permalink

it is a little depressing.....what hope the future if we are run by a bunch of thirtysomethings whose only experience of life is within the bubble of school, university or/and westminster.

 

 

ShirleyM's picture

All parties have received a hammering with the local elections

ShirleyM | | Permalink

There is nothing to choose between one incompetent party and the other incompetent parties these days, so lots of people are not bothering to vote.

In the immortal words of Robert Hiscox ...

JC | | Permalink

When describing Lloyd's of London Names

'.. If God had not meant for them to be sheared, he would not have made them sheep.. '
(Robert Hiscox, Deputy Chairman of Lloyd's, to John Rew in 1991.)

Worth remembering next time you take out insurance with - http://www.hiscox.co.uk/

and yes he is still chairman - http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/insurance/9109083/Hiscox-chairman-eyes-retirement-as-profits-fall-92pc.html

 

@ShirleyM - agreed ...

JC | | Permalink

However, historically there has always been one lot that causes the problem and then the other lot has to put it right and get the flack for doing so

and so the cycle goes on ....

One school of thought says that - wanting to be a politician should automatically debar you from the job

listerramjet's picture

one captain, or two?

listerramjet | | Permalink

Gordon's big thing was to split oversight and regulation between (the newly created) FSA and Bank of England.  Mervyn might have spotted the problem, but Gordon made it someone else's.  So whom would you blame?

Flying Scotsman's picture

Polticians

Flying Scotsman | | Permalink

On a turnout of 30 something percent we can reasonably conclude that the 70% do not want change.

There needs to a law that for referenda  , either the turnout has to reach a certain level of the electoral register OR the threshhold for chnage in percentage of votes cast has to be higher.

I usually spoil my paper at EU elections because it is a much better way of registering discontent than simply not voting  

I cannot see how Ed Milidand can sleeo sound that his party is so popular when 70% or so of people did not support it

I my ward labour romped home not because we support it but because on local issues we have a good councillor who works hard and listens , so we reward him. On national matters at general elections things are a lot more different.

Old Greying Accountant's picture

Two words sum this up

Old Greying Acc... | | Permalink

Flying Scotsman wrote:

It is always somebody else's fault. When I did politics A level we learnt about "collective responsibility and "individual responsibility". I assume in today grade inflated dumbed down soft A levels there is a concept of "nobody's responsibilty" 0r "somebody else's responsibility". One thing is for sure , the days of being a man and falling upon one's sword are but a distant memory. If it all it only happens after weeks of hounding and denial after which the gesture is somewhat hollow and lacking in grace and statesmanship

Peter and Mandelson

On politicians, I have long thought the minimum age should be 50, and some sort of minimum "life experience" in  the real world (10 years?)

But then party politics stinks, voting is generally for the least loathed rather than best liked!

ShirleyM's picture

Whatever the voters do ....

ShirleyM | | Permalink

.... the politicians will manage to put a positive spin on it to make their party look good.

They are a bunch of bad salesmen and just as honest!

Flying Scotsman's picture

Politicians and salesmen

Flying Scotsman | | Permalink

The fundamental difference is that the former is usually in it for their own personal kudos or ego, but the latter is at least selling you a product that usually you need and can enjoy.

It never ceases to amaze me when people surge forward to shake hands with a politician and they think the politician will remember them because they pressed the flesh and said "nice to meet you" . Mr and Mrs Average just doesn't see through it .

A salesman is trained to be congruent with the customer and find a common interest and feign their concern for you. But somehow we al know it is an act and play along because it makes the purchase process more palatable.

Most politicians promise to see what they can do to help and your plea goes into the system. Sometimes you score but invariably they'll blame the civil service for inaction.

But there are some genuine people out there who care and try to make a difference. Like my local councillor mentioned earlier.

 

 

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I've been blogging on my website www.formationsdirect.com for some time with my non-PC view of the world of economics,business and other stuff. If you like to read the views of somebody who doesn't "toe the party line" you've come to the right place. Government cock-ups, financial turmoil , business scandals and people's behaviour - I've got something to say about it , whether you like it or not.