A Hard Look at Mervyn King – John Gelmini

The Bank of England in Threadneedle Street, London. Deutsch: Sitz der Bank von England in der Londoner Threadneedle Street. (Photo credit: Wikipedia)

Mervyn King (Photo credit: Sveriges Kommunikatörer)

Yesterday, I reblogged an excellent article by Martin Wolf, entitled Lunch with the FT: Sir Mervyn King – Martin Wolf – FT.com , where the FT’s chief economics advisor talks over lunch to Sir Mervyn King, the outgoing head of the Bank of England.

I received a detailed response from John Gelmini which I am sharing below, in the interests of promoting public debate. Personally, I think that, on this occasion, John has been a bit too hard in his criticism. I accept that the Bank of England (BoE) is widely regarded as in need of a shake-up, with some new blood. Until fairly recently, the BoE had a much narrower mandate and to be fair to him Chancellor, George Osborne, is responsible for widening the powers of the BoE. George Osborne is also responsible for poaching the BoE’s next Governor, George Carey, from Canada; George Carey is widely regarded as one of the ablest central bankers in the World today. I am not sure whether the BoE has a mandate for employment, like the Fed in the US?

Anyway, as usual please share your thoughts!

A Hard Look at Mervyn King – John Gelmini

This article is very revealing in that it demonstrates just how unimaginative, complacent and defeatist Mervyn King and our ruling classes are in the face of fast moving and unpredictable events. Not one word of contrition along with a subtext that says:

“I did my best, it was all down to factors outside of my control, there are just 4 alternatives to the Euro crisis, there is not much more I could have done, etc, etc, etc” plus “It is all down to the beastly Germans to open their wallets whilst the idle people in Southern Europe are going to have to tighten their belts while I eat my lunch and go off into the sunset”.

One is reminded of the scene in the 1979 film, The Godfather, starring the late Marlon Brando in which the hapless saloon singer, Johnny Fontaine (representing Frank Sinatra during his early years), starts to bemoan his fate in a whining and sorrowful tone only to have the Godfather slap him about the face and shout at him the words “You can be a man” as part of a process of admonishment and severe criticism. Mervyn King needed the verbal equivalent of that sort of admonishment for all his failures and should have been sacked and replaced a long time ago with someone much more streetwise, like Mark Carney, rather than being allowed to permit as much damage to the banking and corporate sector as he did.

From Mervyn King there is never anything about growing our way out of trouble, nothing about inward investment, nothing about promoting the conditions for enterprise, it is all about one club golfing solutions to problems that he and his Monetary Policy Committee didn’t see coming, underestimated the size of and came up with solutions that were not fit for purpose, applied too late to be any good.

To be fair to the man, the same needed to happen to the Chancellor and to David Cameron who was yesterdays man a long time ago.

Sadly, this country seems addicted to the idea of appointing and rewarding those who are not up to the job, no matter how badly they perform and then replacing them with people who are as or even more useless, with very few exceptions such as Stephen Hester at RBS who the Chancellor has obviously fallen out with despite Stephen Hester performing a very difficult job well.