Monday, May 27, 2013

Is Mervyn King In La La Land?

Is the outgoing Governor of the Bank of England, Mervyn King residing in "La La Land" or is he slyly trying to  off-load his share of the blame for the disastrous showing of the British economy the last three years?

First of all the major problems with the British economy started in 1979 with former Conservative PM Margaret Thatcher. It was she who deregulated the City/banks (not Gordon Brown & Labour). It was Thatcher who drove a coach and horses through British manufacturing (not Gordon Brown & Labour). It was Thatcher who decimated the steelworks, ship building and closed nearly all the country's pits and made the entire country almost solely dependent upon the Financial Sector (not Gordon Brown & Labour). It was Thatcher who expected miners to stop mining coal and start selling each other financial services (not Gordon Brown & Labour). However, let's do acknowledge the truth and say that Labour could have clamped down harder on the City, they didn't and that was a mistake, but blaming them  for the absolute failure of Thatcher's monetary policies and for what individual bankers did to this country and the entire world through their greed and often illegal casino banking practices is totally ridiculous and while we keep allowing Osborne and Cameron to pull the wool over our eyes we are failing to acknowledge the real problems and are storing up further huge problems for the country in the very near future.

Incidentally, the only reason why this country has not experienced even worse economic woes is because we are not in the Eurozone and we have our own sovereign currency and can set our own interest rates and for that don't thank former Conservative chancellor Kenneth Clarke, thank Labour and Gordon Brown, who refused to take this country into the euro.

It seems to me that the Conservative party and their supporters really like to re-write history. The crash of 2008 was not the first of it's kind, in more recent history we experienced similar in 1973 under the Conservative government of Ted Heath. Secondary banking crisis which started under the Conservatives in 1973 and which Labour inherited in 1974 . Having already experienced this crash (which the Wilson/Callaghan government were left to clear the mess from 1974 to 1979 and which Thatcher and the Tories like to blame Labour for), it makes what Margaret Thatcher did to the British economy in making it dependent on the financial sector even more astonishing! No lessons were learnt then and none it seems are being learnt by Osborne and Cameron now. What Cameron and Osborne are doing now is a virtual carbon copy of Margaret Thatcher's failed monetary policies and to cap it all, Osborne is now busily creating a housing bubble all of his own under his widely criticised Help to Buy Scheme, thus storing up a further crash for a future government to deal with. The International Monetary Fund (IMF) is the latest to criticise the Tory chancellor's scheme.  Margaret Thatcher dreamed up her "Right to Buy" scheme which caused the horrendous problems we now have in social housing. As council house stock were sold off, none were built to take their place and through that monumental error was created the catastrophic shortage of affordable housing we see now, which in turn has helped to fuel the credit bubble and credit crunch and the multiplication of Tory landlords charging exorbitant rents for their properties, rents which the government  have now capped which are currently forcing people out of towns and out of cities and even in some cases to lose their homes, in what will become known as the big Conservative social cleansing of our towns and cities.  Has Osborne and the Tories learned anything? No because Osborne is now doing exactly the same with his "Help to Buy" scheme! You cannot really make this stuff up and already the market is showing signs of an escalation in house prices which will precipitate a huge crash, even Crispin Odey a big financial backer of the Tories, is warning that house prices will crash and could fall as far as 50% in value, which will leave millions in negative equity! Exactly the same as was caused by Thatcher's policies which is exactly what led to the crash in 2008! Not only is the IMF, Odey and many others warning about this impending disaster, Mervyn King is also firing warning shots and Osborne is taking absolutely no notice and is pushing ahead with what will turn out to be a catastrophe for this country and the people! Why? Because he is panicking, because his austerity measures are not working and because the economy is still flat-lining and because he is borrowing £249 billion MORE than the previous Labour government would have done, and because he is doing nothing with that increased borrowing (whereby Labour have said they would invest in infrastructure, more houses, schools etc to help grow the economy). Because they keep on about the deficit being reduced by a 3rd (it's the same 3rd they keep announcing) and the PM has already been pulled up and rebuked for lying on national TV claiming the national debt was falling, when it is in fact rising.

King who hands over the Governorship of the BofE this summer to Canadian Mark Carney told Sky News's Dermot Murnaghan that there was wide spread risk-taking in the run up to the credit crunch, and that it had been a mistake to give the banking sector such a lofty status in the good times and then he goes on to say "don't demonise bankers" -why? It was them that helped cause this and they have got away with it for too long already.

King was a part of this or has he forgotten? How much status bankers were given is immaterial, they had a choice and they chose greed. They chose to hand out toxic mortgages giving credit to people that could not pay it back. The financial institutions took too many risks and did not have the credit on their balance sheets to cover it, that is illegal, that is false accounting, that was what Mervyn King oversaw and yet not one banker in this country has been prosecuted - why? Could it be because most of them are in some way connected to the present Tory led coalition government? That they are MPs, Lords, financial backers etc?

King says the BofE should not make or take political decisions and yet he himself has made several overtly political comments giving backing to the chancellor George Osborne and PM David Cameron - he allowed himself to become politicised.

It seems to me that King wants to try and ingratiate himself with the good while trying to disassociate himself from the bad. It was his job to spot the credit crunch and he failed to do that, hardly surprising when we look at his record because he has systematically failed to spot anything of real significance (despite some on the Monetary Committee trying to warn him otherwise) and his growth forecasts have never been right - not once. So why should we believe him now when he is predicting a return to growth of 2% by 2015? Does he really need remind that in context, the economy the Tory led Coalition inherited from the former Labour government in May 2010 after the general election was growing and a recovery was already underway? It had grown from the 3rd quarter of 2009 to the same quarter in 2010 by 2.7%, so even if King's predictions for growth are correct, by 2015 the economy will still be 0.7% short of the 2.7%  it was at in 2010 when this present government took the economy over! In the 10 quarters since 2010 the economy has only grown by a disastrous 0.7%! So the shadow chancellor Ed Balls is correct, there has been no real growth in the economy, it is flat-lining and just bumping along the bottom and we cannot continue to do this, especially as despite this government massaging the unemployment figures down, unemployment is now starting to rise sharply again.

Where does all this leave Mervyn King? He doesn't want us to blame the Tory financial supporting bankers whose greed got this country into this mess, King says it's not their fault, it is the fault of the system, really? Would that be the system put in place by Margaret Thatcher? Most certainly it is however, it is also the fault of multi millionaires whose greed spurred them on and on, and who now still have so much money that they could not hope to spend in several life times! Yet they grasped more and more until finally the toxic bubble they all created burst and did they help clean up the mess they created? No they sat back in silence and they still sit in silence and watch as the ordinary person, the disabled, the workers, the low waged, the unemployed, the vulnerable, the elderly, the young, public and private sector workers are forced to pay for the bankers greed, with lower standards of living, with their jobs and cuts to public services, and the looming privatisation of our NHS and education and still Osborne and Cameron do absolutely nothing about it, but why would they when the majority of the Conservatives financial bankers and even some of their MPs and Lords are bankers, shadow bankers, health care companies, property tycoons and are affiliated to multi national companies?

I am even more convinced today that the Conservative party is not a proper political party, it is but a political wing of the banks, shadow banks and multi national corporations, so don't expect that party in or out of government to do anything that is any way beneficial to the people, because this is not the way these institutions work. Their whole raisons d'ĂȘtre is profit - profit - profit, exactly the same as the conservative party as a whole.  Hence the full scale privatisation of the NHS, the privatisation of state education and the removal of workers and human rights and legal aid and the right to take an employer to a tribunal etc as well as the destruction of the welfare state. Look at everything this Conservative led government are trying to do, everything is all what the financial sector would term as drains on their profits and to get rid of it all, would be how asset strippers work when they go into a company and sell off the good bits and this is exactly why the Tories are trying to convince us that "small government" is the way to go and when small government is talked about by Conservatives, what they really mean is shrinking back the state and selling off the good parts to their mates, the bankers, shadow bankers, health companies and multi national companies etc. Bringing in private companies to take more and more of our tax pounds in profits for the banks, shadow banks, the health care companies and the multi national companies and that is healthcare funding, education and welfare that you are your family will no longer receive in the future, because the funding has found its way into the bank accounts of private company shareholders.

 If Mervyn King thinks we cannot see or understand that, then he really is in "La La Land" and if any ordinary person votes Conservative knowing all of this then they are in "La La Land" too.

King wants to leave the BofE on top, he wants to claim a recovery and when it all goes wrong he wants to be able to point to that Sky Murnaghan interview and say, 'well the recovery was under way when I left and look I even warned about Osborne's "Help to Buy" scheme'. Which incidentally, he could have advised Osborne not to do, in fact he could have made it impossible for him to do, but just like King failed to modernise the BofE, he also failed to control his political masters, King is a puppet of Osborne and Cameron. In failing to prevent Osborne going ahead with the insane "Help to Buy"scheme, King is helping lay a trap for a future government who will have to take the banana skin decision of when to end the scheme, and the 3 years that the scheme is only meant to run for could turn out to be a very long 3 years indeed, as stopping t it could cause seismic tremors in the housing market and we all know where that leads!

And remember that absolutely none of this could be taking place, none of it would be possible if it were not for the Liberal Democrats aiding and abetting the Tories to get their socially catastrophic bills through parliament.

When you vote next time remember that and if you think the Tories are bad, then please don't vote Ukip because they are just like the Conservative party - only on "speed"!


Dave Levy said...

Very Good. To these crimes I'd add
his role during the construction of the coalition, he was seminal in establishing austerity at the heart of the the coalition's economic policy. Without his interventions, the Libdems might have held out for an economic policy closer to their pre-election promises. Clegg was ready to be persuaded, but King's bullying allowed Clegg to take his pary with them.

It is also a fact that despite the tri-partitite regulation scheme, also started by Thatcher, King's
Bank failed to act to stop the threats to British bank solvency. His unacceptable successful blame avoidance is one of the reasons that there is political unity in returning financial system systemic safety to the Bank of England.

Gracie Samuels said...

Thanks Dave! Please feel free to add wherever you see I have missed something, always good to read intelligent responses.