Mervyn King, the BoE governor, is resisting the flood of flakey housing bailout ideas coming from the government. Yesterday, he gave a strong performance before the treasury committee, where he ruled out any role for the BoE in providing long term funding for the housing market.
"It is not the purpose of central bank liquidity insurance to provide a source of long-term funding to the financial system – indeed it cannot do that. Only private savers or taxpayers via the government can provide such funds. So I hope everyone will understand that the proposals to be published next week, important though they are, will not and cannot solve the shortage of funding to finance bank lending."
Absolutely spot on. The central bank is not a commercial bank.
2 comments:
I'm not one usually drawn to adulation or hero worship, but among everyone I've identified in the public eye, Mervyn King is superstar material... I have nothing but respect for the man.
This doesn't mean I think he doesn't make mistakes, or that he has much say... but he is credible and appears honest - in today's world that makes someone a superstar.
I watched Mervyn in front of the Treasury Select Committee for the first time about a year ago. He was awesome... set up to take the fall, his opponents were united... but - combined - had half Mervyn's intellect, intelligence and morality... and this shone-through, clear as daylight. My respect was heightened that, in debate, without ever loosing his footing for one second... he was crystal clear and answered every question concisely in such a way as to prove the question retarded; to educate every naive listener (like myself) and to give references to back up his point... all in a tone that was engaging. I finished watching saying... if Mervyn is lying, he damn-well deserves to succeed... to achieve what he did in the meeting while telling the truth is the most staggering feat I'd ever witnessed... to have done so without being 100% honest would count as beyond human.
My ambition, I guess, like the lad of 8 who wants to be a star footballer or F1 racing champion... I would like to be half as adept as Mervyn King. He has Greenspan spooked - and with good reason... Greenspan is a numpty... he is utterly beneath Mervyn's in class, style, honesty, credibility and substance.
I know that suggesting paying attention to a central banker from a small island makes me sound like a train-spotter... but frankly, among every living person I've studied, I consider him the most worthy of attention.
I've never voted... I'd vote for Mervyn King. Forget that, I'd form an army and volunteer for the first rank in a civil war to back Mervyn King. There is something important about honesty - and I think our politicians have forgotten. Mervyn King, it appears, has not.
Christ, you have a soft spot for that guy.
But yeah, King is about the only top level finance guy who isn't digging the hole deeper for us taxpayers. He's almost good enough to make me reconsider my cardinal rule that all central bankers are retarded.
He's the only chance we've got of stopping Brown and Darling from scorching our earth on their way into infamy.
Nick
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