Monthly Archives: August 2011

Claire Jones

Relations between Alistair Darling, Britain’s former chancellor of the exchequer, and Sir Mervyn King, the governor of the Bank, have been confirmed as far from cordial, as has long been suspected.

According to Labour Uncut, Mr Darling’s autobiography slams Sir Mervyn as “amazingly stubborn and exasperating”.

He [Mr Darling] is scathing about the governor of the Bank of England, Mervyn King, who is lambasted as “amazingly stubborn and exasperating”.

The former chancellor confirms how close the government came to not renewing King for a second term in 2008 – the first time a governor would have been sacked after just one term in nearly fifty years – before they ultimately opted for renewal when they couldn’t find a suitable alternative.

That a politician regards a central banker as stubborn is not necessarily a bad thing. There are times when it is wholly necessary for a governor to say no (though Sir Mervyn’s dogged insistence that moral hazard must be avoided in the run-up to Northern Rock’s collapse was not one of them).

What is more worrying is Mr Darling’s claim that relations between the governor and Lord Adair Turner, the chairman of the UK Financial Services Authority, were similarly fraught. 

 Read more

Claire Jones

Many of the world’s most senior central bankers believe monetary policy is close to the limits of what it can responsibly do.

Others disagree.

One argument is that if central banks would only commit to higher inflation, then monetary policy would be more effective in boosting demand. Proponents fall into various camps: nominal GDP targeters, those who favour a price-level target, or those who want to raise existing inflation targets. Read more

Chris Giles

Last week I suggested the UK should offer to issue Eurobonds to help force the eurozone into early action. The idea caused the expected amount of spluttering and comments on my political naivity. But this was the point. If the British authorities cannot imagine taking part, why do they roll their eyes at Germany’s refusal to do likewise?

Today, there is further evidence to show British, German or Swedish participation in eurobonds, while politically difficult, is far from impossible.  Read more

Claire Jones

Do today’s Bankstats data go some way to explaining why the Financial Policy Committee is so concerned about the commercial real estate sector?

The Bank of England data show that, at £2.94bn, write-offs for bank and building society loans to non-financial corporations in the three months to June were at their highest level since the Bank began collecting the data in 1993. The figure jumped from £1.08bn in the first quarter. The previous high was £2.49bn, seen in the final three months of 2009.

How much of this is accounted for by commercial real estate loans? Read more

Chris Giles

Real geeks like me who like downloading data from national statistical websites will have come into work today all of a quiver. The UK Office for National Statistics launched its new website over the weekend promising “to make it easier for our users to find the content they are looking for“.

Apart from expected teething troubles of extremely slow running, the website shows a worrying lack of input from statisticians. For a start, selection of individual data seems to working only occasionally. Most alarmingly, when data is downloaded in Excel, the format conflates annual data, quarterly data and monthly data as below.

No one would ever want to look at data in this crazy format. Monthly data is even worse, mixing monthly quarterly and annual data in one column.

I have complained to the ONS. But in a spirit of public service, I have two ways to work around the problem.

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Ralph Atkins

Ever wondered what a real European bank panic would look like? The European Central Bank today, inadvertently, provided a glimpse of what its daily liquidity monitors might show.

By mistake, the ECB posted on its website the wrong data on use of its emergency overnight “marginal lending facility” – giving a shock to anyone making their daily check of the health of the eurozone banking system. Read more

Claire Jones

Some central bankers have been as spooked as markets by the signs of late that global growth will disappoint.

Turkey’s central bank cut rates to an all-time low despite credit growth of 40 per cent, and the South African Reserve Bank’s Gill Marcus warned of more social unrest if world leaders failed to get a grip.

Officials in Australia are rather less concerned, however, that events elsewhere will hinder growth prospects at home. Read more

Claire Jones

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Public appearances

A busy week is in store for Jean-Claude Trichet.

On Saturday, the ECB president will speak at Jackson Hole at 17:00 GMT. On Monday, Mr Trichet travels to Brussels, where he will field questions from the European parliament on how to restore market confidence (some suggestions from Ralph Atkins and Chris Giles).

The president will be joined by Jean-Claude Juncker, Eurogroup president, Jacek Rostowski, Poland’s finance minister and Olli Rehn, the European commissioner for economic and monetary affairs.  The hearing takes place at 13.00 GMT.

On Thursday, ECB executive board member Jürgen Stark is a participant in a panel on Europe and global competitionRead more

Robin Harding

The monetary policy parts of Ben Bernanke’s 2011 speech in Jackson Hole read as a carefully calibrated attempt to aim off his 2010 speech, and send a signal that the Fed is willing to do more, but that the scope for further action is less than it was a year ago.

The main statement of the Fed’s willingness to act is:

“The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate to promote a stronger economic recovery in a context of price stability.”

Compare that with the 2010 equivalent: Read more

Robin Harding

The first paper of Jackson Hole 2011, by Harvard economist Dani Rodrik, is about economic convergence. It’s a neat and very accessible summary of recent research by Mr Rodrik, his collaborators and colleagues about the vexed question of why poor countries do not catch up with the rich. There’s a lot in there, but here’s a brief summary of some of the most interesting and original points.

Gaps between rich and poor countries are as high as they’ve ever been, but before the financial crisis, they’d started to come down

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