Daily Archives: August 31, 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

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