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si inizia a considerare l'impensabile, anche se qui si scrive su un giornale di area liberale
Steve Richards: At this rate, it won't be long before we're joining the euro
Cracks are appearing in relations between the Government and the Bank of England
Tuesday, 28 October 2008
The calls for a significant cut in interest rates get louder. In the US there is speculation that before very long rates will be close to zero. The long list of those keeping their fingers crossed here that the Bank of England will deliver a headline-grabbing reduction next week includes home-owners with big mortgages, small businesses, big businesses, the Chancellor of the Exchequer and the Prime Minister.
The first three on the list are not surprising. It would be odd if those who owe large sums were looking desperately for a rise in the cost of borrowing. One one level the last two make sense as well. Of course Gordon Brown and Alistair Darling are not biting their fingernails in the hope that interest rates soar. Yet their appearances on the list still seem a little strange, the newly mighty Prime Minister and more self assured Chancellor praying helplessly at the altar of the Bank.
Their subservience is the consequence of the government's supposedly one unequivocally successful policy. The Bank of England's independence is seen widely as Mr Brown's great historic move, the one that brought about economic stability for a decade. But gaping cracks are starting to appear now that the economy has slid in to recession, and Mr Brown, credited in some quarters for saving the world, waits to hear what the non-elected Governor and his anonymous committee of worthy academics decides to do next. It was all so much easier in the good times.
The cracks in the hallowed arrangements spread well beyond the immediate tensions of a single monthly decision. Until quite recently the government was following one economic policy and the Bank of England another. Messrs Brown and Darling were late in realising quite how serious things were, but they got there a lot sooner than the Bank.
In his Mais lecture tomorrow Mr Darling will make waves by formally acknowledging that the government must borrow more and therefore break its so called golden rules, but the Chancellor has hinted strongly that this was happening in interviews earlier this year.
Long ago anyone could see that even these conveniently flexible rules no longer applied. Indeed it is one of the bizarre features of this crisis that when a public figure states the obvious all hell breaks loose.
But while Mr Darling was loosening the strings long before his Mais lecture the Bank of England was sticking to the old orthodoxies, tentatively cutting interest rates by a quarter per cent here, keeping them at the same rate there, and even contemplating the odd increase, as if a little bit of inflation was all there was to worry about.
The two sides are moving more or less in the same direction now, but without the near collapse of the financial markets of recent weeks it is quite possible that the elected wing, the government, and the non elected wing, the monetary policy committee, would be pursuing contradictory economic policies.
Advocates of the current arrangements argue that Mervyn King is not as powerful as he seems, as his appointment and the terms of his remit are decided by the Chancellor and Prime Minister. Some go further and argue that he is not independent enough. This is true up to a point, but the degree of power wielded on either side depends on the strength of the Prime Minister and Chancellor at any given time.
After the landslide in 1997, the Chancellor called most of the tunes. In contrast Messrs Brown and Darling were far from thrilled with Mr King's rule at the time they renewed his appointment for a second term. By then they and the economy was too weak for him to be removed. The renewal increased Mr King's power because it meant that he would more than likely stay in his post for a lot longer than his elected counterparts would stay in theirs. Now Mr King is the one with the swagger of a monarch.
Relations between Mr Darling and Mr King have been poor since the Chancellor awoke one morning to hear the governor give a long interview to the BBC on the Northern Rock saga when they had both agreed not to discuss matters at length in the media. They have worsened since then as mutual wariness intensifies.
No doubt Mr King went public over Northern Rock – and has been provocatively candid in his public messages on the economy since – partly because he wants to show those elected ministers that he can play politics too. In doing so he lands the government in the worst of all positions. Ministers face the consequences of a Governor who acts politically although he is not an elected politician and has never learnt fully the art of politics. Such a situation challenges the fundamental raison d'etre behind the Bank's independence.
As Shadow Chancellor in the 1990s, Mr Brown chewed his fingernails more over fears that there would be a run on the pound under a Labour government than he did over any other issue. It was one of the reasons why he was a robust supporter of Britain joining the euro while he was in opposition. There could not be a run on the pound if there was no pound.
Once Brown was in power, Bank of England independence seemed to do the trick. With others responsible for interest rates, a Labour government could apparently be trusted. Sterling became a mighty currency, dwarfing the fragile dollar and euro. Although the strength of the pound became a problem for exporters, Mr Brown preferred it to the devaluation nightmares of previous Labour Chancellors. It was all relatively simple in the good times.
Now whenever Mr King delivers a speech the pound seems to plummet. His words have the same impact of a naive Chancellor of the Exchequer, and yet as Governor he is not accountable in the same way. He will still be in his post whatever the outcome of the next election. In pathetic contrast, if the pound continues to slide, making big interest rate cuts harder to justify, Mr Brown and Mr Darling will probably be out of power before very long.
Mr King has become a hugely important figure. Every word he utters is weighed by a hysterical market place. He needs the skills of a trained politician, alert to every nuance. But he is there precisely because he is not a politician. Mr Brown and Mr Darling look on without being able to control what he says or when.
There were few controversies between government and bank in that distant era after 1997 as the economy sailed along. Now the arrangements are being tested in extreme circumstances and are not working. Mr Brown's most successful policy could be the source of his undoing as he faces the electoral consequences over decisions he does not control.
I wonder how long it will be before a traumatised senior minister thinks the following: "This wretched independence for the Bank is the worst of all worlds, yet it would make matters even worse to revert to the old arrangements. Therefore the least risky course is to join the euro".
If the arrangements aimed at stabilising the currency are now a source of turbulence, and a return to the old system would cause even more storms, there is no obvious alternative option. That great sleeping issue, Britain's membership of the euro, will be waking soon.
[email protected]
Steve Richards: At this rate, it won't be long before we're joining the euro
Cracks are appearing in relations between the Government and the Bank of England
Tuesday, 28 October 2008
The calls for a significant cut in interest rates get louder. In the US there is speculation that before very long rates will be close to zero. The long list of those keeping their fingers crossed here that the Bank of England will deliver a headline-grabbing reduction next week includes home-owners with big mortgages, small businesses, big businesses, the Chancellor of the Exchequer and the Prime Minister.
The first three on the list are not surprising. It would be odd if those who owe large sums were looking desperately for a rise in the cost of borrowing. One one level the last two make sense as well. Of course Gordon Brown and Alistair Darling are not biting their fingernails in the hope that interest rates soar. Yet their appearances on the list still seem a little strange, the newly mighty Prime Minister and more self assured Chancellor praying helplessly at the altar of the Bank.
Their subservience is the consequence of the government's supposedly one unequivocally successful policy. The Bank of England's independence is seen widely as Mr Brown's great historic move, the one that brought about economic stability for a decade. But gaping cracks are starting to appear now that the economy has slid in to recession, and Mr Brown, credited in some quarters for saving the world, waits to hear what the non-elected Governor and his anonymous committee of worthy academics decides to do next. It was all so much easier in the good times.
The cracks in the hallowed arrangements spread well beyond the immediate tensions of a single monthly decision. Until quite recently the government was following one economic policy and the Bank of England another. Messrs Brown and Darling were late in realising quite how serious things were, but they got there a lot sooner than the Bank.
In his Mais lecture tomorrow Mr Darling will make waves by formally acknowledging that the government must borrow more and therefore break its so called golden rules, but the Chancellor has hinted strongly that this was happening in interviews earlier this year.
Long ago anyone could see that even these conveniently flexible rules no longer applied. Indeed it is one of the bizarre features of this crisis that when a public figure states the obvious all hell breaks loose.
But while Mr Darling was loosening the strings long before his Mais lecture the Bank of England was sticking to the old orthodoxies, tentatively cutting interest rates by a quarter per cent here, keeping them at the same rate there, and even contemplating the odd increase, as if a little bit of inflation was all there was to worry about.
The two sides are moving more or less in the same direction now, but without the near collapse of the financial markets of recent weeks it is quite possible that the elected wing, the government, and the non elected wing, the monetary policy committee, would be pursuing contradictory economic policies.
Advocates of the current arrangements argue that Mervyn King is not as powerful as he seems, as his appointment and the terms of his remit are decided by the Chancellor and Prime Minister. Some go further and argue that he is not independent enough. This is true up to a point, but the degree of power wielded on either side depends on the strength of the Prime Minister and Chancellor at any given time.
After the landslide in 1997, the Chancellor called most of the tunes. In contrast Messrs Brown and Darling were far from thrilled with Mr King's rule at the time they renewed his appointment for a second term. By then they and the economy was too weak for him to be removed. The renewal increased Mr King's power because it meant that he would more than likely stay in his post for a lot longer than his elected counterparts would stay in theirs. Now Mr King is the one with the swagger of a monarch.
Relations between Mr Darling and Mr King have been poor since the Chancellor awoke one morning to hear the governor give a long interview to the BBC on the Northern Rock saga when they had both agreed not to discuss matters at length in the media. They have worsened since then as mutual wariness intensifies.
No doubt Mr King went public over Northern Rock – and has been provocatively candid in his public messages on the economy since – partly because he wants to show those elected ministers that he can play politics too. In doing so he lands the government in the worst of all positions. Ministers face the consequences of a Governor who acts politically although he is not an elected politician and has never learnt fully the art of politics. Such a situation challenges the fundamental raison d'etre behind the Bank's independence.
As Shadow Chancellor in the 1990s, Mr Brown chewed his fingernails more over fears that there would be a run on the pound under a Labour government than he did over any other issue. It was one of the reasons why he was a robust supporter of Britain joining the euro while he was in opposition. There could not be a run on the pound if there was no pound.
Once Brown was in power, Bank of England independence seemed to do the trick. With others responsible for interest rates, a Labour government could apparently be trusted. Sterling became a mighty currency, dwarfing the fragile dollar and euro. Although the strength of the pound became a problem for exporters, Mr Brown preferred it to the devaluation nightmares of previous Labour Chancellors. It was all relatively simple in the good times.
Now whenever Mr King delivers a speech the pound seems to plummet. His words have the same impact of a naive Chancellor of the Exchequer, and yet as Governor he is not accountable in the same way. He will still be in his post whatever the outcome of the next election. In pathetic contrast, if the pound continues to slide, making big interest rate cuts harder to justify, Mr Brown and Mr Darling will probably be out of power before very long.
Mr King has become a hugely important figure. Every word he utters is weighed by a hysterical market place. He needs the skills of a trained politician, alert to every nuance. But he is there precisely because he is not a politician. Mr Brown and Mr Darling look on without being able to control what he says or when.
There were few controversies between government and bank in that distant era after 1997 as the economy sailed along. Now the arrangements are being tested in extreme circumstances and are not working. Mr Brown's most successful policy could be the source of his undoing as he faces the electoral consequences over decisions he does not control.
I wonder how long it will be before a traumatised senior minister thinks the following: "This wretched independence for the Bank is the worst of all worlds, yet it would make matters even worse to revert to the old arrangements. Therefore the least risky course is to join the euro".
If the arrangements aimed at stabilising the currency are now a source of turbulence, and a return to the old system would cause even more storms, there is no obvious alternative option. That great sleeping issue, Britain's membership of the euro, will be waking soon.
[email protected]
....., mi chiedo: banche italiane a picco, credit crunch globali e deleveraging in atto, spread btp/bund alle stelle, politici che parlano di colbertismo (molto chic...).....non è che se da qualche parte non scorre del sangue non siamo contenti...
......Gastro perplesso 
