Search This Blog

Monday, 21 August 2017

Carney in Jackson Hole

Mark Carney is due soon to return to Canada and make a political career in an environment free of worries about the pound sterling, the European Union and Theresa May. While Trump survives in the US presidency there will be a small risk for Canada in the future of the North American Free Trade Area, but in other respects Trump cannot hurt Canada; and if his failures drive down the value of the US dollar, this will be to the benefit of the Canadian currency and economy. Britain's problems may be of passing interest to Mark Carney post-Bank of England, but he will have [nor will he want] any part in addressing them.

George Osborne is a co-culprit with Cameron and Clegg in most of the disastrous aspects of the Coalition and subsequently the Conservatives' economic policies, but it is generally accepted that he alone drove through the decision to bypass Bank of England insiders, and all other Brits who might have had a claim to be considered as Governor of the Bank of England, and opt to advise the Queen to appoint the clever Canadian. Carney was appointed when the policy of Quantitative Easing and low interest rates had been entrenched by the previous management of the Bank, who had reacted to the meltdown of world banking as a crisis of moral hazard until Chancellor Alastair Darling sounded the alarm and compelled them to act positively [if not entirely sensibly]. Since his appointment, in retrospect, Carney has not had much to do. His 'forward looking' comments about the British economy in context, and what the Bank may or may not do about lending and about interest rates have all been falsified by events; to the extent that some journalists have made a joke of his predictive capabilities. He participated in 'project fear', the campaign to scare the British electorate into voting to remain in the European Union even after the continentals had grossly insulted David Cameron [and, by implication the country that he represented] by their contemptuous dismissal of his half-hearted attempt to make the"ever-closer union" less objectionable to sensible Brits. When the referendum result was announced, before there was time for any deep observation of its short-term impact on the economy and on the currency, Carney led his outfit into panicky and wrong decision to lower interest rates further and to continue 'printing money' that the banks could then lend and drive asset prices [especially house prices] ever higher even as real wages continued to fall.

Mark Carney seems a pleasant man, and has a reputation for high intelligence. His record in Canadian banking is excellent: his record at the Bank of England gains him nul points. Later this week he goes to the US ski resort of Jackson Hole to meet the other governors of central banks, with a massive audience of media, to exchange platitudes. The real meetings of central bankers, that matter, occur in the context of the Bank for International Settlements at Berne; and sometimes the governors have influence when they gather with their countries' finance minister in the context of the G20, G8 [or whatever number gather, dependent on which countries are in favour with the USA]. The annual performance at Jackson Hole, beside allowing opportunity for some private chatter and data swapping, allows some more speculative statements to be made. This year, it is expected that the Chair of the US Federal Reserve Board will indicate the approximate scheduling of future interest rate increases; and that the Chairman of the European Central Bank will indicate that it is his organisation's plan to begin policy tightening, within the next year. Carney will have nothing to say. The Bank of England is still stuck like the proverbial rabbit in the headlights, mesmerised by Brexit, Trump and the fear of Britain being alone in the world without a Churchill able to summon up the Few, the Dunkirk Spirit and the resources that were handed to stand-alone Britain by President F D Roosevelt.

Mr Carney's children have already gone back to their Canadian educational institutes, and he will follow them soon. He has learned a lot, but been unable to do anything. His experience in Britain has fitted him better for his future career in Canada; and Britain gained nothing from his presence with us here.

No comments:

Post a Comment

Please feel free to comment on any of the articles and subject matter that I write about. All comments will be reviewed and responded to in due course. Thanks for taking part.