By my count, the British government’s new paper setting out its plans for overhauling the banking industry mentions the words “financial stability” 141 times in its 147 pages. So it comes as some surprise that the document makes no attempt to define the phrase.
The European Central Bank has long been criticised for being too cautious in its response to the financial crisis. Didn’t the inflation hawks of Frankfurt raise rates in July last year just as the credit crunch was about to reach its climax? Despite their massive injections of liquidity into the money markets, Jean-Claude Trichet and his colleagues were pilloried as timorous clones of the Bundesbank for cutting rates too slowly and refusing to follow the Fed and the Bank of England into Quantitative Easing by buying government and corporate debt.
Did Mervyn King miss his true vocation? Last night he compared the Bank of England to a church – with the Governor as the priest – as he took to the Mansion House pulpit to pour a rhetorical bucket of cold water over guests at the Lord Mayor’s banquet.
from Neil Collins:
You may not have heard of Adam Posen, but you hadn't heard of David "Danny" Blanchflower before the banking crisis. Posen is Blanchflower's replacement on the Bank of England's Monetary Policy Committee and, boy, does he have some strong views. Here he is before the US Congress three months ago, with some modest proposals.