June 2024

Is Mark Carney a liar? A self-serving, over-paid, politically-subservient, banker-friendly liar?

Has our dashing new governor of the BoE really cocked up? We got his much hyped “forward guidance” that interest rates would not go up from their current 0.5% level till around 2016. Within a few minutes of Carnage’s great announcement, financial market predictions for UK interest rates priced in a rise long before Carnage’s date.

That puts Carnage in a bit of a bind. If he does increase rates before 2016, everyone will say his forward guidance was garbage. So, to preserve his own lousy reputation, he now has to hold interest rates down for as long as possible.

So, who benefits from low interest rates? Firstly, people taking out mortgages. They’re the main winners as the Coalition government uses its Help to Buy and Funding for Lending schemes to stoke up a house price bubble to make people feel better off in the 20 months till the next election.

But the real winners are the banks and the Government. The banks win because higher interest rates would lead to many mortgage-holders and struggling, over-indebted businesses defaulting and revealing that many banks are to all intents and purposes bankrupt. Also, the Government is giving the banks huge piles of our money that they can lend back to us at exorbitant rates, making massive profits for the banks and massive bonuses for their bosses.

As for the Government, the useless Coalition has been unable to cut public spending. The Government is spending £120bn a year (£2bn a week) more than it takes in tax. But nobody wants to lend the Government money – at least not at rates of interest the Government could afford. Our financially-incontinent Government is going bankrupt. So, Carnage is forced to do more QE to create money out of thin air to buy the government bonds that nobody else wants. Isn’t that pretty much what you did in Canada?

Meanwhile, anyone with any savings is getting fleeced to bail out the banks and the Government. We have about £1.2trn in bank accounts and are losing around £36bn a year in lost interest because, with the Government giving the banks so much of our money, they don’t need our savings and so pay below-inflation interest, if they pay any interest at all.

So come on Mark “Goldman Sachs” Carnage. Why not tell us the truth? You’re imposing “financial repression” – keeping interest rates artificially low – to bail out your political masters and your friends in banking. But you’re trashing the value of the pound and screwing everyone else.

Why not just replace the entire MPC and BoE staff with parrots trained to say “low interest rates” and  “more QE” and sack this lot? It will be a lot cheaper than paying their salaries (and index-linked pensions) and at least the parrots won’t be lying.

(If you’ll permit me a bit of self-indulgence, here’s a comment a reader sent me. “Your GREED UNLIMITED is a very good read. I am lost for words when you say that three quarters of your readers cannot afford the price of the book. Many more could buy it just to support the best blog on the web”)

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