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Mark Carney is hailed as a saviour – but what do we really know about him? Mark Carney is hailed as a saviour – but what do we really know about him?
(3 months later)
From Cairo to Istanbul to Sao Paulo, so much current news is about people demanding more of a say in how they are governed. Yet every day brings fresh evidence of a new setback, of some supposedly steel-like democracy showing a tinpot underbelly. Take this sequence of events from Monday morning. A man pitches up for his first day at work. Effectively in charge of getting the country out of an economic depression, his job could scarcely be more important. Yet barely anyone knows him – including most of his new colleagues. His CV is impressive; but it contains items that should give one pause, such as that decade spent in the Goldman Sachs shark pool. The top-secret recruitment was personally driven by the finance minister, so keen to get his man that he bent the rules and upped the pay. The new foreign hire's package is worth six times the prime minister's salary. Parliament had no say in the appointment, with a handful of MPs allowed merely to chat to him, and issue a report for the sake of appearances.From Cairo to Istanbul to Sao Paulo, so much current news is about people demanding more of a say in how they are governed. Yet every day brings fresh evidence of a new setback, of some supposedly steel-like democracy showing a tinpot underbelly. Take this sequence of events from Monday morning. A man pitches up for his first day at work. Effectively in charge of getting the country out of an economic depression, his job could scarcely be more important. Yet barely anyone knows him – including most of his new colleagues. His CV is impressive; but it contains items that should give one pause, such as that decade spent in the Goldman Sachs shark pool. The top-secret recruitment was personally driven by the finance minister, so keen to get his man that he bent the rules and upped the pay. The new foreign hire's package is worth six times the prime minister's salary. Parliament had no say in the appointment, with a handful of MPs allowed merely to chat to him, and issue a report for the sake of appearances.
Which banana republic was home to such shadowiness? One of those post-Soviet –stans, you may be thinking. Or some corner of Latin America still reeling from an IMF cudgeling. Or maybe you already know. Perhaps you too saw the headlines about Canada's Mark Carney taking over the top job at the Bank of England. Although you may have missed the part when reporters and politicians at least acknowledged how democracy had been railroaded for his appointment because – as far as I could see – there was no such bit.Which banana republic was home to such shadowiness? One of those post-Soviet –stans, you may be thinking. Or some corner of Latin America still reeling from an IMF cudgeling. Or maybe you already know. Perhaps you too saw the headlines about Canada's Mark Carney taking over the top job at the Bank of England. Although you may have missed the part when reporters and politicians at least acknowledged how democracy had been railroaded for his appointment because – as far as I could see – there was no such bit.
Instead, the noise that has greeted the new governor is of loud and contented purring. Some economics journalists obviously wish they could be sports writers instead, for they are depicting the entrance as if José Mourinho had just sauntered into Stamford Bridge with five baguettes and two fish tucked under his arm.Instead, the noise that has greeted the new governor is of loud and contented purring. Some economics journalists obviously wish they could be sports writers instead, for they are depicting the entrance as if José Mourinho had just sauntered into Stamford Bridge with five baguettes and two fish tucked under his arm.
Mark Carney is a "rock star of finance", we were told. He was taking on a "superhuman" job, beamed Ed Balls. He was blessed with "Cary Grant looks", simpered a hack from the FT. For the Pink 'Un, this is the arrival of the year. And the shadow chancellor doubtless wants to snuggle up tight to the central banker so as to have a clear line of sight at George Osborne.Mark Carney is a "rock star of finance", we were told. He was taking on a "superhuman" job, beamed Ed Balls. He was blessed with "Cary Grant looks", simpered a hack from the FT. For the Pink 'Un, this is the arrival of the year. And the shadow chancellor doubtless wants to snuggle up tight to the central banker so as to have a clear line of sight at George Osborne.
But this is still no way to run a country – unless that country is Ruritania. The fussing and knuckle-biting over what Carney will do at this week's rate decision or next month's inflation report just shows how much economics debate amid this once-in-a-lifetime crisis has descended into a facile scorekeeping. How will the new man differ from Mervyn King? What tweaks will he request to the Bank's mandate? What will happen to inflation? It is like some grotesque version of the judging on Strictly: all points and technicalities.But this is still no way to run a country – unless that country is Ruritania. The fussing and knuckle-biting over what Carney will do at this week's rate decision or next month's inflation report just shows how much economics debate amid this once-in-a-lifetime crisis has descended into a facile scorekeeping. How will the new man differ from Mervyn King? What tweaks will he request to the Bank's mandate? What will happen to inflation? It is like some grotesque version of the judging on Strictly: all points and technicalities.
This isn't entirely new: I began economics reporting at the fag-end of the Ken'n'Eddie show, when every month the press would contrive excitement as Eddie George and Ken Clarke set interest rates. But yesterday's Carney-fest comes when the Bank of England's job is more serious than ever. First, follow Threadneedle Street's money. Westminster regularly gets in a lather over the annual budget deficit, which runs at around £120bn. Under its quantitative-easing scheme alone, the Bank of England has pumped £375bn into the financial system, accumulating liabilities worth £14,204 for every household in the UK. This is your money, in the same way that the government overdraft is in your name: but how often do you hear a sustained and serious discussion about what's happened to it? Yet the indications are that that the QE money, together with the £16.5bn taken out in the first eight months of the funding for lending scheme, has done little else apart from keep property and financial markets frothy – tipping money into the pockets of the wealthy.This isn't entirely new: I began economics reporting at the fag-end of the Ken'n'Eddie show, when every month the press would contrive excitement as Eddie George and Ken Clarke set interest rates. But yesterday's Carney-fest comes when the Bank of England's job is more serious than ever. First, follow Threadneedle Street's money. Westminster regularly gets in a lather over the annual budget deficit, which runs at around £120bn. Under its quantitative-easing scheme alone, the Bank of England has pumped £375bn into the financial system, accumulating liabilities worth £14,204 for every household in the UK. This is your money, in the same way that the government overdraft is in your name: but how often do you hear a sustained and serious discussion about what's happened to it? Yet the indications are that that the QE money, together with the £16.5bn taken out in the first eight months of the funding for lending scheme, has done little else apart from keep property and financial markets frothy – tipping money into the pockets of the wealthy.
Consider the issues the new-look Bank has to deal with. As Carney told MPs: "The next five years will span a period that will be critical for the future development of the Bank of England, for the development of the British, European and global economies, as well as decisive for domestic and international financial reform." In the absence of any fiscal stimulus, and against the backdrop of the eurozone crisis, the governor will have to secure a recovery (ideally in time for the next election) and oversee a zombiefied banking sector.Consider the issues the new-look Bank has to deal with. As Carney told MPs: "The next five years will span a period that will be critical for the future development of the Bank of England, for the development of the British, European and global economies, as well as decisive for domestic and international financial reform." In the absence of any fiscal stimulus, and against the backdrop of the eurozone crisis, the governor will have to secure a recovery (ideally in time for the next election) and oversee a zombiefied banking sector.
All this will be carried out by a former Goldman Sachs executive, with a deputy, Charlotte Hogg, also from investment banking. They will work alongside an IMF led by a former corporate lawyer (Christine Lagarde), whose number two used to work for a hedge fund (David Lipton, formerly of Moore Capital); and Mario Draghi, who spent a few years with Goldman Sachs. That resumé rundown isn't meant to impute personal venality to any of these officials; it's to point out the corruption of a system governed by unelected ex-bankers colluding in unprecedented austerity for the poor, while shovelling hundreds of billions at bankers. This rottenness is partly the politicians' fault, for their inability to deal with the fundamental questions, instead resorting to broad brushstrokes and outsourcing the serious thinking.All this will be carried out by a former Goldman Sachs executive, with a deputy, Charlotte Hogg, also from investment banking. They will work alongside an IMF led by a former corporate lawyer (Christine Lagarde), whose number two used to work for a hedge fund (David Lipton, formerly of Moore Capital); and Mario Draghi, who spent a few years with Goldman Sachs. That resumé rundown isn't meant to impute personal venality to any of these officials; it's to point out the corruption of a system governed by unelected ex-bankers colluding in unprecedented austerity for the poor, while shovelling hundreds of billions at bankers. This rottenness is partly the politicians' fault, for their inability to deal with the fundamental questions, instead resorting to broad brushstrokes and outsourcing the serious thinking.
Let me end with a suggestion. If this government is so keen on direct democracy and voting for mayors and police chiefs, why not make the next Bank governor stand for election? One term of five years, on a salary set at a maximum of 10 times the average wage. Some will say this would lead to poor candidates and monetary policy by soundbite. To which I would point at Alan Greenspan. They used to call him the Oracle, you know.Let me end with a suggestion. If this government is so keen on direct democracy and voting for mayors and police chiefs, why not make the next Bank governor stand for election? One term of five years, on a salary set at a maximum of 10 times the average wage. Some will say this would lead to poor candidates and monetary policy by soundbite. To which I would point at Alan Greenspan. They used to call him the Oracle, you know.
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