The Old Lady of Threadneedle Street
Jun 28, 2013 1:36:25 GMT -5
Post by Deleted on Jun 28, 2013 1:36:25 GMT -5
Good morning to you all! To all those who survived the Greeks on BBC Two (television) last night, congratulations! Think of the ancient Greeks and we form a picture in our heads either of old bearded men talking philosophy or ripped warriors tearing their enemies to shreds. Ancient Greece seems full of such contradictions. A place that invented democracy but also ran on slave labour, that idolised youth but left children to die through exposure.
BBC - TV - Blog - Who Were The Greeks: Making sense of contradictions
'The Financial Times' leads today with some editorial comment on a change of guard at the Old Lady of Threadneedle Street: Sir Mervyn King’s legacy holds lessons for Mark Carney. Twenty-two years after crossing the threshold at the Bank of England (BoE), and 10 years since becoming governor, Sir Mervyn King today spends his last day at his magnificent office in Threadneedle Street. Even by the standards of this august institution, established in 1694, few can claim to have matched his influence on Britain’s monetary history.
Sir Mervyn presided over a revolution at the BoE. As chief economist in 1992 he oversaw the shift to the inflation-targeting regime that still guides monetary policy. He has been present at every meeting of the interest rate-setting Monetary Policy Committee (MPC) since the central bank gained independence in 1997. Under his stewardship, the Old Lady of Threadneedle Street has been restored to her dominant place at the heart of the British financial system. The salmon pink newspaper concludes thus:
As for an explicit inflation target, Goodhart's Law warns that it might turn central bankers, or even certain Members of 'The Third', into what Sir Mervyn King, now Governor of the Bank of England, had in 1997 colourfully termed "inflation nutters": central bankers who concentrate on the inflation target to the detriment of stable growth, employment and/or exchange rates. Sir Mervyn went on to help design the Bank's inflation targetting policy and asserts that the nuttery has not actually happened, as does Chairman of the US Federal Reserve, Ben Bernanke, who states that all of today's inflation targeting is of a flexible variety, in theory and practice.
Goodhart’s Law states that when a measure becomes a target, it ceases to be a good measure. Charles Goodhart coined it (the law, rather than anything else) at the Bank of England. At the time the Bank was targetting M3, the broad measure of money supply, as a means of controlling inflation. Soon afterwards, the correlation between M3 and inflation collapsed. Targeting inflation directly worked for almost a decade, but today that result looks more like luck than judgement. It might be possible to target house prices (as well as inflation), although it might not ultimately work.
So kleines c is ultimately cynical of economists' attempts to regulate anything. In the words of arguably the greatest of philosophers, Immanuel Kant, you cannot make one straight thing out of the crooked timber of humanity. Yet men and women will still come and go like the generations of leaves in the forest. We will still be weak and our gods, whatever they may be, Sydney Grew, remain strong and incalculable. The quality of someone matters more than their achievement; violence and recklessness will still lead to disaster, and this will fall on the innocent as well as the guilty.
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Iliad, Homer, translated by Pope (1715)
Reporting for BBC News, Stephanie Flanders considers the luck of the Canadians (and Mark Carney). Canada's Mark Carney faces high expectations as he takes over the Old Lady of Threadneedle Street. Before Mark Carney comes here, Stephanie thought that she should go there, to get a closer look at his record in Canada, and decide for herself whether's he's anything like as good as he's cracked up to be. Her conclusions? He didn't singlehandedly rescue the Canadians from the worst of the global financial crisis - he didn't really need to. But boy, did he win over the press.
Britain's press corps like to think they're more hard-nosed than their Canadian counterparts. Meaner. Less easily impressed. Perhaps. But I've read what the Canadian press say about other Canadian policy makers, and I've read what they said about Mark Carney after five years in the hot-seat at the Bank of Canada. It's like night and day. One paper put Carney at the top of its list of "Canadians abroad that we want back". Before he had even left.
I can't help thinking the hard men and women of Fleet Street might find themselves charmed as well. This is a man who established a reputation as a 'working class hero' to many Canadians, despite having spent 13 years at Goldman Sachs. Then again, Canadians don't have nearly as much reason to dislike bankers. Canada is the only G7 country that has not had to spend any taxpayer money bailing banks out. Stephanie concludes thus:
Due to unprecedented demand from around the world, everyone reading 'The Third' is cordially invited to the Bank of England Open Day promptly at 09:45 (BST) on the morning of Saturday 13 July 2013. If you cannot make it in person, Sydney Grew, do not worry at all. Why not follow events online instead?
London Cultureseekers Group - Bank of England Open Day
But, what is to be the fate of the great wen of all? The monster, called, by the silly coxcombs of the press, "the metropolis of the empire?" I propose some toast: to Sir Mervyn King, Mark Carney and the Old Lady of Threadneedle Street! Three cheers from kleines c and the gang (Friday morning breakfast coffee)!
BBC - TV - Blog - Who Were The Greeks: Making sense of contradictions
'The Financial Times' leads today with some editorial comment on a change of guard at the Old Lady of Threadneedle Street: Sir Mervyn King’s legacy holds lessons for Mark Carney. Twenty-two years after crossing the threshold at the Bank of England (BoE), and 10 years since becoming governor, Sir Mervyn King today spends his last day at his magnificent office in Threadneedle Street. Even by the standards of this august institution, established in 1694, few can claim to have matched his influence on Britain’s monetary history.
Sir Mervyn presided over a revolution at the BoE. As chief economist in 1992 he oversaw the shift to the inflation-targeting regime that still guides monetary policy. He has been present at every meeting of the interest rate-setting Monetary Policy Committee (MPC) since the central bank gained independence in 1997. Under his stewardship, the Old Lady of Threadneedle Street has been restored to her dominant place at the heart of the British financial system. The salmon pink newspaper concludes thus:
" ... When Mark Carney, Sir Mervyn’s successor, takes over on Monday, he will inherit a vastly more powerful institution than the one his predecessor guided. The BoE will directly regulate lenders, taking over powers from the FSA. This newspaper has reservations about the accumulation of responsibilities in the hands of the new governor. We welcome the splitting of the role, which sees the managerial side taken over by a chief operating officer. This should allow Mr Carney to focus on his regulatory and monetary roles.
The new governor should continue Sir Mervyn’s fight to ensure that the banks are adequately capitalised. With the Treasury bending towards forbearance, Mr Carney needs to stand firm. He should tread cautiously in adopting “forward guidance” as one of the BoE’s policy tools. As the market’s reaction to the US Federal Reserve’s talk of slowing down quantitative easing shows, communication strategies can be a double-edged sword. Mr Carney should learn from Sir Mervyn’s tenure and be more open-minded about the policy weapons at his disposal. Accommodating more flexibility would be a welcome change after a decade of inflation-based orthodoxy."
The new governor should continue Sir Mervyn’s fight to ensure that the banks are adequately capitalised. With the Treasury bending towards forbearance, Mr Carney needs to stand firm. He should tread cautiously in adopting “forward guidance” as one of the BoE’s policy tools. As the market’s reaction to the US Federal Reserve’s talk of slowing down quantitative easing shows, communication strategies can be a double-edged sword. Mr Carney should learn from Sir Mervyn’s tenure and be more open-minded about the policy weapons at his disposal. Accommodating more flexibility would be a welcome change after a decade of inflation-based orthodoxy."
As for an explicit inflation target, Goodhart's Law warns that it might turn central bankers, or even certain Members of 'The Third', into what Sir Mervyn King, now Governor of the Bank of England, had in 1997 colourfully termed "inflation nutters": central bankers who concentrate on the inflation target to the detriment of stable growth, employment and/or exchange rates. Sir Mervyn went on to help design the Bank's inflation targetting policy and asserts that the nuttery has not actually happened, as does Chairman of the US Federal Reserve, Ben Bernanke, who states that all of today's inflation targeting is of a flexible variety, in theory and practice.
Goodhart’s Law states that when a measure becomes a target, it ceases to be a good measure. Charles Goodhart coined it (the law, rather than anything else) at the Bank of England. At the time the Bank was targetting M3, the broad measure of money supply, as a means of controlling inflation. Soon afterwards, the correlation between M3 and inflation collapsed. Targeting inflation directly worked for almost a decade, but today that result looks more like luck than judgement. It might be possible to target house prices (as well as inflation), although it might not ultimately work.
So kleines c is ultimately cynical of economists' attempts to regulate anything. In the words of arguably the greatest of philosophers, Immanuel Kant, you cannot make one straight thing out of the crooked timber of humanity. Yet men and women will still come and go like the generations of leaves in the forest. We will still be weak and our gods, whatever they may be, Sydney Grew, remain strong and incalculable. The quality of someone matters more than their achievement; violence and recklessness will still lead to disaster, and this will fall on the innocent as well as the guilty.
"Achilles' wrath, to Greece the direful spring
Of woes unnumber'd, heavenly goddess, sing! ... "
Of woes unnumber'd, heavenly goddess, sing! ... "
Iliad, Homer, translated by Pope (1715)
Reporting for BBC News, Stephanie Flanders considers the luck of the Canadians (and Mark Carney). Canada's Mark Carney faces high expectations as he takes over the Old Lady of Threadneedle Street. Before Mark Carney comes here, Stephanie thought that she should go there, to get a closer look at his record in Canada, and decide for herself whether's he's anything like as good as he's cracked up to be. Her conclusions? He didn't singlehandedly rescue the Canadians from the worst of the global financial crisis - he didn't really need to. But boy, did he win over the press.
Britain's press corps like to think they're more hard-nosed than their Canadian counterparts. Meaner. Less easily impressed. Perhaps. But I've read what the Canadian press say about other Canadian policy makers, and I've read what they said about Mark Carney after five years in the hot-seat at the Bank of Canada. It's like night and day. One paper put Carney at the top of its list of "Canadians abroad that we want back". Before he had even left.
I can't help thinking the hard men and women of Fleet Street might find themselves charmed as well. This is a man who established a reputation as a 'working class hero' to many Canadians, despite having spent 13 years at Goldman Sachs. Then again, Canadians don't have nearly as much reason to dislike bankers. Canada is the only G7 country that has not had to spend any taxpayer money bailing banks out. Stephanie concludes thus:
" ... Paul Krugman says this all makes Canada a test case for two somewhat different views of the financial crisis and its aftermath. One view says that it was primarily down to the banks and their problems. If that's true, you'd expect Canada to stay out of trouble, for all the reasons I've already discussed. The other view is that the banking crisis was just a sideshow for the main event which was the housing boom and bust and the long-term implications for the economy of households being stuck with so much debt.
I'm not sure anyone thinks any more that 2008-9 was 'just" a banking crisis. For a Nobel prize winning economist, Paul Krugman has quite a weakness for straw men. But when you look at what's happened to Canadian house prices and personal debt ratios, you do have to wonder whether Canada has simply postponed its moment of truth. At this point, it's traditional for us 'hard-nosed' UK economics journalists to joke that Mark Carney is "getting out of Canada in the nick of time". We'll see.
Maybe our new central bank governor is lucky as well as charming. But you'd have to say, it's lucky for Canada, too, if it has once again been able to postpone its day of reckoning, to a time when its neighbour and main trading partner is on the mend. George Osborne isn't the only one wishing we could have been so lucky in the UK."
I'm not sure anyone thinks any more that 2008-9 was 'just" a banking crisis. For a Nobel prize winning economist, Paul Krugman has quite a weakness for straw men. But when you look at what's happened to Canadian house prices and personal debt ratios, you do have to wonder whether Canada has simply postponed its moment of truth. At this point, it's traditional for us 'hard-nosed' UK economics journalists to joke that Mark Carney is "getting out of Canada in the nick of time". We'll see.
Maybe our new central bank governor is lucky as well as charming. But you'd have to say, it's lucky for Canada, too, if it has once again been able to postpone its day of reckoning, to a time when its neighbour and main trading partner is on the mend. George Osborne isn't the only one wishing we could have been so lucky in the UK."
Due to unprecedented demand from around the world, everyone reading 'The Third' is cordially invited to the Bank of England Open Day promptly at 09:45 (BST) on the morning of Saturday 13 July 2013. If you cannot make it in person, Sydney Grew, do not worry at all. Why not follow events online instead?
London Cultureseekers Group - Bank of England Open Day
But, what is to be the fate of the great wen of all? The monster, called, by the silly coxcombs of the press, "the metropolis of the empire?" I propose some toast: to Sir Mervyn King, Mark Carney and the Old Lady of Threadneedle Street! Three cheers from kleines c and the gang (Friday morning breakfast coffee)!
