The Irony of Lie-bor

I’m sure the irony is not lost on Mr Diamond that when the Bank of England and HM Treasury manipulate interest rates it is legal and most of the country celebrates (due to their downward bias), but when he does their bidding and tries to support them in these efforts then he loses his job and could end up facing criminal charges. This is a clear sign that the elite is starting to find it ever tougher to keep its house in order given increasing transparency and the ease with which information is disseminated. Next time that phone call comes in, if it does at all, the head of the financial institution in question is going to wonder whether it is worth it. Systemic risk just cranked up another notch and the monetary transmission mechanism, which is roundly derided as being broken anyway, has just had another nail smashed into its coffin.

So, another week and another £50billion has been “pumped” into the economy. Hardly an eyebrow was raised, which is strange given that never in the Bank’s history has it had interest rates at 0.5%, let alone for nearly four years, and never before has it purchased one third of the government’s outstanding debt. The result is the continued devastation of the country’s savers – but then our policymakers have been laughing in their faces for more than a decade. It seems like only yesterday that Gordon Brown removed the dividend tax credit for pensions (in 1997). The frog is being boiled alive.

The world economy is now once again at the infamous “stall speed” and all eyes are on the central bankers. One can only imagine how markets would react if they lost faith in their omnipotence. However, the central bankers are starting to struggle, having emptied a fair amount of ammunition over the past few years. They can, of course, carry on printing (and they will), but its efficacy is not the same as dropping interest rates. Hence all eyes are turning to the developing world which still has positive interest rates. Maybe “developed world” (I always love the irony, and arrogance, of that nomenclature) policymakers can convince their “developing world” brethren to follow the same path as them. I guess that would give us another few years to put our houses in order. Or not, as the case will probably be.

Talking of buying time, it is something that Europe seems to be excelling at. And like many other countries and regions, they are wasting it. Admittedly not wasting it would take herculean efforts and unprecedented co-ordination, but hope springs eternal as the alternative is not pretty. At this juncture the best outcome for the Eurozone looks like sclerosis (Japan being a good case study) and the worst is… well… significantly worse…