The news that Mark Carney is to be next governor of the Bank of England came as a huge shock. My old boss Paul Tucker had been expected to be next Governor but I think Mr Carney is an excellent appointment. He comes as a clean skin untainted by the various banking scandals to hit the City and best of all he is a banker. Harvard, Oxford and 13 years at Goldman Sachs is a really strong CV. No government bail outs of Canadian banks on his watch running the Canadian central bank adds to his attractions.
Mervyn King is an academic monetary economist and control freak who does not feel comfortable talking to bankers. He is only comfortable talking to other monetary economists whom he considers his intellectual equal. King had no hands on banking experience prior to his appointment and it showed in his later errors of judgement. He was a bad governor presiding over the Northern Rock, RBS and Lloyds banking meltdowns as well as the Libor fixing scandal. He came up for reappointment in 2008. Brown was strongly rumoured to want a new man thenbut the re-appointment coincided with the Northern Rock fiasco and it was judged to risky and smacking of panic to change your central bank governor at that time. So King was reappointed and Northern Rock , became a comparitively small problem compared to the subsequent RBS, HBOS/Llyods disaster. Lesson to politicians who always claim to learn lessons is don't take long term decisions for short term reasons.
I have high hopes of Mr Carney. The BoE deserves a good shake up but so does the BBC. Why on earth was Fat Pang allowed to appoint yet another BBC wallah, Tony Hall as DG without advertising the position or interviewing? Its quite incredible. No attempt was made to find an outside candidate. Luke Johnson, C4 chairman springs to mind but he was Fat Pang's boss on the C4 board. I remember my dear cousin a BBC wallah telling me in 1966 what a national treasure the BBC was. The Beebs big trouble is it believes this sycophantic self publicity.
The Beeb needed an outside appointment more so than the BoE.
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Carney did not indulge in the misguided policy of money printing which the economists call Quantitative Easing to mislead Joe Public into thinking its not money printing.
Carney reduced the interest rates to 0.5% and stated they would be kept there for two years! He gave banks certainty. King with his stupid another month another MPC rate decision, another possible dollop of money printing gave them uncertainty.
That is part of why Canada got better quicker than other countries. It really never got ill.
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