Today’s SQotD is already taken, and in any case yesterday’s SQotD was also about banking, but here is more quotability, from regular quotee here, Steve Baker MP, writing for the Spectator Blog about the LIBOR scandal:
The really important question today is not whether the Bank of England encouraged manipulation of credit markets by self-interested rogues but why we tolerate systematic credit market manipulation by the central banks as a matter of policy: nowhere else in the economic system would we accept explicit planning of the price and quantity of a vital commodity. If it worked, we’d all be communists.
In the Cobden Centre round robin email flagging up this piece, the words “linked from Guido” were included in the email title. This stuff is not merely being said, relentlessly. It is getting around.
Here is some further evidence of that, from the BBC:
A popular solution to the financial crisis has been to print more money, but is there another way of fixing our economy? Would the financial system be more stable if each pound, dollar or euro in our pocket was once again backed by gold?
And they go on to provide the answer given to them by Detlev Schlichter: yes.
All of which confirms the Austrianism as Number 2 meme.
LATER: More incoming from the Cobden Centre flagging up this programme, the first part (of two) of which will be shown at 9pm on Channel 4 this evening. Various Cobdenites contribute. Plus, see also this.
I know this post is really about central banking, but since the LIBOR scandal is the “hook” it seems a good place to post this interesting article about how the LIBOR figure is calculated and the real-world implications of its manipulation. A bit technical, perhaps, but LIBOR is inherently technical. You’re welcome.
I agree wholeheartedly with what @Freddie Berman says there. He is an outstanding chap.
But seriously, many thanks to @Brian Micklethwait for this post. Very helpful/informative with all the links. I shall follow them with keen interest (not compound).
I have tried to come up with a satire of the Bank of England’s (and the elected government’s) latest antics – but I have failed.
What is being done is so irational that is hard to make a satirical attack upon it (as it is so weird to start with).
Perhaps someone else can do the job.
What we need is probably something like the Bird & Fortune duo’s droll satire on the financial crisis of 2008 in their “Silly Money” spoofs – for example:
Part 1: (Link)
Part 2: (Link)
The one they did on explaining the subprime mortgages rort was right on the button and rather clever too.
I reckon a similar job could be done on Libor/Barclays.
Bank of England creature.
“So you got into trouble by lending out money, that did not exist (created by book keeping tricks) to people who could not or would not pay it back?”
Banker.
“But you encouraged this at every turn – indeed your Cental Bank interest rates were set low (i.e. your own money created from NOTHING) for the express purpose of getting us to lend lots of money – to create a boom”.
Bank of England creature.
“I do not deny it – indeed you mistake me…. I do not want you to stop acting in this way, I want you to carry on. Here have some more money (created from NOTHING) at virtually no interest cost – as long as you lend out”.,
Banker.
“Who to?”
Bank of England creature.
“Businessmen, consumers – oh anybody really. Whoever you lent the money to before”.
Banker.
“But will not that get us into trouble again?”.
Bank of England creature.
“Bark, Bark”.
At this point N. Ferguson (the pet “free market” person of the BBC, Newsweek magazine and Harvard) should jump in and explain that what is needed is “reasonable regulation” by the “highly talented” people at the Bank of England (and the elected “Conservative” government – which is as conservative as he is).
Any demand that lending be from REAL SAVINGS (not credit bubbles) and to people likely to PAY THE MONEY BACK (not to random people and enterprises as “monetary stimulus”) to be denounced by Ferguson as “primitive”.
After all his hero, Frederick the Great, showed the way forward for Western Civilisation.
If you want the essense of the decline of liberalism – it can be shown the habit of many liberals (even in the 19th century) to make a hero figure of the collectivist swine and mass butcher, Frederick the Great.
No wonder they went on to support German and Italian unification (which meant higher, not lower, taxation – mass state education, the persecution of non standard cultural groups, conscription and many years of, IGNORED, war in places like Sicily….), if people are prepared to reconcile worship of Frederick with liberalism (or conservativism) then they can reconcile anything with it.
Even a revolt against the “Gods of the Copybook Headings” – which is what credit bubble finance really is.