Thursday, September 27, 2007
Banana republic
Posted by David Smith at 10:00 AM
Category: Thoughts and responses

Richard Lambert has made his strongest speech since taking over as director-general of the CBI, saying that the run on Northern Rock was the kind of thing you would expect to see in a banana republic and attacking just about everybody, including his old monetary policy committee colleague Mervyn King.

"Itís not enough to say, as the Governor did last week, that the main difficulties in fixing the problem had been created by the complexity of todayís company law, and by our system of deposit guarantees,"he said.

"You donít wait for the cinema to catch fire before you check out whether the fire precautions are going to work."

Meanwhile, the Bank of England has released its credit conditions survey, pointing to tougher times for business, though not yet for consumers. It can be accessed here.

The Nationwide's house price index showed a 0.7% rise this month, up 9% on a year earlier. The Nationwide suggests that this shows the market is shrugging off the credit crunch. It is, however, too early to say.

Comments

Its possible to have a functional problem in its first crisis. Mervyn King has stayed the path and he is just brilliant....however the lesson starts now.

Will it follow the FED in cutting interest rates? Will politics take over? Will UK have an inverted interest rate curve?

This may be the time to shift resources to emerging markets and the BOE should help the markets find that way, thru building statisitics on vibrant economies, advising on foreign policy and generally weaning off old influences of the economy.

Posted by: Hitesh Damani at September 27, 2007 12:14 PM

Too early to tell in my opinion. I think we will have to wait until November to see how the credit crunch will affect house prices. These things take some time to seep in.

Posted by: JohnN at September 27, 2007 01:58 PM

The comments page is back! Unfortunately that will just lead to more comments like this one. Close it again David, before it's too late.
BA

Posted by: bears all at September 28, 2007 11:31 AM

The main reason I read this site is because of the amusing comments, and David's equally amusing responses. Long may it continue.

Posted by: Ed B at September 28, 2007 12:37 PM

Chances of such quite remote. GB needs to go to the electorate...

Posted by: F.Fox at September 30, 2007 09:54 PM
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