We must be cautious how we welcome Andrew Bailey, Mark Carney was certainly the worst governor in post war history so CoCo the clown would look good initially. He has to date been what a commanding officer might mark as ‘Good’ in his annual report of a junior officer. This means in army parlance ‘moderate’. Bailey is nothing if not moderate. He has kept his nose clean & his head down in his previous roles at the Old Lady of Threadneedle St. Apart from a few billion pounds worth of mistakes at the box ticking Financial Conduct Authority, which is par for the course, he has just what the establishment love, he won’t frighten the horses. Certainly better than urbane vacuous Lord Adair who was utterly clueless.
What makes me uneasy? It is his very background, the fact he is considered a ‘safe pair of hands’ by the political & Treasury amateurs. He would have, I concede, made a competent governor in the early Edwardian era. However he seems monumentally ill equipped to deal with what will surely hit the bank on his watch. If Great Britain presented its accounts in line with international accounting standards the national debt is at the highest in history.
Private pensions average a 35% underfunding, public sector pensions are a drag anchor on the taxpayer with no hint of reform. The deficit whilst falling in recent years is still out of control.
Britain has had its sixth general election without any mention of the national debt in the entire campaign. Global sovereign & corporate debt is reckoned at $270 trillion. Beyond human imagination. QE, a system of counterfeiting fiat currency is a global phenomenon, interest rates are zero or negative, certainly in real terms. What can’t go on won’t on.
When the crisis comes central bank governors are going to have to think outside the box big time. Fiat currencies will collapse & alternatives will have to be found. It might be crypto or gold or some kind of mix. Whatever it is we must return to asset backed money. Bailey is no Schacht or even Volker.
He is indeed a a creature of the establishment in spades, in short one of the chaps who got the world into this mess in the first place.
He is no clueless pretty boy political poseur like Carney, but none the less a potential very weak link when the poo hits the fan which it must on his watch.
I realise every Cambridge undergraduate is a neo socialist Keyensian, Bailey ran the Fabian Society, ‘nuff said. But there is no great evidence deep down he has been parted from his core beliefs. When the crisis comes, (outlined in detail in my book Magic of Banking), he will print & print & cut interest rates to zero. Like the Bourbons central bankers learn nothing.
To be fair he has been delivered a suicide hand, I despair of any man or women who accepts the post of central bank governor, they are either mad, don’t understand money or have an ego the size of Jupiter. I suspect notwithstanding Mr. Bailey’s relatively clean record, like his forbears & all politicians ironically he does not understand money, few do.
The Goodnight Vienna Audio file