March 21, 2007

FLASH: UK central banker comes clean: Admits causing housing bubble for short-term gain, leaves financial catastrophe for others to deal with

You'd like to think the world's central bankers were smart people. That they cared about short term issues, but had their eye mainly on the long term welfare of people, families and society at large.


That's not the case folks. The US and UK central banks are evidently made up of incompetent, clueless, morally-questionable boobs, driven by short-term business profits and serving their political masters, who could care less about the societal and personal destruction caused by their misguided, short-sighted, greed-inspired ways.

Seriously.

Here's a startling and bizarre admission from UK bank governor Lord Eddie George, where he admits he and his crew inflated the biggest bubble the world has ever seen simply because they thought they had no other short-term option to deal with the 2001 slowdown.

Here's one they should have considered in 2001 - go into recession. Taking that medicine then would have prevented the bubble, and prevented the biggest asset crash in recorded human history now underway.

You should all be outraged, sickened... and not surprised.

The Bank of England deliberately stoked the consumer boom that has led to record house prices and personal debt in order to avert a recession, the former Bank Governor Eddie George admitted yesterday.

Lord George said he and his colleagues on the Monetary Policy Committee " did not have much of a choice" as they battled to prevent the UK being dragged into a worldwide economic slump by slashing interest rates. And he said his legacy to the current MPC was to "sort out" the problems he had caused.

"We only had two alternative ways of sustaining demand and keeping the economy moving forward - one was public spending and the other was consumption.

"We knew that we were having to stimulate consumer spending. We knew we had pushed it up to levels which couldn't possibly be sustained into the medium and long term. But for the time being, if we had not done that, the UK economy would have gone into recession just as the United States did."

He said he was "very conscious" that stimulating consumer demand could give rise to problems in the future. "My legacy to the MPC, if you like, has been 'sort that out'," he said.


24 comments:

RipeDurian said...

Keith they're not incompetent. All is going according to plan, this is just another chapter of "rowing" the economy and collecting more wealth and real assets from the sheeple masses.

More serfs and more billions for billionaires incoming!

http://www.themoneymasters.com/

Get this dvd and watch it, its low key and full of great history info (and no I have no affiliation, I just happened to get it and was blown away.)

Anonymous said...

Depression coming

Anonymous said...

Keith,

You need to start a topic on whether or not the FED will lower rates.

Qs:
1) What is the only thing that can save a complete housing meltdown?

2) Will the government allow the meltdown to reach nuclear?

Answers,
1) Lowering rates and ordering Fannie and Freddie to lower their lending guidlines. No matter how bad it gets for private lenders Fannie can hide losses and shinnanigans forever.

2) No, the GOV. simply cannot allow the housing collapse to reach the point that common sense dictates it should.

The only arguement against lowering rates is the dollar sinking and causing foriegn investment to dry up (the foreign investment that finances our deficits). The oriental people think long term. China could care less if it a gets a lower rate of return for 10 years. It will still buy our debt.

China's choices:

1) Get just 1% on treasuries but still sell US consumers $trillions in trinkets, keeping the Chinese economy humming.

2) Refuse to accept a lower rate of return and stop buying US debt. The result is a US recession, US consumer buys less China junk and China's economic miracle grinds to a halt.

Its Undeniable that they will lower rates to prop up housing.

Anonymous said...

people don't seem to understand that a system based on usuary and debt will ultimately fail.

the nytime was stumping for debt today with the suggestive headline, "Once Again, Debt Is Miscast as the Villain. [Read It]

Anonymous said...

Bernanke & Co. keep key rate at 5.25%, say economy expanding despite housing woes

Anonymous said...

B*stard

GWK said...

Well we still have the Beatles.

Anonymous said...

Greenspan's Fed did the same thing. Money (ha-ha!) quote from Board of Governors of the Federal Reserve System, "International Finance Discussion Papers, Number 841, House Prices and Monetary Policy: A Cross-Country Study", Federal Reserve Board, September 2005:

"Like other asset prices, house prices are influenced by interest rates, and in some countries, the housing market is a key channel of monetary policy transmission."

GWK said...

As of this date 03/21/2007 the Fed announced no interest rate hike!

Anonymous said...

The only arguement against lowering rates is the dollar sinking and causing foriegn investment to dry up (the foreign investment that finances our deficits). The oriental people think long term. China could care less if it a gets a lower rate of return for 10 years. It will still buy our debt.


You do know, don't you, that China is actively trying to build up its own internal market? When that happens, China no longer needs the US as much.

Anonymous said...

People are deluded if they think China needs us as much as we need them.

We are rapidly approaching the point where we are more trouble to China than we are worth.

Things are shifting.

keith said...

At least they didn't cut rates today.. then we'd know who was running the fed

I think they're clueless on what to do and what to say in regards to The Great Unwinding. Except I doubt Greenspan's number is on Bernanke's speed-dial tonight

Anonymous said...

A large number of those central bankers are as Keith describes: clueless, short-sighted, and morally questionable.

The problem is there is a small group of central bankers who are actively orchestrating events.

It is nothing less than warfare between the very top elite and the masses. The elite's goal is to maximize their control and power.

The more you learn and look, the more apparent there has been a small, powerful group of people who use central banks and media to herd the masses.

Anonymous said...

Most central bankers are clueless. They are doing the only things they can and their options are limited.

This is according to plan. The true elite has political and economic change as their goals. Consolidation of power. I don't think the US Constitution is going to survive.

Anonymous said...

The Fed will start lowering rates soon. They do not care about inflation, they MUST print in order to lessen the massive debt bubbles they have created.

Never underestimate the power of the Fed to devalue the currency. People say look at bonds, the rates are low and therefore the market is not forcasting inflation. They do not realize that all rates along the curve are constantly manipulated lower by the Fed.

It would not surprize me to see a resurgence in housing soon. The Fed will lower as much as they need to (remember 1%) to prevent the bubble from busting.

Anonymous said...

keith said...
At least they didn't cut rates today.. then we'd know who was running the fed

I think they're clueless on what to do and what to say in regards to The Great Unwinding. Except I doubt Greenspan's number is on Bernanke's speed-dial tonight

March 21, 2007 10:58 PM
-----------

+1, Keith!

They re damned if they do, damned if they don't.

Professor said...

Bankers fall over each other lending until they've reached the bottom of the debtor barrel and then go broke; then, they turn to the central banks to bail them out with cheap or free (in real terms) credit, which debases the currency, causes energy prices to spike, and the US military to go to war to defend the imperial oil supplies and shipping lanes.

The central bankers' mischief reflates the financial system's assets to start the bubble cycle all over again.

And it is said that the Fed's "enlightened policies" have led to less volatility of booms and busts than in the past. Over the past 32-36 years that the US$ has floated and the Fed has been hyper-interventionist, the US economy has experienced 3 wars, 4 (and soon 5) big recessions and housing busts, 4 oil spikes with oil tripling and quadrupling in price, 3 US$ crashes, and 3 of the worst stock market crashes in US history.

Thank goodness we had the Fed to save us! Good grief!!!

striker said...

Anonymous said...
People are deluded if they think China needs us as much as we need them.

We are rapidly approaching the point where we are more trouble to China than we are worth.

Things are shifting.


----------------------------------


video: shift happens

http://tinyurl.com/2eaozx

The chinese don't need us!

Anonymous said...

This whole friggin mess dates back to the 1930s when Lord Maynard Keynes proposed his general economic theory that government deficits could exceed government income to help smooth out the economy. The politicians adopted that theory whole hog but they totally ignored the flip side of that theory which states that in good economic times the budget should be in surplus to build up funds that could be used during the next period when the economy was in trouble. A small deficit can be tolerated but these clowns fail to understand that the higher the deficit, the higher the rate of inflation. Since inflation is by definition related to price increases caused by the creation of an excessive amount of money the deficits cause an increase in inflation.

A college Freshman Course in Economics 101 using the Austrian School used to teach this as a matter of basic knowledge. With the modern College system and all of the liberal wacko professors, graduate courses in economics probably do not adequately teach this concept. I got my economics education at a small state university in the midwest in the early 70s and it has served me well. I never earned over $70k per year, raised 6 kids, helped 3 of them graduate from 4 year college programs and my new house is paid for with money in the bank without my wife having to work after we got married.

I suspected that these policies would eventially result in a major recession or depression and could not believe that the beloved Chairman could be that stupid to not recognize what would happen. He took the easy political route to defer the problems until after the next election. The chickens are coming home to roost and there is no solution.

Do you know how to tell when a politician is lying? His or her lips are moving. The mainstream media is losing so much credibility by ignoring these major problems with endless coverage of Anna Nicole Smith, O J Simpson years ago and other major wastes of the airwaves. Some predicted a civil war starting in 2007. I wondered how and why it would start. Lets see now, mass foreclosures of people from their homes, illegal immigration, the export of jobs overseas, stagnant wages for all but the upper 10 per cent, high taxes, illegal wars, hushing up the problems caused by peak oil etc. etc. etc.

Anonymous said...

china will take indian land in return for its products, vrs 5% short term or 4% long???

Brian said...

It'd have been cool if the record low interest rates were used to start innovative businesses, that created value and efficiency, rather than just bidding up the price of housing to ridiculous levels.

Anonymous said...

All Roads lead to Inflation. Got Gold?

Anonymous said...

Would someone ask Ben if it hurts very much when you've got your tit in a wringer?

Smug Bastard

Anonymous said...

think Walmart, think walmartization of banking had occurred long time ago, a non sustainable system that thrives on unprecedented wealth accumulation that then gets vacuumed up to the top, and nothing to show for it down the lane (down the drain?); the after is devastation and financial ruin, whereas the before is ignorance, greed, naivete and the superlative of sheepness.
Globalization is us!