http://www.telegraph.co.uk/comment/c...edit-card.html
Mervyn King has calmly cancelled Gordon Brown's credit card
The spandex-clad superhero has lost his aura of power, says Matthew d'Ancona.
Long before the first anti-capitalist protester descended upon London to rage against the G20 summit, a brick had already been thrown through Gordon Brown's window. How embarrassing for the Prime Minister that it should have been hurled by a man with the placid features and calm demeanour of Mervyn King, the Governor of the Bank of England. This was no Black Bloc anarchist, screaming for the leaders of the free world to be lynched. But the metaphoric glass of Brown's stimulus plans was still shattered by the Governor's intervention.
At the risk of mixing metaphors, being duffed up verbally by Mr King must be like being savaged by a sheep with a doctorate. "Given how big these deficits are, I think it would be sensible to be cautious about going further in using discretionary measures to expand the size of those deficits," Mr King told the Treasury select committee on Tuesday. Or to put it another way: "I think the fiscal position in the UK is not one where we could say, 'Well, why don't we just engage in another significant round of fiscal expansion?'" In other words: put the nation's credit card away, Gordon, you can't afford that stimulus – or anything else for that matter.
Once the brick was thrown, the uprising followed in the form of the first failure of a government bond auction since 1995. Government spin doctors rushed like the riot police to quell the revolt, claiming that the failure was a blip and that the particular bond was a 40-year gilt which is ineligible to be sold back to the Bank of England. But the symbolic power of the auction's failure was beyond dispute. In October, George Osborne said in a speech at the LSE that "at some point the question becomes 'how much more are the markets prepared to lend?' That's why there are limits to borrowing – not political limits, but actual limits." This botched sale of bonds was the first undeniable evidence that those "actual limits" may be within sight and that the markets' tolerance of government borrowing is closer to exhaustion than the Prime Minister likes to claim.
As Mr King was doing his worst, Mr Brown was on a whistlestop tour of the planet, acting as his own sherpa for Thursday's G20 gathering. His progress around the world was meant to be the 21st-century equivalent of a medieval monarch's itineration: an expression of his authority and influence, raw power in motion. In practice, the tour was closer in spirit to Les Vacances de Monsieur Hulot. At the European Parliament in Strasbourg, my old friend and associate Daniel Hannan MEP subjected the PM to a rhetorical attack of breathtaking concision and eloquence – a speech which has, quite rightly, become an instant YouTube classic. In Brasilia, the Brazilian Prime Minister, Luiz Inacio "Lula" da Silva, said after talks with Mr Brown that the global crisis was the fault of "white, blue-eyed" people, the first time, as far as I am aware, that eugenics has been advanced as a reason for the sub-prime disaster.
In New York, Gordon was asked about Mr King's intervention and his answer amounted to: la, la, la, la, la, I am not listening, my hands are over my ears, la la la la. Indeed, so keen was he to change the subject that his team briefed journalists about his plans to reform the monarchy: as if pictures of the Queen would stop us talking about King.
No chance. For this weekend's Week in Westminster on Radio 4, I interviewed Nigel Lawson and asked him how he would have felt as chancellor and architect of Conservative economic policy if Robin Leigh-Pemberton, then governor of the Bank of England, had sabotaged government plans as overtly as Mr King did last week. Lord Lawson replied that the present Governor was quite right to say what he had – adding wryly that he approved of Mr Brown's decision to give the Bank of England independence but that the PM "may perhaps slightly regret that now".
Not that tension between government and Bank is anything new. Churchill, as chancellor, had his run-ins with Threadneedle Street over the Gold Standard. After Labour's narrow victory in 1964, Harold Wilson's clashes with Lord Cromer, governor from 1961 to 1966, over government spending grew so severe that he warned Cromer he would "go back to the electorate for a mandate giving me full power to handle the crisis". Brown and King have had their moments: not least at the Mansion House dinner in June 2004 when the Governor publicly warned the then chancellor about expenditure levels.
But there is no comparison with what happened last week. Mr King's remarks to MPs preceded the most important international summit of Brown's career and a make-or-break Budget on April 22. More than that: the Governor's red light to a second round of fiscal stimulus had about it a bleak symmetry that will not have been lost on the Prime Minister.
It is as though, in the eyes of posterity, the Bank of England will form the book-ends of Brown's career at the apex of government. No decision he ever took was more swashbuckling and widely welcomed than his granting of independence to the Bank's Monetary Policy Committee in 1997. Now, 12 years on, that very independence has become the instrument of his humiliation: King, in his diffident way, was acting as spokesman for the markets and the polity, as well as the Bank. He was calling time on Gordon and his spending bonanza.
The global crisis itself provides another, more immediate symmetry. In the first few months after the collapse of Lehman Bros on September 15, the PM trotted the globe as a spandex-clad superhero, uniquely equipped to save the world. The Tories feared a snap election and prepared a manifesto over Christmas. But, just as the crisis gave Brown the appearance of power, so it has stripped him of that aura no less speedily. "Whatever it takes" has been his tough-guy slogan in the run-up to the G20 summit. Yet he no longer demands urgency of action anything like as robustly as he once did. "Nobody is suggesting that people go to the G20 meeting and put on the table the budget they are going to have for the next year," he said last week. "Nobody is trying to upset that timing, which is a matter for individual governments reporting to their individual parliaments."
In which case, Prime Minister, why have you been banging on about "global this" and "global that" all these months? And why have a G20 summit if it's for governments to decide? You can bet that there will a few tasty news stories in the final communiqué, chewy morsels of policy to satisfy the host's pride if nothing else. But it is overwhelmingly clear that this gathering will be one of those conferences whose principal achievement is an agreement to hold another conference. This really will be politics as spectacle: the spectacle of world leaders shoulder-jostling in photo-calls, the spectacle of the mob growling at the gate, and the spectacle of a depleted Prime Minister who is a super-hero no longer. That brick Mervyn King threw? It was made of Kryptonite.
Matthew d'Ancona is Editor of 'The Spectator'
======================================
I do love the first paragraph.
Mervyn King has calmly cancelled Gordon Brown's credit card
The spandex-clad superhero has lost his aura of power, says Matthew d'Ancona.
Long before the first anti-capitalist protester descended upon London to rage against the G20 summit, a brick had already been thrown through Gordon Brown's window. How embarrassing for the Prime Minister that it should have been hurled by a man with the placid features and calm demeanour of Mervyn King, the Governor of the Bank of England. This was no Black Bloc anarchist, screaming for the leaders of the free world to be lynched. But the metaphoric glass of Brown's stimulus plans was still shattered by the Governor's intervention.
At the risk of mixing metaphors, being duffed up verbally by Mr King must be like being savaged by a sheep with a doctorate. "Given how big these deficits are, I think it would be sensible to be cautious about going further in using discretionary measures to expand the size of those deficits," Mr King told the Treasury select committee on Tuesday. Or to put it another way: "I think the fiscal position in the UK is not one where we could say, 'Well, why don't we just engage in another significant round of fiscal expansion?'" In other words: put the nation's credit card away, Gordon, you can't afford that stimulus – or anything else for that matter.
Once the brick was thrown, the uprising followed in the form of the first failure of a government bond auction since 1995. Government spin doctors rushed like the riot police to quell the revolt, claiming that the failure was a blip and that the particular bond was a 40-year gilt which is ineligible to be sold back to the Bank of England. But the symbolic power of the auction's failure was beyond dispute. In October, George Osborne said in a speech at the LSE that "at some point the question becomes 'how much more are the markets prepared to lend?' That's why there are limits to borrowing – not political limits, but actual limits." This botched sale of bonds was the first undeniable evidence that those "actual limits" may be within sight and that the markets' tolerance of government borrowing is closer to exhaustion than the Prime Minister likes to claim.
As Mr King was doing his worst, Mr Brown was on a whistlestop tour of the planet, acting as his own sherpa for Thursday's G20 gathering. His progress around the world was meant to be the 21st-century equivalent of a medieval monarch's itineration: an expression of his authority and influence, raw power in motion. In practice, the tour was closer in spirit to Les Vacances de Monsieur Hulot. At the European Parliament in Strasbourg, my old friend and associate Daniel Hannan MEP subjected the PM to a rhetorical attack of breathtaking concision and eloquence – a speech which has, quite rightly, become an instant YouTube classic. In Brasilia, the Brazilian Prime Minister, Luiz Inacio "Lula" da Silva, said after talks with Mr Brown that the global crisis was the fault of "white, blue-eyed" people, the first time, as far as I am aware, that eugenics has been advanced as a reason for the sub-prime disaster.
In New York, Gordon was asked about Mr King's intervention and his answer amounted to: la, la, la, la, la, I am not listening, my hands are over my ears, la la la la. Indeed, so keen was he to change the subject that his team briefed journalists about his plans to reform the monarchy: as if pictures of the Queen would stop us talking about King.
No chance. For this weekend's Week in Westminster on Radio 4, I interviewed Nigel Lawson and asked him how he would have felt as chancellor and architect of Conservative economic policy if Robin Leigh-Pemberton, then governor of the Bank of England, had sabotaged government plans as overtly as Mr King did last week. Lord Lawson replied that the present Governor was quite right to say what he had – adding wryly that he approved of Mr Brown's decision to give the Bank of England independence but that the PM "may perhaps slightly regret that now".
Not that tension between government and Bank is anything new. Churchill, as chancellor, had his run-ins with Threadneedle Street over the Gold Standard. After Labour's narrow victory in 1964, Harold Wilson's clashes with Lord Cromer, governor from 1961 to 1966, over government spending grew so severe that he warned Cromer he would "go back to the electorate for a mandate giving me full power to handle the crisis". Brown and King have had their moments: not least at the Mansion House dinner in June 2004 when the Governor publicly warned the then chancellor about expenditure levels.
But there is no comparison with what happened last week. Mr King's remarks to MPs preceded the most important international summit of Brown's career and a make-or-break Budget on April 22. More than that: the Governor's red light to a second round of fiscal stimulus had about it a bleak symmetry that will not have been lost on the Prime Minister.
It is as though, in the eyes of posterity, the Bank of England will form the book-ends of Brown's career at the apex of government. No decision he ever took was more swashbuckling and widely welcomed than his granting of independence to the Bank's Monetary Policy Committee in 1997. Now, 12 years on, that very independence has become the instrument of his humiliation: King, in his diffident way, was acting as spokesman for the markets and the polity, as well as the Bank. He was calling time on Gordon and his spending bonanza.
The global crisis itself provides another, more immediate symmetry. In the first few months after the collapse of Lehman Bros on September 15, the PM trotted the globe as a spandex-clad superhero, uniquely equipped to save the world. The Tories feared a snap election and prepared a manifesto over Christmas. But, just as the crisis gave Brown the appearance of power, so it has stripped him of that aura no less speedily. "Whatever it takes" has been his tough-guy slogan in the run-up to the G20 summit. Yet he no longer demands urgency of action anything like as robustly as he once did. "Nobody is suggesting that people go to the G20 meeting and put on the table the budget they are going to have for the next year," he said last week. "Nobody is trying to upset that timing, which is a matter for individual governments reporting to their individual parliaments."
In which case, Prime Minister, why have you been banging on about "global this" and "global that" all these months? And why have a G20 summit if it's for governments to decide? You can bet that there will a few tasty news stories in the final communiqué, chewy morsels of policy to satisfy the host's pride if nothing else. But it is overwhelmingly clear that this gathering will be one of those conferences whose principal achievement is an agreement to hold another conference. This really will be politics as spectacle: the spectacle of world leaders shoulder-jostling in photo-calls, the spectacle of the mob growling at the gate, and the spectacle of a depleted Prime Minister who is a super-hero no longer. That brick Mervyn King threw? It was made of Kryptonite.
Matthew d'Ancona is Editor of 'The Spectator'
======================================
I do love the first paragraph.
