Lunching with the governor
"He needs to learn that lunch can be a very dangerous occupation". So says a Whitehall source about Mervyn King. The governor of the Bank of England had two meals last week. One with the chancellor which, I'm told, was quite convivial. The other with the journalist who has since the Bank of England's frustration at the government's inability to take speedy decisions to deal with the aftermath of the Northern Rock crisis.
Ministers are said to be baffled by this complaint believing that the Bank was happy to take time to take the right decisions rather than rushed ones.
The two key decisions that need to be taken are:
• an extension of the guarantee to depositors - there's no disagreement here
• reform of the tripartite system so that it works in a crisis and not in peacetime
Today opposition members of the Treasury select committee are likely to want dine either on Mr King and his deputy, John Gieve or on their tales of government failures. Both men have been trained to say very little in public. They are now under extreme pressure to show that they can do just that.
Underlying all this is the issue about whether Mervyn King will get a second term as governor. Some in government would dearly love him to walk away but know that to deny him re-appointment if he wanted it would cause a crisis of confidence in the markets. This is not a problem that will be solved over a good lunch.
I'm 
Comments
"reform of the tripartite system so that it works in a crisis and not in peacetime"
Does that mean they are working out how they can ensure that they are at each other's throats until a crisis breaks out, when, thanks to the previous release of tensions, they are ready to operate as a single, unified team?
Only two meals in a week? Poor man. Is this some sort of crash diet, or is he just snacking all the time?
It's more like a chimps' tea party everyday!
"• reform of the tripartite system so that it works in a crisis and not in peacetime...."
Surely, a system which works in crisis, and not JUST in peacetime, would be the best option??
As an occasional lunch partner in his early days in Brum, one looks back in nostalgia...
Lunching can be dangerous but playing about with a fiscal systems that has largely worked for centuries is the true danger.
Brown by name and Brown by reputation before too long when the foul smelling bubbles of assett valuations and personal debt burst
It's easy to look like a success when things are going well. Every decision looks like a good decision. It's when things go badly you start sorting the wheat from the chaff. The usual attention seekers will claim they would have done better or with 20-20 hindsight claim solutions they were chillingly silent on before a crises emerged. While recent difficulties have lapped at the doorstep of the government I remain generally happy with their handling of issues.
The contribution the big four banks and media made to this problem has still gone unanswered. I don't see much accountability from those quarters. The drying up of liquidity is down to individual banks panicking and run on Northern Rock encouraged by headline hungry journalism. It strikes me that the big four banks see the collapse of Northern Rock as advantageous to their interests, and the continued rumbling gives an authority boost to the media.
As people have divided into friends and enemies, and the mob have chased the government to the edge of the cliff, the government merely has to formulate a plan, turn around, and by moving forward cut through a good portion of them. Consider, for instance, the self-serving banks who kill economic growth in the regions, or the media who upset social harmony with tittle-tattle. Yes, they've had a good laugh but, I figure, they've signed their own death warrants.
More important to most English folk is how they avoid becoming somebody else's lunch, in terms of their savings.
I would suggest that this is a moment to be prudent and ensure that your savings are parked with an institution that does not rely excessively on the wholesale money markets (or the BoE) for its funding.
In practice, this means the Building and Friendly Societies.
One cannot be too cautious in these uncertain times, the fear and loathing in the markets is just below the surface.
English people can be certain of one thing, the 'magic circle' have already moved their money to 'safer climes'.
I bet they don't go to Benjies for lunch!
Oh the life of a banker. Lose a million? Who cares, what wine is reccomended?
Lose a billion....what's the best bubbly you have?
Just goes to show you should never put too much (if any) faith in what a journalist says. What they hear/understand is not necessarily what they are being told, especially if it is not what they want to hear -the reporting of the Hutton Inquiry was a wonderful demonstration of this principle. What the Governor told MPs is that he was trying (and by implication failing) to explain the huge complexities of fiscal management to Mr Stelzer. King denies the 'story' absolutely, though of course the truth won't get the same headline coverage as the scandal mongering.
Considering it’s people's confidence that is at the centre of most of this, let's hope political opponents don't exasperate any fears further due to political pointscoring.
If Northern Rock was allowed to go under, and the people responsible for it were jailed, we would see much less mendacity, corruption, perfidy and incompetence in the banking $ystem.