Saturday, 28 March 2009

Bank fled from equities in 2006

Peter Oborne has an interesting story in this morning's Mail; the Bank divested itself of all equities in its pension fund in 2006 in favour of worse-performing index-linked gilts. The only justification for doing so is that the Bank foresaw the 50% collapse on equity prices that the financial crisis has brought.

In November of last year on a visit to the LSE, the Queen asked "Why did nobody see this coming?"

The answer, Ma'am, seems to be that the Bank knew it was coming but didn't tell anyone. Perhaps a regular weekly visit to the Palace by the Governor of the Bank is needed. Perhaps the Governor's first visit for 57 years recently is the start of this. And perhaps the Bank could let the rest of us know, too.

3 comments:

Budgie said...

It is not true that no one saw this was coming. Roger Bootle, Jeff Randall and Ambrose Evans Pritchard all did, more or less. The IMF warned McBust. Ordinary people at the later stages of the house boom said that it could not carry on like this. Nearly two years ago I warned my children not to buy a house.

The problem was (and is) that McDebt is so arrogant and deluded that he is incapable of listening.

it's either banned or compulsory said...

Lots of the common people said for ages that it could not carry on.

Can someone tell me the difference between the government buying its own debts and a feckless fool swapping his debt between one maxed out credit card to another ?

Budgie said...

it's either banned or compulsory said: "Can someone tell me the difference between the government buying its own debts and a feckless fool swapping his debt between one maxed out credit card to another?"

Yes.

In the government's case the taxpayers in general pay. Which is why McDebt can be so profligate - it's not his money.

In the debtor's case, he pays, or his particular creditors pay.