Such a comfort to know that the governor of the Bank of England is “absolutely serene”. If banking is all about confidence, then central banking is about national confidence, and Mark Carney, apparently, believes he has it. Please do not label the halving of Bank Rate, the expansion of quantitative easing and the buying of big company debt as a panic reaction to the people voting the wrong way.

It was, Mr Carney told parliament last week, a measured response and, golly gee, look how successful it has been in combatting the terrors of Brexit. See, houses are still being sold, people are still shopping, company buyers are still buying. It’s all thanks to the BoE’s prompt action. Even the pound has perked up.

If Mr Carney really believes that a trivial cut in Bank Rate, the farcical shenanigans in the gilts market and the offer to buy a few investment-grade private sector bonds have prevented the meltdown his former boss predicted, then he is not so much serene as delusional.

Shaving a quarter-point off the official cost of money makes no practical difference to borrowers.  Pushing gilt yields into negative territory merely compounds the already dire problems facing pension funds, while intensifying the margin squeeze on the banks. The suggestion that another cut in Bank Rate may follow shows how little our monetary masters have learned.

With interest rates at this level, monetary policy is powerless to influence the behaviour of companies and individuals, whatever Mr Carney may think. The power is firmly back in the hands of the treasury, and if the new chancellor knows what to do, he might tell us on November 23. It may not suit Mr Carney to admit as much, but rather than pretend that he is really making a difference to people’s lives, he might remember the words of Leslie O’Brien, one of his predecessors: “The role of the Governor is to exude confidence without actually lying.”

 

More breakages for Hammond to fix

The art of taxation is extracting the maximum amount of feather with the minimum amount of clucking. In his attempts to squeeze more revenue from stamp duty on housing, George Osborne seems to have got this the wrong way round. The chickens are clucking like mad, yet the harvest of feathers is shrinking.

We may not feel too sad about Berkeley Group suspending work on a £20m development in Barnes (supposedly to allow to allow buyers to customise their apartments and not because they have the post-Brexit blues) or the fact that unaffordable properties in London are becoming marginally less unaffordable.

Out in the world away from London, the contradictions of the government policies are stark. Barratt Homes, Britain’s largest housebuilder, reported that 30 per cent of its sales were to those using the subsidised Help to Buy scheme, where buyers need find only 5 per cent of the price. The demand thus created allowed Barratt to raise its prices by twice that amount.

The combination of steep charges to purchasers of expensive homes and penalties for buyers of second homes are not making existing houses any cheaper either. The costs are merely gumming up the market,with fewer houses on agents’ books. Lower volume means less tax paid. The old system was silly, with its step changes of rates of duty, but Mr Osborne has demonstrated once again that there is no situation so bad that government interference cannot make it worse.

He hadn’t got a clue

When Gordon Brown took bank supervision away from the Bank of England and sent it to the Financial Services Authority, it looked at the time more like punishment than policy. So it proved. Stanislas Yassukovich, a giant in the eurobond market which had laid the foundation for London’s financial supremacy, relates in his memoir Two Lives how he was interviewed by a pimply youth from the FSA. Did he understand what his dealers were doing? As a tease, Stanni replied: “Actually, I find the cricket scores easier to understand.” The youth merely ticked the box and moved on to the next question. No wonder the FSA went sleepwalking into the banking crisis.

 

 

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