Paul Tucker, Deputy Governor of the BOE will take the stand in Britain’s Parliament shortly, but really, what can he possibly say? It is a documented fact (phone logs and newly released e-mails) that he spoke to Barclays’ Bob Diamond. Can he say “I don’t remember”? Or maybe “we talked about the weather”? I’m pretty sure that he can’t. He is in line to become “governor” of the BOE or the equivalent of our Ben Bernanke so why doesn’t he tell the truth and say “we were trying to adjust interest rates”. It is what central banks and central bankers do isn’t it. I mean think about it, is it so shocking that a central banker would try to “influence rates”?
This is the problem as I see it from a “logic” standpoint. Here in America and also in London, the buzzword has always been “we are the most transparent and free markets in the world”. We know now and are learning more on a daily basis that this is not true, in fact, for the last 5++ years investors have been “hoping” that we are not free markets at all. Investors want “juice”, they want “free money” to flow freely so that speculation can again run wild and bail out the multitude of underwater positions. But, then you have the flip side, the “public persona” side, central banks can’t be seen as “rigging” the markets”.
It really is hilarious if you think about it, it’s like the crazy aunt in the basement that everyone knows about but doesn’t want to talk about or (no offense intended) a bunch of holy roller Southern Baptists tending to their still and falling down drunk behind closed doors! Central banks “want” everyone to believe that the markets are “free” to encourage participation, on the other hand, they want investors to believe that “they are always there with a watchful eye and will intervene, manipulate or support markets whenever necessary”. So, again I ask, what can Paul Tucker possibly say or anyone else who is deposed after him?
It is all rigged folks and it has been for years on end, the problem for the policymakers is that they have reached the dead end in “logic”. This “dead end” is everywhere now. Mathematically it is a dead end for sovereign fiscal positions as they can now no longer make any case for a solution. From a monetary standpoint, no currency can be seen to logically survive the amounts that are necessary to be supplied and derivatives, well, think about the logic here. These things are 15 or 20 times the size of the entire global economy, how can any of these ever be “money good”? How can it be that no counter party has blown up yet or the chain not broken in a $1+ Quadrillion market?
Again, this goes back to “it’s a free market but the government will never let it happen”. BOTH sides of the statement sound very very good. “Free market”? How noble, how quaint? “Government will never let it happen”? How reassuring! Logic? “We don’t need no stinkin’ logic”!
P.S. maybe Mr. Tucker could just pull a Roseanne Rosanna Danadana and plead “never mind”?