Random Thoughts on The City, Wall St & Capitalism

There hasn't been much to report this year. Most of January I was glued to Big Brother. Cheap television is indeed addictive. I'm on Miss Goody's side. She has taken a beating for her apparent ignorance and lack of finesse. Yet I believe on the judgement of money alone she is an extremely successful person. Worth £8 million.That's pretty good really considering she hasn't been ripping people off,unlike investment 'professionals' in the financial services industry,to make a fast buck.I am not surprised she reacted so unpleasantly to Miss Shetty's clean living holier than thou patrician hauteur.

The only other thing to happen of any note was the interest rate rise by the MPC that took city economists by 'shock'. Only one in fifty city economists predicted the rate rise.That was Simon Ward of New Star. This really is a poor show.The other 49 must be congratulating themselves that the city reward system is in no way linked to performance, otherwise they would be in trouble wouldn't they. The real shock came this month when the MPC again left interest rates alone. I'm now quite convinced there is no point having the MPC at all. I don't really believe that they are independent or competent. Their collective decision making priority seems to be to prop up the housing market. Reading between the lines they seem to live in fear of making a decision that could mean they could be blamed for bursting the housing bubble. Any prophylactic measures are always put off. Rates should really be up to 6% or above by my reckoning. Money supply is out of control, credit is easy, witness the increasingly ambitious size and scale of private equity deals on the table currently.Mervyn King & the MPC seems to think inflation is on it's way down mainly because of lower energy prices.Hmm not really convinced. Other indicators, for example gold futures are telling a different story.They are at a 7 month high today. On almost every measure of prudence the MPC have failed to curb inflation. There is some doubt as to whether they actually know what's going on at all. All in all it's really not good. One way we could save the tax payer money is by getting rid of them, and replacing them with a celebrity who would toss a coin every month. Heads up, tails down. It's quick, short and transparent. No Delphic announcements like labour mobility from the former Soviet block is making things very difficult to predict. Well guess what the Fed has had the same problem in the US from Mexican immigration for years, they seem to be able to factor it into their decision making process quite easily. Truth is the MPC seem to be not up to it. In the long run they are just storing up more trouble for the future by trying to protect their own reputations now. I believe we should have Miss Goody as Governor. She would probably be cheaper per month than shelling out for the MPC pay and pensions from the public purse. She would not bring pre-conceived economic ideas to the table, she says what she thinks so transparency would not be a problem. A Governor of the Bank of England for the people by the people.

RB