Roger: you are no longer my hero

“Roger who?” you cry.

The answer is to name one of the few advisers who predicted the current recession. His forensic analysis of the money supply statistics is considered by some commentators to have established him as a leading UK economist.

He is a God to my stockbroker pal Michael.

Question: How do you make a small fortune?

Answer: You give your stockbroker a large fortune and ask him to invest it safely.

I never understand why but Michael does not find this funny.

To name our hero. Roger Bootle. He is managing director of Capital Economics and economic adviser to Deloitte.

He thinks that the Bank of England should be given a wider brief in respect of the implementation of economic policy. The Governor of the Bank Mervyn King is suggesting a ‘macro-prudential toolkit’. This is a system of variable capital ratios whereby the Bank reins in bank excesses by forcing them to hold more capital. This will prevent events such as housing booms. It ignores the fact that the lenders will devise ways to circumvent the controls. Hey ho.

Anyway Rog (to his mates) doesn’t like this idea because he recognises that nobody can be sure what the next boom will be (did you spot ‘dot-com’ in 1997/8?). He wants the Bank to achieve an inflation objective over the medium term.

For once Rog has got it wrong. Remember back to Alistair Darling’s agonies over Northern Rock. At one point he was trying to absorb advice from The Treasury, The Bank of England, the FSA and lawyers representing the EU. No doubt GB was telling him what to do but that’s irrelevant.

Mr. Bootle does not rate the FSA: “The idea that the FSA…should now preside, emperor-like, over the financial system, appalls me.”

BUT it is fact. Let the Bank set interest rates and allow the FSA to do the rest. In Lord Turner they have a masterful leader who intellectually will understand the issues. It is the best way to go.

It probably doesn’t actually matter because the last Banking crisis was in 1973 (“The Secondary Banking Crisis”).

I remember it well. I was a young finance house executive with Mercantile Credit. I had a call from the Chairman. He was promoting me to London to run his banking division. I was HIS choice. I moved to London having told my wife I was going to the top and how lucky she was to marry me. Three month’s later I was swimming for my life in the ‘Lifeboat’ which was a fund the Bank put together to rescue companies such as Mercantile.

My wife is still with me. As for the career……!”

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