The late President Harry Truman had a plaque on the wall behind his desk in the Oval Office which read: "The buck stops here." Truman, a decisive and honorable man familiar with the chronic buck-passing in the bureaucracy, was always prepared to accept responsibility for his actions, as well as for decisions made by others acting under his overall supervisory authority. Unlike most of his successors, Truman had a compelling sense of RESPONSIBILITY.
We are disappointed by the absence of same among the stolid decision-makers at the Bank of England. Disappointed, but not surpised. The tough-talking Governor, Mervyn King, abandoned his loudly-staked out position of defending the ramparts of what he defined as central bank responsibility with unseemly haste as soon as the kitchen became too hot. (Which brings to mind another of Truman's practical, yet compelling aphorisms: "stay out of the kitchen if you can't stand the heat," he was fond of saying). Indeed, we do not condemn Mr. King for abandoning the above-the-fray stance he adopted in the face of a very serious banking system crisis. WE DO FAULT HIM for the far more egregious sin of gross incompetence in assessing the actual dimensions of the crisis. WE FURTHER condemn him for staking out an absurd position in the first place. Of course the central bank will ride to the rescue in a crisis, all the nonsense about moral hazard to the contrary notwithstanding. The position that moral hazard takes primacy over the central bank fulfilling its baseline responsibility of PREVENTING a financial crisis from developing and spreading is both intellectually and legally absurd. It is akin to a fireman refusing to enter a burning house to save the inhabitants because one of them smoked in bed.
To compound his shameful performance, King is now busily blaming EVERYONE BUT HIMSELF for his own failures. Above all, he has undermined the central bank's credibility. King has forgotten the first law of decision-making: NEVER STAKE OUT A POSITION YOU DO NOT HAVE THE INTESTINAL FORTITUDE TO DEFEND.
We cannot help but compare King's initial foolishness, compounded by a lack of courage under fire, with the stalwart bravery of British soldiers in countless wars. The warriors of central bankdom come out rather short even when they possess a preponderance of power, it would seem.
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