I’m your man for the job, Chancellor
HM Treasury has placed an advert in the Economist looking for a new external member of the Bank of England’s Monetary Policy Committee, the body that sets UK interest rates, to succeed David Blanchflower. I have decided that it is my duty to apply and have therefore sent this letter to Alistair Darling, who will make the decision.
Dear Mr Darling,
I would like to apply for the vacant post of external member of the Bank of England’s Monetary Policy Committee. Admittedly, beyond a grade A at ‘O’ level, I don’t have any formal qualifications in economics, but your advert does not specify these as essential. Instead, you have asked for a letter ‘summarising evidence from your career which best demonstrates your qualifications for the appointment’. So here goes.
Economist or not, I did at least foresee the housing market collapse, which is more than some members of the MPC managed to do. My eye was taken particularly with a speech made by Kate Barker on 23 October 2007, in which she declared that it was ‘not immediately obvious’ why the credit crunch and the Northern Rock crisis would provide ‘a trigger which significantly alters previous expectations of continued house price growth’.
For some years I had been arguing that the housing market was a speculative bubble which would burst the moment that lenders decided enough was enough. Here, for example, is what I wrote in the Daily Telegraph on 30 June 2007, six weeks before the beginning of the credit crunch: ‘Many explanations have been put forward for the trebling of prices over the past decade: low interest rates; poor returns on the stock market; the failure of the government to build enough houses.
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