Have pity for Mervyn King. With his term about to expire, this is indeed, an uncomfortable time of year to find yourself at loggerheads with the government and the most powerful media organisation in the country: uncomfortable to find oneself caught telling Rupert Murdoch’s high-priest that New Labour was in meltdown.
Common sense suggests the Treasury would be foolish not to renew his governorship in such a time of economic crisis; loose tongues suggest otherwise.
This all kicked off just as we were heading on holiday. King had a hard time before the Treasury select committee on December 18th. The crueler MPs asked bluntly why he hadn’t resigned yet. But while King batted down all the familiar tropes on the 18th – why did this happen on your watch? Was this the Treasury’s fault? Are the banks to blame? – on one point, he came unstuck.
Was there any truth, asked Labour members of the committee, in this article? An article, published two days earlier, in which, Irwin Stelzer – respected economist and representative on earth for Rupert Murdoch – reported one “senior bank official” as saying the government was “unable to focus” on the credit crunch due to low morale. “Brown in Crisis” ran the front page of the Times.
King was clearly flustered. MPs asked if there would be a leak enquiry. Who was this loose cannon at the bank, they wanted to know. Through questioning King confirmed he had met with Stelzer. But those words, he told MPs, did not pass his lips.
None of the comments in the article I recognise and they’re certainly not my views… I don’t believe that anyone in the Bank would make comments like that.
Not me, said Merv.
On the 23rd, the Sunday Times ran Stelzer’s riposte:
Now that Mervyn King has chosen to reveal that he was good enough to invite me to lunch at the Bank of England, I suppose I am free to comment on that event… it is a pity that he has chosen to say that neither he nor anyone at the Bank ever commented to me on the low morale of the government.
My incentive to invent a story is nonexistent; the incentive of the governor to deny it is, of course, self-evident. But I prefer to chalk this up to a failure to recall this aside to a long policy discussion.
Yes, you, said Irwin. A moral/morale hazard you missed, Merv.
Stelzer again:
When I reported to the editor the information I had gathered at the Bank, he suggested that this was more a news story than the sort of policy piece I customarily write. I was assured by those at The Sunday Times more knowledgeable than I in these matters that if the governor had not asked that our conversation be kept off the record, I could consider it an on-the-record briefing.
What then, will the Treasury be making of this New Year bombshell: that Mervyn King briefed Rupert Murdoch’s right hand that the government was in meltdown?