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Goldman Sachs Guy: Mark Carney, Song and Dance

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Mark Carney has been the Governor of the Bank of Canada since 2007.  During his time as Governor, the main chartered banks were injected with “liquidity” totaling about $114 billion because of the financial crisis of 2008.  The Prime Minister denied that this injection was a “bailout.”  The Canadian banks also borrowed from the US Federal Reserve discount window–one bank alone borrowed $10 billion.

Canadian banks have gradually been deregulated and now are getting bigger than ever before.  They can sell insurance, make investments and take deposits where previously they had been just boring depository banks.  They are also getting bigger through acquisitions of other banking institutions.

Mark Carney gets credit for keeping Canadian banks from failing during the crisis but it was mostly luck (“horsehoes”) or previous regulation that actually kept the financial system stable.  Carney and Finance Minister Flaherty frequently warn Canadians to get out of debt even though savings earn very little interest with our low interest rate policy and wages are stagnant or decreasing while prices continue to increase.  Debt levels in Canada reflect the conditions of our economy.  At the same time, the government has decided to impose austerity on the population by reducing expenditures across the board by 10% including loss of government jobs.

Here’s a little song for Mark Carney as he leaves Canada to become Governor of the Bank of England:

When I was a Lad” (Carney Style)

By Polemic – Macro Man 

After prompting from a reader and getting bored of guessing Italian election outcomes, we have adapted Messrs Gilbert and Sullivan’s “When I was a Lad” from “HMS Pinafore“. Instead of the Queen’s Navy, we think the B.o.E is more topical. 

“When I was a Lad” (Carney Style)

When I was a lad I served a term

As a junior trader at the Goldman firm.

I cleaned the books and soon wasn’t poor,

As I traded debt and made the profits soar.


He traded debt and made the profits soar.

I traded debt so carefully

That now I am the Governor of the B.o.E


He traded debt so carefully

That now he is the Governor of the B.o.E

As trading boy I made such a fee

That they gave me a post in the ministry

As Canadian minister with no recourse

I introduced a tax on income trusts at source.


He introduced a tax on income trusts at  source

I introduced the tax when at the ministry

So now I am the Governor of the B.o.E 


He introduced the tax when at the ministry

So now he is the Governor of the B.o.E

In raising tax I made such a name

That a central bank governor I soon became

I saw a crash, chose policies to suit

To prevent Canada becoming destitute.


To prevent Canada becoming destitute.

I passed so well through the G.F.C

That now I am the Governor of the B.o.E


He passed so well through the G.F.C.

That now he is the Governor of the B.o.E

Of central bank skills I acquired such a grip

That they took me into the partnership.

Bernanke, Merve and then Draghi

All showed me the way to play the great Q.E.


All showed him the way to play the great Q.E.

Balance Sheet Constraint won’t apply to me

Now that I am the Governor of the B.o.E


Balance Sheet Constraint won’t apply to he

Now that he is the Governor of the B.o.E.

I grew so known that I was sent

By a select committee into Parliament.

I always voted for the strong growth call,

I never thought of thinking of inflation at all.


He never thought of thinking of inflation at all.

I thought so little, they rewarded me

By making me the Governor of the B.o.E


He thought so little, they rewarded he

By making him the Governor of the B.o.E

Now bankers all, (don’t look at me Moody)

If you want to rise to the top of the tree,

If your soul isn’t bothered by a ratings fall

Be careful to be guided by this golden rule.


Be careful to be guided by this golden rule.

Preach growth, restraint yet huge Q.E.

And you all may be Governors of the B.o.E


Preach growth, restraint yet huge Q.E.

And you all may be Governors of the B.o.E

Mark Carney Will Be Goldman Sachs’s Guy in London

Mark Carney Will Be Goldman Sachs‘s Guy in London

Just how does Goldman Sachs influence the policies of government?  In 2011, Goldman economists suggested that additional asset purchases would help the Fed‘s easing policy.  The Fed did decide to buy $85 billion in assets each month beginning in 2012 when the unemployment rate in the US was 7.8%. This policy is supposed to reduce the unemployment rate  but the unemployment rate has gone up to 7.9% since the implementation.

Here is Goldman’s economist, Jan Hatzius:

“With short-term interest rates near zero and the economy still weak, we believe that the best way for Fed officials to ease policy significantly further would be to target a nominal GDP path such as the one shown in the chart on the right, indicating that they will use additional asset purchases to help bring actual nominal GDP back to trend over time. The case would strengthen further if deflation risks reappeared clearly on the radar screen.”  (from Business Insider)

Mark Carney, Governor of the Bank of Canada, takes Goldman’s suggestions seriously, having been a Goldmanite himself.  So why would anyone be surprised that he will be taking Goldman’s economic ideas from Canada to the Bank of England?  Besides that, Carney now will have additional duties to perform such as supervising the other British banks.  It is so easy to spread Goldman’s economic ideas!

via Goldman Sachs: Information, Comments, Opinions and Facts: Mark Carney Will Be Goldman Sachs’s Guy in London.

Carney set for first taste of Bank of England job

The Treasury Committee is among the more powerful committees in Britain’s Parliament and it recently won the power to interview the incoming governor before he takes office. Although it doesn’t have the ability to block Mr. Carney’s appointment, the committee could make it difficult by issuing a negative report to the House of Commons and forcing a vote on whether he should be appointed.

No one is expecting that to happen, or the committee to give Mr. Carney a particularly rough ride on Thursday. “This is an opportunity for the new governor to get to know the committee,” member Andrew Love, a Labour MP, said in an interview. “It’s important for us to get to know him. And it’s an opportunity for the British public to find out more about how he sees the job as governor of the Bank of England.”

But it won’t all be easy going. Committee chairman Andrew Tyrie, a Conservative MP, has made it clear he has reservations about the recently expanded role of the governor, which now includes a supervisory role over London’s financial district along with setting monetary policy. Mr. Tyrie and other committee members have called for more oversight of the central bank, given its additional responsibilities. “We will want to hear what [Mr. Carney] has to say about making sure the bank is equal to the challenge of these new responsibilities,” Mr. Love said.

Mr. Carney will also be grilled about his decision to take the post for five years, instead of the eight requested by the British government. Mr. Carney told The Globe and Mail in November that he wanted the shorter term for family reasons and because it matches his potential tenure as head of the global watchdog known as the Financial Stability Board. Mr. Love said he and other committee members will need more of an explanation.

Merging the new responsibilities won’t be easy and it is hard to see how that can be done quickly, the MP added. “He certainly comes well qualified but there’s a major challenge and we will want to hear from him why he believes he can achieve that in five years.”

There will also be plenty of questions about Mr. Carney’s recent statements about whether central banks should scrap inflation targets during extraordinary times and move to a target that includes nominal gross domestic product, or GDP that has not been adjusted for inflation. Economists say targeting to nominal GDP growth would allow for higher inflation when the economy is slow, and lower inflation when the economy is strong. The idea is to try to smooth out the boom-and-bust cycles with an expanded approach, rather than fixating on a specific inflation number.

That kind of change would mark a major shift in policy for the Bank of England, which has followed a strict policy of targeting inflation at 2 per cent. Even the man who appointed Mr. Carney, George Osborne, the Chancellor of the Exchequer, has expressed little interest in the idea, saying inflation targeting has served Britain well. During a speech at the recent World Economic Forum in Davos, Switzerland, Mr. Carney also mused about using “unconventional measures” to kickstart an ailing economy.

Those comments have been given front-page treatment in Britain and will make up a large part of Thursday’s hearing. “We hope that he will lay out in some detail how he sees [nominal GDP targeting] developing and where he sees us moving,” Mr. Love said.

Ex Goldman Sucks Man gets top UK Banking Job

The  Chancellor George Osborne stuns the city with the appointment of Mark Carney the Canadian central banker who will replace Sir Mervyn King as the next Governor of the Bank of England.
Carney had previously had previously ruled himself out of the job but his old employees Goldi Sucks persuaded him to reconsider.
Mr Carney will serve a five year fixed term rather than the normal eight years.
A spokesperson for Goldi Sucks stated they were delighted with the appointment and expected Carney to relieve the British economy of all its wealth within the allotted period.
Goldi Sacks added they had offered Mr. Carney generious incentives to take on the job of Governor of the Bank of England.
They further added they expect to play a meaningful and significant role in advising the UK on its future bailout terms. The signal for this will be a ratings agency downgrade of the UK economy.
The immediate outlook for the UK is Greek style austerity for the general population but the good news is the 1% will get richer

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With a critical score of 90 points+


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