Yves here. It really is too bad, what happened to Andy Haldane. I’d regularly post his speeches and articles when he was the Executive Director of Financial Stability at the Bank of England right after the crisis. He was widely seen as one of the most creative and insightful economists of his generation. But Haldane looks to have been promoted (or demoted) to his level of incompetence, where his job consists of forecasting (or overseeing forecasters) and talking to Mr. Market and Fleet Street. As Richard Murphy explains, Haldane needs to get out of his elite bubble and get a better grip on what is happening in the economy.
Perhaps Murphy is in a minority in noticing how out to lunch Haldane’s forecasts are, with the most recent coming off as the Covid-crisis answer to Irving Fisher’s 1929 declaration that stocks had reached a “permanently high plateau.” I gather Haldane has managed not to notice Brexit, which is shellacking everything from shellfish to City trading activity to high fashion to live animal exports. And the good news just keeps piling up, like Trailer shortage fears as EU drivers question the viability of serving the UK (but not to worry, higher prices will come to the rescue) and:
Latest EU guidance on rules of origin – puts companies that stockpiled EU inputs before Jan 2021 in a difficult position.
Such inputs cannot be considered EU-originating and cumulation cannot be used. Final product exported to the EU may not be able to avoid tariffs.
— Dr Anna Jerzewska (@AnnaJerzewska) February 11, 2021
a port pass which allows you to THEN book a ferry.
People need to be very careful taking on Irish work at the moment. Johnson negotiated this for the only internal border within one country on the planet . That takes some doing
— ciaran the euro courier 🇪🇺🇮🇪 (@donnyc1975) February 11, 2021
Or remember when Janet Yellen, early in her tenure at Fed chair, needed to speak about poverty and her staff found three real living breathing poor people to chat with her? As Lambert pointed out then, they couldn’t have been totally destitute, since they did own phones.
Anyway, it’s sad to see a genuine talent come to this. And it’s not a good sign as far the caliber of data gathering at the Bank of England is concerned either.
By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK
The Guardian reports on comments from Andy Haldane, Chief economist at the Bank of England, this morning, noting:
British families are ready to fuel a rapid return to prosperity with a multibillion pound spending spree, according to a senior Bank of Englandpolicymaker.
With the vaccine rollout protecting more than 13 million of the most vulnerable people, the BoE’s Andy Haldane said the economy was about to turn “a decisive corner with enormous amounts of pent-up financial energy waiting to be released, like a coiled spring”.
Echoing comments made by BoE governor Andrew Bailey last weekend, Haldane – the Bank’s chief economist – said most people were desperate to socialise again and spend money on going out for meals.
First, Haldane has clearly noted none of the lessons of ‘eat out to help out’. This country remains a very long way from being safe from another wave of Covid. It seems Haldane shares the Sunak approach of ‘bring it on’.
Second, this is the view of the financial elite. Haldane, and almost certainly everyone he knows, has had a very good crisis, economically speaking. Their incomes have been secure. They were already comfortable. Their spending has been cut. They may be raring to spend from a position of considerable economic security. But Haldane is being foolish to extrapolate his good fortune.
That is because, third, much of Britain is not raring to go. They have suffered massive loss of income. They have debts. Those debts are at present unaffordable. If they have their own businesses they do not at present know if they will survive. And for those who have lived through such stress of course the desire to socialise will be strong, but so too will the caution be overwhelming. They are very unlikely to be spending as if money is going out of fashion any time soon.
Haldane has called almost everything on this crisis wrong, right from the outset, when it was only ever going to be a temporary V shaped blip in his view. Well it wasn’t. It’s already delivered a loss of 9.9% in GDP, with long term losses likely to be more significant, only compounded by Brexit.
I would suggest that there are actually some who, despite their financial good fortunes, have had very bad Covid crises. In economics, Haldane is near top of that list.