...six months before it happened.As we reported last week, Bank of England boss Mervyn King is categorical in stating that the current round of austerity cuts are entirely to blame on the bankers and not the national defecit. Read here.
Not only that. Mervyn is revealed in Wikileaks to have been trying to galvanise internatuional action to help prevent the financial collapse.
In a March 2008 cable leaked by WikiLeaks to the Guardian, Bank Governor Mervyn King told U.S. ambassador in London Robert Tuttle that British banks needed injections of capital and that central bankers should coordinate their efforts.
"It could be a temporary group and (King) suggested that perhaps the central banks and finance ministers of the U.S., the UK and Switzerland could coordinate discussions with other countries that have large pools of capital, including sovereign wealth funds, about recycling dollars to recapitalise banks," Ambassador Tuttle said in the confidential memo.
"He said it is hard to look at the big four UK banks (Royal Bank of Scotland, Barclays, HSBC, and Lloyds TSB) and not think they need more capital. A coordinated effort among central banks and finance ministers may be needed to develop a plan to recapitalize the banking system," the cable to Washington added.
By October 2008, U.S. investment bank Lehman Brothers had collapsed and Lloyds, Royal Bank of Scotland and HBOS had all been rescued by the government. According to the cable, King told the U.S. ambassador and former U.S. Treasury Deputy Secretary Robert Kimitt, who was visiting London, that the Group of Seven major economies was no longer relevant to deal with global financial issues. "The G7 is almost dysfunctional on an economic level, said King. Key economies are not included, especially those that have large and growing pools of capital. King said that a new international group was needed to address the issue," Tuttle said in the cable.
King also said, according to the cable on the Guardian's website, it was imperative to find a way for banks to sell off unwanted illiquid securities, including mortgage backed securities, without resorting to sales at distressed valuations.
"The King proposals were not casual ideas developed in the course of luncheon conversation. It was clear that his principal objective in the meeting was to outline his outside-the-box thinking for Kimmitt," the cable said.
