Simon English: Sir Mervyn may seem like yesterday's man but we should heed his advice


Outlook It's understandable that some folk lately see Sir Mervyn King as part of the problem. A fusty guy who was in charge when everything went haywire, still lecturing everyone else about their failings even as he shuffles off towards retirement. He should stop banging on about what's wrong with us and adopt a different approach.

How about this one: Open mouth. Insert sock. Chew.

The Bank of England governor doesn't have a necessarily winning way. He knows more than you do, which makes the question you just asked him an embarrassment to both parties, is his typical opening stance. (He regards press questions the way Geoffrey Boycott regarded the first 50 overs – deliveries to be patted back with suspicion).

And lately there is a chance that he's overexposed, but then it's not his fault that what he says gets reported so regularly. He'd far rather be out of the papers than in them.

That we collectively get bored with people in public life is understandable and Sir Merv has been around for more than a while.

But there's every chance that he will turn out to be someone we rather miss. His stewardship of the Bank of England may lately be regarded as a period of stoic ambassadorship, before the new man, some loony from Canada, took charge and all hell broke loose.

Signs of that hell came in yesterday's Financial Stability Report from the Bank of England, issue no 32 for those of you counting.

It's tempting to think that the worst of the banks crisis is in the past, that the bailouts have fixed the main problems and that we are now wiggling our way to security.

If you want to hold on to that idea, don't read this report.

There is, says the FSR, "under-recognition of expected future losses on loans", from the banks. They are still in dreamland, in other words.

There are far more costs coming for PPI mis-selling than the banks have yet fessed up to, and a rising number of "conduct issues" (that's Sir Mervyn-speak for "banks are still ripping us off as a matter of course").

The market value of the four largest UK banks' equity is about £90bn less than book value, warns the report.

What is this telling us? That nobody believes the book value; investors still look at bank balance sheets and regard them as a lie, or at best the most optimistic assessment of the truth possible.

The Financial Policy Committee, under whose guidance the report was published, thinks the banks' accounts should reflect "a proper valuation of their assets", a "realistic assessment" of risk.

"Prior to the crisis," the report notes, "there was little difference" between what banks said their assets were worth and what investors thought they were worth.

That the gaping hole still exists after all we have been through is worrying.

Sir Mervyn isn't noting all of this because he enjoys being miserly; he'd much rather be at the cricket.

He is trying to help us get to somewhere sustainable – perhaps even suggesting the policy of the past four years, let's call it extend and pretend, was useful for a while but that at some point we need to have a reality check and it might as well be now.

Suggested Topics
Alexis Sanchez has completed a £35m move to Arsenal, the club have confirmed
sportGunners complete £35m signing of Barcelona forward
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
world cup 2014
Ray Whelan was arrested earlier this week
Arts and Entertainment
In a minor key: Keira Knightley in the lightweight 'Begin Again'
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
Wayne’s estate faces a claim for alleged copyright breaches
newsJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Life and Style
It beggars belief: the homeless and hungry are weary, tortured, ghosts of people – with bodies contorted by imperceptible pain
lifeRough sleepers exist in every city. Hear the stories of those whose luck has run out
Mick Jagger performing at Glastonbury
Life and Style
fashionJ Crew introduces triple zero size to meet the Asia market demand
ebookA unique anthology of reporting and analysis of a crucial period of history
Santi Cazorla, Mikel Arteta and Mathieu Flamini of Arsenal launch the new Puma Arsenal kits at the Puma Store on Carnaby Street
sportMassive deal worth £150m over the next five years
Arts and Entertainment
Welsh opera singer Katherine Jenkins
musicHolyrood MPs 'staggered' at lack of Scottish artists performing
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Arts and Entertainment
Currently there is nothing to prevent all-male or all-female couples from competing against mixed sex partners at any of the country’s ballroom dancing events
Potential ban on same-sex partners in ballroom dancing competitions amounts to 'illegal discrimination'
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

£60000 per annum: Harrington Starr: A leading provider in investment managemen...

AVS, JVS Openlink Endur Developer

£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

Technical Support Analyst (C++, Windows, Linux, Perl, Graduate)

£30000 per annum: Harrington Starr: A global leader in trading platforms and e...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice