The Sketch: 'None of us really know what will happen' – not words you want to hear from the Guv'nor

Mervyn King was completely unruffled. That's the central talent of a central banker
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The Independent Online

The Sketch's Stability report. There is no stability. Sketch's topline recommendation: panic. Especially panic-buying of rice and guns. If you mishear that as "ricin guns", they may be even more helpful.

For a longer stability report, it was off to Threadneedle Street and the Bank of England. This is the place where the buck actually stops. Or in the case of quantitat- ive easing, where the buck starts.

In the foyer, we were waved through an airport security arch by an attendant wearing top hat, salmon-pink tails, and a scarlet waistcoat. Those of a conservative temperament found his dress very comforting. The waistcoat had lapels. These added extra confidence to what is entirely a confidence trick (the promise to pay the bearer on demand).

The Governor has his dormouse qualities but he was completely unruffled by the contents of his stability report. As we all know, that's the central talent of a central banker. Under five screens he summarised his report. Key words and phrases were frankly, amazing: Bonds falling. Deleveraging. Spiralling into a systemic crisis. Extraordinarily serious. Exceptionally threatening environment. Beyond the control of any UK agency. A crisis not of liquidity but of solvency.

Three years ago it was the other way round. A loan isn't going to tide us over, we're all bust.

But the most ominous words weren't "none of us really know what will happen". No, that was a welcome indication of modesty, sanity and truthfulness. The terrifying words were: "Governments will have to confront the underlying causes."

So we really are doomed then. We're still at the stage of that public sector placard: "Work harder, faster, longer for less pay? No way!"

Some of his remarks were a little hermetic. He emphasised several times that he wanted banks to take any opportunity to increase capital levels but not – repeat NOT – capital ratios.

No one really understood what that meant until a questioner asked how bankers could pay themselves bonuses while this catastrophe, this cataclysm was brewing. But that's what he meant by banks should take every opportunity to build their capital levels. Ahhh! Central bankers do need decoding.

So can we translate "crisis of solvency" as "citizens best placed to ride out the approaching conditions are well-armed householders with fat neighbours"? Let's wait and see, it may not be long.