SocGen’s Edwards: Mervyn King should be stripped of knighthood

Société Générale global strategist Albert Edwards has said Bank of England governor Mervyn King and former Federal Reserve chairman Alan Greenspan should be stripped of their knighthoods in light of the same fate befalling Fred Goodwin.

Former RBS chairman Goodwin was stripped of his knighthood last month, with the Cabinet Office saying the scale and severity of his actions while CEO of RBS made it an "exceptional case". Goodwin's tenure at the bank ended when it received a £46bn government bailout in 2008-9.

Perma-bear Edwards, however, maintains it was excessively loose monetary policy in both the US and the UK that was primarily responsible for the crisis, rather than lenders and borrowers overextending themselves.

"If knighthoods are being removed for those held primarily responsible for the debacle, shouldn't Sir Alan Greenspan and Sir Mervyn King, like the ex-CEO of RBS Fred Goodwin, be stripped of their honours too?" he said.

While suggesting responsibility for the collapse of RBS may not lie at the Bank of England's door, the strategist said Goodwin had been made a scapegoat for the crisis, suggesting the failure of other UK lenders pointed the finger at policymakers.

"One could charitably argue in his defence that RBS was laid low primarily by US housing-related instruments acquired from ABN-AMRO and that had nothing to do with UK monetary policy, but what about the ‘bankruptcies' of HBOS, Northern Rock and Bradford & Bingley, which were all home grown disasters, all directly attributed to the UK's own boom/bust economic cycle," he said.

Edwards said central bankers had been "working hard...to deflect blame away from themselves" since the financial crisis flared up.

Post-crisis, King was mistaken in his belief that quantitative easing would offset fiscal reform, Edwards suggested, with the UK likely to fall back into a recession as a result.

The strategist also noted King's June 2011 knighthood was additionally controversial to those who believed he had strayed too close to commenting on fiscal policy issues in the run-up to the 2010 General Election.

"I find it simply incredible that they have been so successful at shifting the blame elsewhere. The Bank of England and Sir Mervyn King have been far more successful at evading criticism than the Fed, Sir Alan Greenspan and his successor Mr Ben Bernanke," Edwards said.