Fan base: Mark Carney with his wife Diana
On Mark Carney’s last day at the Bank of England in March 2020, the Governor raided the Old Lady’s legendary wine cellar and entertained his business press associates with a sumptuous lunch.
On several occasions, his assistants pulled Carney out of the room to take vital phone calls.
The Covid-19 virus was spreading uncontrollably around the world. Unknown to his guests, Carney and his successor as governor Andrew Bailey were in urgent consultations with the US Federal Reserve and other major central banks about measures to take while Western capitalism went into lockdown.
In keeping with the rectitude required of central bankers, Carney gave no hint of the crisis unfolding on Wall Street, where the U.S. Treasury bond market, the lifeblood of the global financial system, was halted.
His calm, poker face and deliberate decision-making were in keeping with his experience running the Bank of Canada in the great financial crisis of 2008-9. He also reflected on his seven years at Threadneedle Street, when he looked after the UK during the shock of the 2016 Brexit referendum.
Five years later, freed from the shackles of office, the financier, known as the George Clooney of central banking for his affable appearance, has discarded any pretense of political independence and plunged deep into controversy.
Last week he was the surprise at the Labor Party conference in Liverpool.
A video message, broadcast from her native Canada, described shadow chancellor Rachel Reeves “as a serious economist” and noted that she began her career at the Bank of England and understood the “economics of work, place and family “and knew how to ‘put ideas and energy into action’.
Carney’s decision to align himself with progressive politics is no coincidence. Last month, he was rubbing shoulders with Keir Starmer at a centre-left gathering in Montreal.
At the meeting, Carney launched a scathing attack on the populist right in politics, criticizing Liz Truss for her “basic misunderstanding of economics”.
He accused his government of having turned Great Britain into the “Argentina of the Channel.” It was a deeply hurtful insult coming from a former head of the Bank of England, given that Argentina has defaulted on its debt nine times since 1816.
Britain, despite all the wobbles, has never defaulted.
Backing: Carney described shadow chancellor Rachel Reeves, pictured with Keir Starmer, as “a serious economist”
His headline, which captures antics on both sides of the Atlantic, has led to intense speculation in Ottawa that the 58-year-old economic guru and climate change warrior is preparing for a shot at Canadian politics under the Liberal banner.
The arrows aimed at Truss and Trump were aimed as much as anyone else at discrediting Canadian conservative populist leader Pierre Poilievre.
A parliamentary seat has been identified and, if Carney fails to displace Justin Trudeau as prime minister, he is ready to serve under him as finance minister.
Carney’s policy interventions represent an extraordinary move by a former Governor of the Bank of England.
Although the Bank only gained formal independence in 1997, it long ago recognized that it needed to stay out of the political fray.
One could never imagine the late Eddie George, or his successor, the brilliant economist Mervyn King, letting themselves be drawn directly into partisan politics.
Carney appears to have dismissed the mystery of the role that comes with being in charge of the Bank.
As he becomes more deeply involved in left-wing politics, his role at Brookfield is likely to become a target.
Since he left five years ago, his career has been a priest’s egg. His enthusiasm for the net-zero economy and climate change earned him the position of United Nations special envoy for climate action.
Boris Johnson later appointed him financial adviser to COP26 in Glasgow, a slightly surprising choice given the ideological differences over Brexit.
Carney was never enthusiastic about Brexit, but, paradoxically, it was probably his finest hour.
As Britain descended into the shock, chaos and turmoil of Downing Street in the hours after the referendum result, Carney was the only adult in the room. He scheduled a press conference to reassure markets and the world that the British economy was healthy and that the Bank was there to ensure continued stability.
What’s unclear, given Carney espouses a progressive political mantra, is how this fits with his role as first vice president and now chairman of greedy Canadian private equity champion Brookfield Asset Management.
Brookfield’s claims to be carbon neutral have sparked skepticism from the environmental lobby.
It continues to expand rapidly, raising £9.8 billion of new funding earlier this month. Last week it took over the Banks Group’s renewable energy division for £820m.
As he becomes more deeply involved in left-wing politics, his role at Brookfield is likely to become a target. Both Labor in Britain and Democrats in the United States have set their sights on tax-advantaged carry: the profits that private capital raiders make on their investments.
The enthusiasm with which Reeves and the Labor Party welcomed Carney’s backing might have seemed less attractive if more was known about his current central role in private equity, his terrible record on transparency and his scant respect for workers’ rights and jobs.
But the prickly former Bank of England governor’s ability to turn nonsense into advantage should never be underestimated.
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