WikiLeaks reveals that Mervyn King is just a humble patriot of austere convictions

So Mervyn King wasn't trying to get himself a peerage by supporting Tory austerity policies, after all. Those wary colleagues on the monetary policy committee about whose concerns I wrote last week may have misjudged the boss.
No. The deep, sharp cuts were his policies, pressed upon David Cameron and George Osborne because the governor of the Bank of England had concluded they were callow youths – presumably still are – and needed his fatherly assistance to save the economy. Not "Blue Mervyn" at all, but a humble patriot of austere convictions.
So suggests today's dollop of WikiLeaks, the point in the narrative at which we turn to domestic affairs: how the coalition was formed and who thought what about whom. The Wiki-pattern persists: we sort of knew a lot of this. But even an old curmudgeon like me must concede I read it all with interest – King's case especially so.
He is an academic by background, widely thought to be less adept than his canny, chain-smoking predecessor, Eddie George, a Bank of England man to his fingertips.
"Eddie would have spotted the looming liquidity crisis much quicker," folk say, as folk usually do.
King's team and the Brown-created FSA missed it – too busy worrying about solvency to fret about a liquidity crash – at Northern Rock and elsewhere. Even after the crisis broke, King was still banging on about "moral hazard" – ie that shareholders and bosses should not be protected from their own errors by taxpayers – when the whole financial edifice was ablaze and needed government rescue.
It's very annoying, but the alternatives were worse: look at the collapse of Lehman. At least London imposed restructuring on its dodgier banks rather than blithely underwriting their losses as Dublin did – to its continuing cost.
What today's papers are reporting is that King – who takes comfort in being right all the time – decided that Cameron and Osborne were "weak, insular and lacking in depth" as the Times's Guardian catch-up story puts it – and over-reliant on a small circle of advisers. This is what he is said to have told the US ambassador.
It's what old farts tend to say about younger farts. I've said it myself about all sorts of people, including George and Dave, now I come to think about it. But the young farts usually have a point and, being younger, learn faster.
For all his cocky weaknesses – noted here by me – I'd still bet on Master George to clean out Governor King in a poker game, if not this year, then next year. That's how life goes.
So King, a deficit hawk, decided this spring – as the Greek sovereign debt crisis unfolded – that Alistair Darling's provisional plans to cut £40bn or so from public spending if Labour won (Darling says he didn't expect his party to win) were not enough. More must be done and soon to get sterling and gilts – the UK Treasury's bond market to fund borrowing – out of the firing line.
As Patrick Wintour sets out in today's Guardian exclusive – he used David Laws's memoir too – King and the Treasury's permanent secretary, Nick Macpherson, were also influential in persuading Nick Clegg and his team, even the Keynesian Vince Cable, of the need to act fast after the coalition was formed on 11 May.
It was Laws who made the first cuts statement to MPs. I remember thinking "they'll get him for this" – and so "they" did, within a week, for expenses irregularities. When you put your head above the parapet be prepared for attempts to chop it off.
Laws and Clegg were always on the "Orange Book" (free market) side of Lib Dem policymaking. Cable was persuaded by the Greek crisis, though King insists he'd said nothing in private that he'd not said in public.
He might have added – but tactfully doesn't – that Cameron and Osborne had opposed the recapitalisation of tottering UK banks (Brown and Darling's key world-leading decision in the crisis) until after they had been briefed privately by King. Thereafter they miraculously changed their minds and publicly demanded it.
What is a little troubling here is that unelected public officials may have been calling the deflationary shots since 11 May. If you remember Dave and George backed Labour's now-unrealistic spending plans, promising to "share the proceeds of growth" until quite late – November 2008 – and later toned down their "austerity Britain" message when it proved unpopular with voters.
Bank governors can be expected to be small-c conservative. So can senior Treasury officials such as Macpherson, who are also paid to adjust to changing political weather. But we elect politicians to call the shots and take both credit and blame. And we know that, for all his faults, Brown imposed himself on the Treasury.
No wonder that officialdom likes the coalition. It restores its influence over policy and allows it to play both parties off against each other. I have heard it said that whenever Clegg or Cable gets cross, the Treasury says: "We told Danny Alexander." Flooding ministerial boxes with too much information is another old trick of Sir Humphreys down the ages.
Two final points here: Be sure to read the Guardian's account today of Bradley Manning, the WikiLeaks leaker, who now faces trial and a fearsome prison sentence in the US. It's a sad story of what comes across as a naïve, well-meaning young man.
In today's Times (paywall), Danny Finkelstein, always a provocative writer, likens the leak to Martin Luther's historic posting of his critique of the corrupt medieval papacy on the door of Wittenberg church on 31 October 1517.
Driven by the invention of the printing press 70 years earlier (unless we count China) – it is one of the great moments in the history of the world and unleashed the Protestant intellectual revolution which created our societies.
You can't stop the internet, says Danny, any more than the Ottoman empire could stop the printing press (though it tried). It's about the shift of information and power away from existing elites – popes and priests, US diplomats and Saudi princes – to a wider community, usually for the general good.
I'm sympathetic to the broad proposition – suppressing the printing press helped ruin the mighty Ottomans just as disdain of the west humbled mighty China in the 19th century – but I'm not sure that the analogy holds here. Where, for instance, do the likes of Rupert Murdoch fit into this wholesome picture, Danny? Might they not be outriders for a new and suppressing information elite?
So, as with the role of Bradley Manning and WikiLeaks in this drama, I'm still thinking that one over. Julian Assange as Luther, eh? He was very pro-state, Luther, come to think of it. Some blame him for Hitler. As those dodgy Renaissance popes might have said. "See. I told you in would end in tears and WikiLeaks."

Posted in: Wiki Leaks