Politics: Central Bankers Always Blame Others…

Central bankers are meant to be independent – “independent my foot!”

Our central banker here in Helsinki is a Center Party broiler, and now a Centre Party Rooster. He has never worked a day in his life in any ordinary job but has held positions thanks to the  Centre Party from nursery school to his current position at the central bank.

Born in 1962 to a family with deep political connections, he finished school around 1980 and then attended University for the next 8 years. While at university he began a career in youth politics in 1987, and was even elected as a city councillor in Helsinki. Just imagine what he brought to the table in terms of municipal experience… probably very little is the best answer.

Shortly after that he was elected to the Finnish Parliament in 1991, becoming a special adviser to the Prime Minister in 1992. 

He was later elected to the European Parliament in 1995. After failing to be re-elected in 1996 he managed to receive comfortable jobs in various bodies in the EU until 2003 until he secured various more senior positions in the EU for the next 10 years.

Again, it is all politics, politics, and politics.

It is worth noting from above that he seldom held a position for longer than a couple of years – and they are all due to the fact that he played his political networks with skill.

Most of the time in his various positions he has spoken about the need for austerity in any economy: 

  1. He spoke about austerity to the Greeks during their crisis – he was wrong. Spending on reforms and economic recovery was the correct medicine with a trust-worthy government.
  2. He spoke about austerity for Finland after the 2008 financial crisis and was wrong – the Finnish economy shrivelled when firms should have invested in innovation, exports, and on policies that would have increased productivity like having more women in the workforce.

Then in 2018 he became our central banker with the support of his party whose leader was the Prime Minister! 

More recently he has again spoken about austerity because “Finland is facing an economic crisis!” – even though we have a AA+ and AA1 Stable rating from all three big credit rating agencies. We could do better but with this bunch of politicians “don’t hold your breath”…

That is true but that crisis is mainly thanks to his party, one of the main political parties that has been al most in every government for the last two decades and never instituted reforms to reduce the monopolistic behaviour of the many big companies that dominate our economy, they never invested in education but cut their budgets. They also failed to reduce the number of small municipalities where money is wasted on duplication and inefficient services they cannot afford, and they never tried to consolidate the incredibly wasteful pension system where three “private bodies” operate with costly administrations overseen by many layers of civil servant regulators.

Mr. Rehn has been a politician from the Centre Party for all his life, and even now his used this support to put himself up for election as Finland’s next president, which did not exactly work out even though he said that he was the best candidate…

… and now he went back to his comfortable job as the governor of the central bank where  he still whines on about austerity, while giving huge handouts to banks here, because according to him banks are “key to the economy and must be profitable…” 

The banks are running a nice cartel with almost identical prices and huge profits they use to pay themselves without doing very much for the economy. Today banks do not help SMEs nor do they really assist exporters. They are more a drag on the economy that extract rent from taxpayers and the central bank! 

Central bankers are never independent souls. They are mainly elected because the big parties appoint them, and these parties are supported by the big banks who benefit from  having a friendly central banker helping them create juicy bonuses for the chosen few…

Yes, there is work to be done in shaping up our economy to the level of our Nordic peers, but do not expect too much assistance from central bankers in Helsinki or Frankfurt…

Photo: Wikipedia CC source unknown…

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