King Is Following Greenspan Into Credit ‘Debacle,’ SocGen’s Edwards Says

Bank of England Governor Mervyn King is mimicking “ruinous” Federal Reserve monetary policies that led to the current financial crisis, Societe Generale SA’s top- ranked strategist Albert Edwards said.

“There is a healthy debate in the U.S. about the culpability of the former and current heads of the Fed for the inevitable debacle,” Edwards, who predicted the Asian currency meltdown of the late 1990s, said in a phone interview today. King is “similarly responsible for presiding over a copycat catastrophe.”

King may announce today that he will pump another 50 billion pounds ($79 billion) into the U.K. economy as the central bank ramps up protection for a nascent recovery. The nine-member Monetary Policy Committee will raise the target for bond purchases to 325 billion pounds, more than a quarter of current outstanding gilts, according to 34 of 50 economists in a Bloomberg News survey. Fifteen economists forecast a 75 billion- pound increase and one no change.

“It is the monetary authorities in both the U.S. and U.K. who are almost wholly responsible for allowing this lax monetary environment and the boom and bust in their respective economies,” Edwards wrote in a report today. “Not the over- exuberant actions of lenders and borrowers.”

Former Fed Chairman Alan Greenspan cut interest rates at the start of the last decade in a move critics say helped create a debt bubble years later. Under current head Ben S. Bernanke, the Fed reduced rates to a record low and embarked on a policy of buying bonds, known as quantitative easing, to ease the cost of borrowing and stimulate growth.

Knighthoods Stripped

Edwards also said that King and Greenspan should be stripped of their knighthoods after the British government last month removed the title from former Royal Bank of Scotland Group Plc (RBS) Chief Executive Officer Fred Goodwin for leading the 285- year-old lender into the world’s biggest bank bailout.

“Central bankers have been working very hard,” Edwards wrote. “Working hard that is, to deflect blame away from themselves. If knighthoods are being removed for those held primarily responsible for the 2008 economic collapse, Sir Alan Greenspan and Sir Mervyn King should also be stripped of their honors.”

Edwards and colleagues at Paris-based Societe Generale were voted Europe’s best economy and strategy team in the 2011 Thomson Extel survey.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net