The Special One

Gordon Brown and Alistair Darling will have reason to feel duly grateful to Jose Mourinho this morning. The Special One’s abrupt and unanticipated departure from Stamford Bridge is wall-to-wall on all the news bulletins and has pushed the fallout from the Northern Rock affair off the top spot.

The relief will, however, be no more than temporary. Later today, the Governor of the Bank of England, Mervyn King, will appear before the Treasury Select Committee, where MPs will no doubt be eager to learn why, within a matter of days of writing a ten-page letter to the Committee with a dire warning about the “moral hazard” of extending liquidity into the market, he did what appears to be an incomprehensible volte-face by apparently acceding to the Government’s guarantee of Northern Rock deposits and then pumping an additional £10 billion into the banking system.

Credibility is crucial to the reputation of any central bank; it is its essential stock-in-trade. Mervyn King can therefore expect some deeply probing questions.

My colleague, Michael Fallon, the senior Conservative on the committee, put down a marker for today’s likely tough questioning when he said:

“We are looking for a fuller explanation as to how we got in to a situation where we saw a run on a bank - the likes of which have only been seen in the Weimar Republic or Zimbabwe - in the fourth biggest economy in the world.”

And then there is the further question that will no doubt be exercising committee members: was there political pressure? As Ken Clarke put it:

“Any suspicions that Mervyn has not changed his mind and that the political people involved are just panicking and have insisted he does something . . . would be very worrying indeed.”

Both the Treasury and the Bank have been quick to deny any such pressure. So what was the reason for Mervyn’s u-turn? No doubt all will be revealed today.