King warning: financial crisis is far from over

SIR MERVYN King and his former German counterpart Axel Weber issued grim warnings over the state of the financial crisis last night at an event at the London School of Economics in Aldwych.

“The crisis is far from over, there are many unexpected twists and turns to come,” said King, who steps down from his post as Bank of England governor this summer.

Weber, ex-chief of Germany’s central bank, later echoed the sentiment. “We are not out of the woods yet,” he said.

The pair’s bearish outlook came alongside a resolute defence of the US Federal Reserve’s aggressive monetary easing policies, which its chief Ben Bernanke insisted are helping the world economy to recover from the crisis.

Bernanke, a guest speaker at the forum in London, maintains that American quantitative easing is beneficial for other countries, despite claims that it has contributed towards stoking currency wars.

“Because stronger growth in each economy confers beneficial spillovers to trading partners, these policies are not ‘beggar-thy-neighbour’ but rather are positive-sum, ‘enrich-thy-neighbour’ actions,” Bernanke said.