The Central Banks do act as bankers for the Government, and if they make decisions which hurt the Treasury maybe the treasury should go shopping for another banker.
Or maybe, as in Hong Kong, dispense with a Central Bank entirely and turn it into a "Monetary Authority".
As we have seen in Northern Rock, one of the major reasons for the f..k up appears to be the fact that the UK Treasury not long ago took away from the Bank of England -after 300 years - the core function of the "Debt Management Office".
True to grasping Treasury tradition they simply could not resist the "seignorage" income available from the loans they made to "bail out" the Wreck. The fact that this starved the system of liquidity passes them by: that's the Bank of England's problem....
Another triumph of central control freakery. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
So there isn't really anything unusual here. This isn't all that different to starting a stupid war for the financial benefit of contractors. And it's not exactly news that the easiest way to trade on insider information is to get a job associated with the government.
The scale of it may be unusual, but we're never going to know who did those trades, because it's never going to be investigated - in the same way that the massive profits from put options before 9/11 were never investigated properly.
