Mervyn Lamont.

The recent subprime global credit crisis has hardly boosted the credibility of Mervyn King, Governor of the Bank of England. Throughout the initial stages of the global credit meltdown, as both European Central Bank President Jean-Claude Trichet and Federal Reserve Chairman Ben Bernanke massively injected liquidity into the financial system, King took the passive approach with what appeared to be a smugness toward the perceived panic by his international central bank counterparts. Then the British bank Northern Rock began to hit the credit skids. Newspaper stories showed desperate depositors a la the 1930s lined up outside bank branch offices. British commentators began accusing King of actually contributing to Northern Rock's problems through the BoE's hands-off approach. Eventually an embarrassed Bank of England was forced by the government to step in and rescue Northern Rock, but not before British commentators began drawing comparisons between King's handling of the credit crisis in 2007 with former Chancellor of the Exchequer Norman Lamont's handling of the ERM crisis in 1992, which contributed to the exit of Sterling from the European exchange rate system. To make matters worse, King is facing criticism for a failed monetary policy. The Bank of England raised short-term interest rates from 4.5 percent in August 2006 to 5.75 percent this past summer. The criticism is two-fold: King failed to prepare markets properly for the rate hikes and the central bank's policy actions failed to prevent inflation from rising above 3 percent anyway. Not a good year for the British central bank chief.

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What do these two men have in common? Mervyn King [left], current Governor of the Bank of England, and Norman Lamont, Chancellor of the Exchequer in 1992.