3 October 2012 — Return of the Public
The banks have ripped us off, screwed the economy, and taken tens of billions in the taxpayers’ name. They are not lending to the productive sector of the economy, they are still paying themselves huge bonuses, and there is barely a flicker of political protest. None of the three major parties are even thinking of doing anything serious to restrain or reform them. It’s not that the banks are too big to fail, to quote the title of one of the books about the events of 2007/8; they have already failed. Rather, they are perceived in this country to be too big to tackle.
This essay tries to explain how we got here. By which I don’t mean the recent events leading up to the crash of 2008 – these have been discussed in dozens of books. Instead I want to set out the older and specifically British back story, both economic and political. The crash of 2008 did not appear out of the blue. Yes, some of the key factors, notably the use of computers in the global gambling, are relatively recent. But many of the building blocks were in place long before the Internet enabled the global casino we now live in.
The story in outline is simple: we got here because we removed the controls placed on the financial sector. For sixty years the British banks struggled to escape the constraints imposed on them by the rest of society. And as they overcame each obstacle they proceeded to create and lend money on an ever larger scale. They lent money against property for the most part and left British industry to look after itself as best it could.The bankers in charge did this to make themselves rich. That’s all there is to it. What follows is a very short account of how this happened. And almost no economics knowledge is required to understand it.
You can buy the full text in Kindle format here.