Jonathan Freeland makes the point that the crisis open up opportunities to explore new ideas, and resurrect old ones. I agree, but saying 'how come we can bail out the banks but not fund the NHS better?' doesn't really take us much further. And he falls for the dumbest line of the lot: "This is to finance-driven capitalism what 1989 was to Soviet communism."
What is 'finance-driven capitalism' and in what respect have we seen the regimes that adhere to it as their over-riding ideology crumble? I'd like to see a serious look taken at what capital markets actually contribute to the economy, but I am under no illusions that they are going to disappear. Calm down dear, it's only a bit of part-nationalisation!
In the other corner, Simon Jenkins has a much better sense of proportion. It's a knock, not a knockout blow, and it's in now way a serious challenge to capitalism as a whole. But someone has been dripping pure poison into his ears about who is to blame for where we are - what's this lurking at the bottom of is article?
"Though bankers are more fun to blame, it was politicians whose laxity and craving for popularity lay at the root of the present trouble."You what now? I'm not a Dubya fan (!) but I don't think he was personally frog-marching mortgage salesmen around telling them to feed on the low-paid and poorly-educated. I don't think all those people in financial institutions of all types who knew where things were wrong but declined to say so when the party was in full swing were following a communique from the politicos.
I do think it's true that politicians made mistakes, but they are more likely the result of misunderstanding not deliberate policy IMO. The highly-remunerated finance types on the other hand in many cases knew exactly what was going on. Credit crunch where it's due (boom boom!).
3 comments:
Jenkins is right to the extent that without the deregulation of the financial sector in the 1980s, the current crisis would probably not have happened, and certainly wouldn't be having such deep effects. And to that extent, it's entirely down to the deliberate policy of Thatcher and her circle, and the failure of Blair and Brown to reverse her policies (and, by the same token, to Reagan's dogma and Clinton's cowardice in the US).
Blaming politicians or bankers is preferable to blaming those poor Americans who took what they thought was a good deal by buying a home of their own.
I'm not sure about the mistake of politicians being misunderstanding. As Blair said, the markets will break you if you don't toe the line. Clinton was threatened that if he implemented the programme on which he was elected, capital would go on strike. In this situation you face what Michael Lebowitz calls "cave-in or move-in".
As I expected, the Chancellor is caving in - agreeing that divident payments in the part-nationalised banks will be made after one year rather than five.
This means that what appeared to be a buy-out is fast becoming a bail-out - and at a time when unemployment is rising, I expect the Tories will make much of this.
If the labour movement doesn't get tough with Brown and co, we'll have a Tory landslide and another two decades of Thatcherism.
it was politicians whose laxity and craving for popularity lay at the root of the present trouble
I'd still finger politicians but for different reasons
basic issues of nous & competence
(a) they should know that you get the behaviours you incentivise (traders are venal, we know this)
(b) they should know that if you don't genuinely understand something you're being pressed to do ("no need to regulate OTC derivatives, Minister, as I'm sure you'll have seen for yourself when you analysed a few structured products") - you don't do it
specific issues of policy
(c) Blair and Brown both positively, nay aggressivly encouraged lax financial oversight to make the City 'more competitive' than NY / Chicago / Frankfurt
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