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The Banks Are Not The Only Ones To Blame

by Jim ONeil on April 28, 2011

in uk banks

Two weeks ago, everyone was reading the Vickers review on banking, another blow to bankers. For three years, banks have been blamed for the financial crisis because they are a great alibi. Blaming them relieves everyone else of responsibility.

However, the government is partially to blame for the crisis because it never saw the asset bubble.

Severely underpriced debt created the bubble, though everyone refuses to admit any bubble existed. Blaming the banks is not just a lazy move, it is a dangerous one. It indicates that errors made by the Labor party have not been identified or corrected.

Therefore, the factors that led to the crash are still in place and ready to wreak havoc again.

George Osborne seems prepared to ensure that the banks are properly regulated, which is great. However, this will not resolve the problem. Some say that a hard look at the Monetary Policy Committee is required because this group led Britain into the financial abyss.

The economy was infused with cheap debt and the illusion of prosperity was created. In reality, it was a shiny finish that masked New Labor.

The UK Treasury led Europe in concealing debt via schemes like the International Finance Facility and PFI arrangements. A pyramid of debt was created and this structure was built upon debt. Consumers took out cheap loans and spent the money or used it to speculate in the real estate market.

Everything followed the classic bubble pattern, down to people saying that this time, things would be different.

Brits like to state that the crisis started in the U.S. but in several ways, London did. Inept financial regulation, huge liabilities in the investment sector, and government profiting from it. No one saw the crisis looming because everyone was trying to regulate inflation and did not notice the debt bubble that was ready to pop.

Carl

If you ask me it seems the UK Foreign Office/ Government was spinning the whole sorry mess.I don’t think I’m the only one thinking this either!

Vincent-Strong-Editor-UK-Fast

I don’t think you are the only one thinking this Carl. You can hardly blame people for grabbing cheap borrowing, it was kind of like a financial gold rush and the government did nothing to stop it blowing up like a 20 megaton bomb!

Georgia P

Yeah but if you ask me they take the lions share of the damn blame.I saw enough of them swanning around Canary Wharf for long enough! Smug gits most of them…snorting enough coke to keep the cartels in business for the next 10 years!

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