I read, with no surprise to be honest, in today's Telegraph that the governor of the Bank of England is concerned by the possibility that the banks could create another financial crisis. I do think that the title,"Governor of The Bank of England", comes with at the very least the duty to forewarn of such failings in the financial system. This is something that he did nor do last time until it was occurring.
I am also disappointed to see the blame falsely in my opinion being laid with the bankers. It is the politicians that decide upon what can and cannot be undertaken within the institutions. Institutional investors are gamblers by nature and their only allegiance is to the quickest and largest profit. This is their reason for existence. When the Liberal, Labour and Conservative MP's agreed to deregulate the financial system they effectively announced no rules and no limits in the casino. There us an old adage that the only winner in a casino is the house. Unfortunately in this case the house is open to global banking and the bankers, now released with the nations wealth gambled like a lottery winner in Las Vegas. The winner was the global banking elite and the loser without a doubt is the current and next generation of British tax payers.
The 'new' financial crisis that the good governor is talking about is really quite inevitable and an inevitable continuation of the last one. The feebly weak politicians have neither the spine to perform nor the wit to understand the necessary changes. Until this situation is resolved the imbalances and profiteering will continue, as will the obscene bonuses, and Britain's financial situation will become more perilous until we reach the situation where the pound is worth less than the Euro. This could be an indicator to foreign investors that Gt Britain Plc needs a thorough inspection. If they begin to care about our horrendous debt to GDP ratio, which is worse than that of Greece when they received their bailout, and the fact that we are shoring up our financial system by repackaging our own debt and selling it to ourselves, then we are in sovereign default territory. IMF bailouts and a return to the 'gnomes of Zurich' syndrome for those that are old enough to remember ir will be upon us again. Policies will then have to be agreed with foreign regulators. Not a pleasant thought.
The scenario above is all too possible and with us in a situation similar to that of Japan twenty years ago. Japan is still struggling even with a large manufacturing economy and control of their own fiscal affairs. Imagine how we would fair with a comprehensively broken financial sector and foreign hands steering policy. The Scouts or Guides could do a better job.
The answer is simple enough but highly unlikely. The government has to reign in the abilities of the finance houses to gamble. This will curtail the financial sector and necessitate investment in the manufacturing sector and national infrastructure. Real wealth creating jobs would be created and many people in society would actually have a reason to get up in the morning. To normal people this would be good news but not to the politicians who have spent the last thirty plus years destroying the traditional economy to create their dream 'service and education' economy. The consequences of the inability of the politicians to admit that they have got it wrong will be with us for generations. Unless of course the public wakes up and votes in a suitably nationalistic government. Even then the damage will take several terms to reverse.
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