According to the FT:
The Treasury will on Monday be accused of failing to learn the lessons of the financial crisis, with senior MPs claiming there is “an urgent gap” in its preparedness in the event of another crash. The MPs expressed surprise that financial and economic risks are not included in the government's “national risk register” and said the Treasury and other regulators should do more crisis planning.
Apparently Bernard Jenkin, Conservative chairman of the cross-party public administration committee, has said:
We did not find evidence that government and the City are actively practising and exercising for this worst case scenario.
The Treasury has done a lot but there is more to be done to be ready for another financial crisis. We still have institutions which are too big to fail, but with so much national borrowing capacity used up, they may prove ‘too big to save' if it happens again.
I am sure he's right.
Our banks are still too big to fail. As are our auditors and many other parts of the financial services system.
Second, despite efforts such as quantitative easing which pumped cash into the financial services sector it is not in robust health because much of that money was taken out again by bonuses, fines, and compensation payments.
But most importantly, a certain part of the Establishment is still just too stupid, blind, arrogant or small minded to realise that 2008 was not a once in 25,000 year event, but indication of a systemic flaw in Anglo-Saxon capitalism and that recurrence is nigh on inevitable.
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Is it not now that some companies E G HSBC are to big to prosecute as they have armies of barristers and lawyers who will cost the country fortunes because the legislation was drafted by the same people who now defend the almighty banks?
Gosh this makes me livid.
There is perhaps no will to deal with this because it is being used by some to help reduce the role of the State in society.
By doing nothing, it will harder to justify the State existing at all so when the Tories, UKIP and the Lib Dems (and even New Labour) get in, they can continue to shrink it and make it toothless. And the public – feeling let down – won’t mind when the apparatus that has been set up to protect them (but has been systematically dismantled since 1979 at least) is eventually turned into a superfluous entity.
After all – it would be far harder to justify the dismantling of a courageous state actively seeking and manifestly trying to bring fairness and justice and protection to its citizens – would it not?
Is it not somewhat ironic that the flag bearers of libertarianism are incapable of understanding the meaning of the phrase ‘free market’. The central tenet is that in a free market Competition supplies natural regulation. As Colin Crouch of Nottingham University pointed out competition derives from ease of access to and exit from the market. The banks and for that matter the energy companies redefine the principle and argue that a cartel is the equivalent of competition.
Crouch concluded:
The fact that banks were deemed ‘too big to fail’ was both a demonstration that the market was highly imperfect (there was no easy exit) and produced the paradoxical consequence that some banks acquired political power by the very fact that they had been incompetent. They were able to hold governments and ultimately taxpayers to ransom.
That is a challenge to democracy, MPs know it, Government do little or nothing. One might easily come to the cynical view that the £90m+ a year spent on lobbying by the banks is actually a share of the bonus pool.
My apologies to you and Colin Crouch who is emeritus Professor at Warwick University not Nottingham.
Oh come come. I’m sure the Treasury is fully “prepared”. In fact I can reveal their plan. It’ll be to donate another trillion billion pounds of taxpayers money to those criminal organisations we euphemistically call “banks”.
Robin William’s last DVD ‘Weapons of Self-Destruction’ – featuring a live show (or shows) in Washington in about 2010 had some good gags about the crash that also make some big points.
As well as being extremely rude, he equated the concept of banks being ‘too big to fail’ with saying one is ‘too fat to diet’. In other words, the concept of being too big or too fat is complete red herring that makes no sense at all.
In other words if we know being fat is bad for us and that we must lose weight then the same applies to banks that get too big – they too are bad for us. I for one would like to see the larger banks broken up.