Wednesday, 2 February 2011

On the blaming of bankers for everything

Most bankers dwell in marble halls,
Which they get to dwell in because they encourage deposits and discourage withdrawals,
And particularly because they all observe one rule which woe betides the banker who fails to heed it,
Which is you must never lend any money to anybody unless they don't need it!

This isn’t really a blog post about banking but about blame. Or rather our desperate search for a simple, ideally faceless target for us to place society’s sins upon before casting it out into the wilderness. And right now the scapegoat – the receptacle for all the blame we wish to impart – is the banker.

And not without some cause.  The banks did lend money against flaky assets, bundle in up into wondrous packages, sprinkle them with fairy dust and lo, the financial instrument. For sure, those bankers levered the gold-plated, risk-free, government-protected personal deposits into trillions of complicated borrowings, lendings, re-lendings and re-borrowings – the reinsurance scandal writ on a new and vast scale. So, yes, blaming the banks makes some sense.

Except for one crucial point. Banking – at whatever level – is a service industry. I know that comes as a shock to those of you struggling to get some service out of your bank but banks are in the business of providing people with a service. And that service is (when you boil it down) lending. You need some cash where do you go? Assuming you’ve exhausted the piggy bank, the stash under the mattress and mum, you go to the bank.

So all those duff loans – you know the ones that brought the whole house of cards tumbling down – they weren’t created for the specific benefit of bankers (albeit that bankers were quite keen to shovel those loans out the door). Those nasty loans were for our benefit – we demanded them, insisted on our rights to buy houses, have bigger cars, further-flung holidays, new garages, dormer extensions and a mobile home in Filey. If we hadn’t poled up at the bank, hand out before us saying, “gissa a loan, mate”, there wouldn’t have been a banking crisis.

Understand that the banks screwed up the world’s economy so we could have an extra bedroom.

So blame the banks. Moan about the bonuses. Camp out in high street stores shouting about taxes. March the streets calling for “Robin Hood Taxes”, bonus taxes and the public whipping of any bankers who happen to wander by all bowler-hatted and umbrella-clutching. Pile all the guilt onto these folk – we the public that demanded everything shiny, that voted in a government promising us the rainbow and a share in the crock of gold at the end of that rainbow, we are not to blame. Oh no, we didn’t live beyond our means or support politicians who told us that boom and bust were over. We are not to blame.

So now the banking goat is laden with our sins. Send it out into that desert. And all will be fine. We can go back to cultivating the money tree, demanding our government gives us all the shiny things we want and complaining when any aspect of reality gets in the way of our enjoying our birthright of free stuff, cheap stuff and indulgence.

Dear reader, I hate to tell you that it wasn’t the banks. It wasn’t the government. It wasn’t the Americans. It wasn’t the EU. It was us. We did it, we are to blame.

But hey, the bankers make a great scapegoat! Heap on that blame!



Singing is Easy said...

Scalpel....the loans that brought down the house of card were not incurred by the British public, but by poor Americans inveigled into taking on loans they couldn't afford by the unholy alliance of American banks and the Clinton administration. British banks participated further up the card edifice so fell with a thump when it collapsed. Yes, the British people have been running on debt economy for over ten years, which is why so many are hocked up to the eyebrows. Yes, by all means blame the Blair/Brown government for its profligacy in spending the tax revenues from the British banks' involvement in high-risk, high-return trading activities, and for conniving at the slack regulation that allowed banks to leverage up their balance sheets and flout capital adequacy requirements to such an extent that they were unable to survive the calls on their capital that followed the inevitable collapse. But don't blame the British public for this. We didn't do it.

Private Widdle said...

On "Newsnight" last night Mason even said in his preamble that the bank bailout had caused the structural deficit. He's supposed to be the Beeb's economics editor.