Don't shoot the messenger, for goodness sake
by Michael Smith (Veshengro)
Bank of England chief under fire after warning Britain is at risk of another financial crisis and certain people are about to shoot the messenger
Mervyn King, the Governor of the Bank of England, has come under fire from leading economists after warning that Britain risks suffering another financial crisis without reform of the country’s banks. He said that “imbalances” in the banking system remain and are “beginning to grow again”.
There are certain people that are too deep in the pay of the banking sector, it would seem, right there in the middle of the government establishment that would wish to shoot down the Governor of the Bank of England in flames.
Words and statements that the financial sector is very important to the British economy and that the Governor should not be attacking and criticizing the banks. Criticizing them reduces their credibility and then people worry about them and that the important thing for the Governor of the Bank of England is to help the banks.
Well, it would seem that Mervyn King would rather like to tell the people of the country how and where things really lie without using lies, unlike our politicians, and that's when bankers and government people seem to all end up in a fluster.
The Banker's Association has come out attacking Mr King's statements saying that there a a great number of points with which they disagree. I do not doubt it. In the same way, no doubt, that the British railways companies disagree with the findings of EU bodies that the British rail passenger is being ripped off and that rail travel in Britain is the most expensive of all in Europe.
The banking industry recognises that some of its number got it badly wrong during the crisis. Since then the industry has reformed radically. Thus says the Banker's Association in a statement, and continues to claim that that they have changed and all that.
It is rather amazing though that we cannot, in fact, see any of the changes, and SMEs have great problem getting loans while bankers and especially chief executives of banks are getting bonuses in the millions of Pounds Sterling again.
It is obvious that nothing to very little has changed in the way the banks were doing business before. In fact, it would very much appear it to be the BAU model that has come back, the business-as-usual.
In interview that Mr King gave urges high street banks to take a better, longer term view towards their customers and to stop focusing on the need to “simply maximise profits next week”.
He accuses them of routinely exploiting their millions of customers. “If it’s possible [for financial services firms] to make money out of gullible or unsuspecting customers, particularly institutional customers, [they think] that is perfectly acceptable,” he said. And he also expressed regret for not sounding a louder warning over his concerns before the last banking crisis.
Mr King's words must be a warning to government and to us all that we will never see the likes of the living standards again that some of us have enjoyed in the last decades. That time is over and – more than likely – will never return.
We must also prepare that things are not going to get better but that they are going to go downhill for a lot longer before they will bottom out and then stay at that level somewhere.
Government allowed a banking system to build up which contained the seeds of its own destruction and we have not as yet solved the 'too big to fail’ or, as Mervyn King called it, the 'too important to fail’ problem.
The fact is that the concept of being too important to fail should have no place in a market economy and it seems that the only “industries” that were not allowed to 'fail' were some huge banks that were bailed out, here and across the pond, and some automobile manufacturers, in the States (and Britain?).
When asked whether there could be a repeat of the financial crisis, Mr King said that he would say yes, as the problem is still there. The search for yield goes on. Imbalances are beginning to grow again. To which one could but add that also the culture of the huge bonuses is still there and some bankers even think that they have nothing to be grateful to the taxpayer for.
Maybe it is really time that the governments (and the taxpayers) told those banks how the cookie crumbles and actually would take full control of those banks that have been bailed out by billions and billions of British taxpayers' money.
This is money, if we had not have to throw it at the banks 'too big to fail' we would still have in the system and thus we would not have a financial problem in the public service and in the country as a whole.
But, as it has happened there is very little that the government, or we, as people, can now do about it and that means we have to face the problems of the now, of the present and of the future, and that future does not look all that bright in the old light.
However, I think we have the opportunity now to make something better and create a brighter, a green future, with a constant economy, and proper economy as if people mattered. The question only is as to whether the British government will grab the bull by its horns and do it. But, then again, it is up to us, as the electorate, to demand that they do and allow us to be fobbed off with the fibs of the need for a constantly growing economy. That notion is a totally and utterly false one.
Once again, let us remember not to shoot the messenger if the news he brings is bad but the truth. Let us act upon the news and, in this case, change the course of this old ship.
© 2011
