Lessons Learnt

As we soldier on, with the world financial crisis that took us to the very brink of oblivion, a distant memory and confined to the annals of history, it seems we have learned little from the whole debacle.

I have no idea any longer how much we have spent, pledged, loaned, guaranteed in prop ups and bail outs but it something close to £1.3 trillion in the UK alone, closer to $5 trillion worldwide, about a tenth of Global Output. It seemed in the midst of the crisis, although my memory is hazy, that we were all particularly vindictive about the regulatory bodies who basically allowed banks to take excessive risks - most of which caused a repeated and prolonged breach of basic banking standard governance tests. We accused the regulators of being 'asleep on the job' and 'turning a blind eye' as banks produced profits from thin air and paid their executives bonuses of incredible magnitudes. There was kamikaze lending, 125% mortgages, a ten fold increase in house values, complex derivatives with unclear lines to unassessed assets - no one had any idea who was buying what, who owed who and how much the underpinning assets were.

All the while, the regulators collected their fat salaries, had power breakfasts and big lunches with roaring banking executives and did nothing - some claiming because the Government told them to do so.

Learning From Our Mistakes

It would heartwarming then, given how close we came to the financial equivalent of a China Syndrome global financial meltdown, to know we have learned lessons from our mistakes and plan a new, tighter system so that the same mistakes are not repeated.

In a Blairesque re-writing of history, Chancellor Alistair Darling now tells us that the regulators were in fact not to blame for the financial meltdown. In fact, he tells us that it was not the system that was at fault but the judgement of those who were in the system.

For the uninitiated, that would be Lord Adair Turner, who has had the penance of revising the system in between all his other and non-executive jobs, and his well paid and dimwitted CEO, Hector Sants. Curiously, they were at the helm of the FSA before the credit crunch hit us all so badly and they are still there today. So we have a situation where Darling believes the FSA is well set up but manned by idiots with no judgement but he asked the same idiots to revise the system and stay there.

Good thinking - that should stop the whole thing happening again then as the same Government is there to tell them to turn a blind eye again.

Re-Writing History

I dare say in the revising of the fiasco, we will find that Lord Myners and the Government were salaciously hoodwinked by McKillip and Scott in stitching us up on Fred's pension, that Ron Sandler at Northern Rock personally took the decision to keep handing out 125% mortgages after the Government took control, that Gordon Brown suggested that Lloyds TSB did not, at all costs, take over HBOS at the eleventh hour and that the British taxpayer voted openly in favour of his leadership at the MEP and Local Council elections - they just got the ticks in the wrong boxes which was someone else's fault also.

The fact is that the banks are already steaming ahead on the old course with new money and no punishment for their past. Precious few executives have lost their jobs but thousands of tellers, administration and branch staff have lost theirs while bonuses will start to flow again at renewed rates very soon.

There has been no ban on shorting or derivatives, credit is flowing back into the system to start the whole gravy train again. In fact, at the last round, banks were starting to clock up enormous profits out of thin air once again. The banks are happy as sand boys.

Meanwhile, down in the real world, unemployment continues to rise, negative equity is rising to above 11% and small businesses continue to go bust in their hundreds, every day. The personal and social consequences of the worst financial crisis since the Great Depression will be felt for a long time to come, not least in higher taxes lasting for another 20 years - let alone the missing, household named businesses.

It would be comforting to know that the Government would have got to grips with the real causes of the banking crisis, make sure it can never happen again and have a regulatory system which had the teeth, motivation, no vested interests and the determination to act decisively whenever and wherever it saw breaches of governance.

But that's precisely what we won't get. The Brown-Darling thinking is that's no way to get the kind of growth they want. Just as Green and environmental policy are at odds with capitalism, we will never get that either.

Politics is all about the here and now - it's why filling in Expenses Claim Forms is a higher priority than fixing the banking system.