Why do people blame bankers and not Euro politicians for Europe's economic mess?

[doomage]

Why do people blame bankers and not Euro politicians for Europe's economic mess?

Maybe because they didn't vote for the bankers. Blaming the politicians implies accepting some kind of responsibility for the misuse of your vote.

And to quote Thomas Jefferson

If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

Every good story needs a villain.

[TestMangler]

The banking crisis (caused by sub prime) didn't last that long and had a strong but largely containable effect (in no small measure because central bankers round the world acted decisively).
The effect was largely confined to institutions and banks that had to be rescued and we were well on our way to recovery by this year.

To my mind the creation of the Euro was a far bigger economic crime, even if the intentions were good.
As many of us pointed out at the time, you couldn't shoe-horn widely disparate economies into one currency with the same interest rate.
The result was an artifical boom as countries whose economies should have had high interest rates, instead had low ones.
The low interest rate also kept the Euro lowish and ensured German exports were cheap.
So in effect the GErmans lent the PIIGs who couldn't afford it the cheap money to drive their export boom.
Similar to banks lending money to plebs who couldn't afford it.

I'm a bit bored by ecomic illiterates not seeing this, and continuing to use bankers as scapegoats.

As well as coming from people in Mitch's position I think the public 'backlash' comes from the constant rhetoric that was trotted out day after day, via the news, from the slack, drooping jaw, of Gordon Brown. Everything was 'the bankers' fault because it's convenient to have someone to blame. People wanted (and still want) to believe that there is someone to pin it all to and Fred goodwin was as good a target as any (assuming you discount the growth/profits/taxation created by RBS in the years preceding their collapse).

Blame the Sun, Sky News and sheeple's desire to need a single entity to pin anything on

[sasguru]

Subprime = banking system lending irresponsibly to people who could never afford to pay it back
Euro crises = banking system lending irresponsibly to people who could never afford to pay it back

The banks did the lending to the eurozone and the ratings agencies rated those debts AAA when, if what you say is true, they should not have been because this situation was inevitable. Now the borrowers can't afford to pay it back. Unfortunately although unsurprisingly those who will bear the brunt of the pain are those least to blame.

Also worth pointing out that large chunks of the sovereign debt that is now problem #2 was incurred solving problem #1 due to various stimulus packages.

.

While the banks might have lent irresponsibily, politicians set the interest rates via their central banks (and I don't believe the myth that politically appointed central bankers are independent).
Look at interest rate in Greece before it joined the EUro versus after.
From the US to Europe, naive politicians, usually of the left but also of the right, allowed themselves to think they had abolished economic reality.

Personally I think they've done an excellent job deflecting the blame by scapegoating bankers and the masses are lapping it up.

[Mich the Tester]

This is the problem with the financial services industry crying "we need less regulation" as I see it.

They had less regulation and they mis-sold endowments

They had less regulation and they mis-sold pensions

They had less regulation and they caused the sub prime crises

Nobody trusts these people any more. They can be as right as Righty McRight on the Rightest day in history about matters economic but nobody will accept what they say because they have proven not once, not twice, but every time they have been given the chance, that they are not to be trusted.

And if you want to regain trust, you don't start by insulting people's intelligence.

[sasguru]

This is the problem with the financial services industry crying "we need less regulation" as I see it.

They had less regulation and they mis-sold endowments

They had less regulation and they mis-sold pensions

They had less regulation and they caused the sub prime crises

Nobody trusts these people any more. They can be as right as Righty McRight on the Rightest day in history about matters economic but nobody will accept what they say because they have proven not once, not twice, but every time they have been given the chance, that they are not to be trusted.

And if you want to regain trust, you don't start by insulting people's intelligence.

Good rant but who removed the regulation in the first place?
That would be Thatcher and Reagan in the 80s.
Anathema to the likes of Dodgy but true nevertheless.


My position on this is that you split IB and retail. Let IB do as much casino stuff as they like. Regulate retail. There are enough different types of people to fit both sides.
if the IBs go bust let them.

[GreenLabel]

This is the problem with the financial services industry crying "we need less regulation" as I see it.

They had less regulation and they mis-sold endowments

They had less regulation and they mis-sold pensions

They had less regulation and they caused the sub prime crises

Nobody trusts these people any more. They can be as right as Righty McRight on the Rightest day in history about matters economic but nobody will accept what they say because they have proven not once, not twice, but every time they have been given the chance, that they are not to be trusted.

And if you want to regain trust, you don't start by insulting people's intelligence.

I agree re: the competence of the banking community. Funny* that such self-important prats who screwed up so royally can maintain that they've done nothing wrong and that their pay packets are still well-deserved. However, nationalising banks won't help; the government will only prove even worse.


*Well, not really.

[Mich the Tester]

This is the problem with the financial services industry crying "we need less regulation" as I see it.

They had less regulation and they mis-sold endowments

They had less regulation and they mis-sold pensions

They had less regulation and they caused the sub prime crises

Nobody trusts these people any more. They can be as right as Righty McRight on the Rightest day in history about matters economic but nobody will accept what they say because they have proven not once, not twice, but every time they have been given the chance, that they are not to be trusted.

And if you want to regain trust, you don't start by insulting people's intelligence.

I would just add to this that here in the Netherswamp we've moved from a largely public healthcare service to one financed mostly by private healthcare insurance. It hasn't improved matters and is getting more expensive by the day, largely because the insurers (the very same companies that mis-sold endowments and pensions) have introduced enormous amounts of bureaucracy and worse still, dictate terms to hospitals and other care providers, even controlling the working practises of nurses with so-called 'quality' systems and micromanagement that pays them per task, per minute.

This morning's news welcomed me with the unedifying sight of the chairman of the healthcare insurers lobbying club (read; cartel) complaining that surgeons had bought 16 operation machines nationwide where 4 would supposedly do the job for carrying out all the prostate cancer operations. Of course, if I want to know how a surgeon should equip himself to save my life should some dreadful disease befall me, I'm really likely to want to ask the bloke with the insurance qualifications who sold me a dodgy pension scheme.

No, I'm afraid it's gone too far with this 'we need more freedom for the financial sector'. I don't believe it any more.

[Mich the Tester]

I agree re: the competence of the banking community. Funny* that such self-important prats who screwed up so royally can maintain that they've done nothing wrong and that their pay packets are still well-deserved. However, nationalising banks won't help; the government will only prove even worse.


*Well, not really.

I think there's an alternative; mutuals and cooperative banks.

[doodab]

politicians set the interest rates via their central banks (and I don't believe the myth that politically appointed central bankers are independent).

Look at interest rate in Greece before it joined the EUro versus after.

Look at interest rates since 2008 and you can see quite clearly that the second statement contradicts the first.

Actually, look at the first of those graphs you posted this morning and you can see that Greek interest rates fell from over 18% in 1995 to around 10% before the € was ever introduced and about 3% more before Greece actually joined. They also enjoyed pretty good growth rates up until 2008.

[Arturo Bassick]

That would be Thatcher and Reagan in the 80s.

I was under the impression that though the pair mentioned deregulated banking, they left enough handcuffs in place to stop what eventually happened when the Golden Clown took the handcuffs off.
Didnt the septics government "force" the banks to lend money on the sub-prime market as "it was only fair". Did ours do similar.
Then the speculators realised how risky these sub prime loans were and offloaded them thus starting the rush to the bottom?

I would appreciate enlightenment if I am a bit poorly informed here.