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

[sasguru]

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.

[Mich the Tester]

I blame both.

[sasguru]

I blame both.

The creation of the Euro is by far the greater economic crime - and one which may still have the worst effects on the whole world economy.
Throughtout history idealism has caused far more hurt than greed.

[Mich the Tester]

Well, in my case, it's because the bastards from a huge Dutch financial conglomerate took 350 euros per month off me in private pension contributions for 10 years, wrapped it all up in AAA grade investments, and then sent me an overview of the capital that's supposed to pay for my old age, 2312 euros, and then started whining when the government threatened to regulate their practises. I'd quite like to get my hands on the thieving bastards at this very well known financial conglomerate and strangle them. But first I might rip their intestines out and piss all over them.

I suspect, or sorry, I know, that there are a lot of other people in a similar position, and they're not all thick.

[sasguru]

Well, in my case, it's because the bastards from a huge Dutch financial conglomerate took 350 euros per month off me in private pension contributions for 10 years, wrapped it all up in AAA grade investments, and then sent me an overview of the capital that's supposed to pay for my old age, 2312 euros, and then started whining when the government threatened to regulate their practises. I'd quite like to get my hands on the thieving bastards at this very well known financial conglomerate and strangle them. But first I might rip their intestines out and piss all over them.

Your anger is understandable but don't let that blind you to reality.
Why is the capital so low BTW? How did they invest it?

[Mich the Tester]

Why is the capital so low BTW? How did they invest it?

They invested it in bonusses for themselves.

You might want to research 'woekerpolis' on t'internet.

It wouldn't absolve the politicians though, as the people involved should have been brought to trial.

Anyway, do you now understand my point? That it's better for the government to regulate now, and at least make people think they're doing something, and indeed for the financial corporations to demonstrate they're learning from their mistakes, than to wait a few more months and let the street deal out justice?

[doodab]

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.

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.

Personally I would let the banks take a massive haircut / bloodbath, nationalise the rump of them and shut the private banking system down for a bit. That should appease the masses.

[GreenLabel]

The creation of the Euro is by far the greater economic crime - and one which may still have the worst effects on the whole world economy.
Throughtout history idealism has caused far more hurt than greed.

Totally. Some of the "blame the bankers" crowd ought to reflect on the number of people who've died at the hands of a major bank, versus the number of those killed by governments.

[Mich the Tester]

Totally. Some of the "blame the bankers" crowd ought to reflect on the number of people who've died at the hands of a major bank, versus the number of those killed by governments.

Straw man argument.

[doodab]

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.