Friday, September 21, 2007
British Bankers Association behave as a union to protect their industry
... and they do so at the expense of the wider economy. This is a great analysis from Martin Wolf in the FT who lays the blame for the recent credit crunch squarely at door of the banking industry itself. They have engaged in irresponsible lending and now essentially hold Mervyn and the whole UK economy to ransom for taxpayers' money to bail them out of a jam. "In a game of chicken, the loser is the player who swerves first out of the way of the other driver’s car. Since the Bank is concerned about the health of the economy, while the banks are concerned only about their survival, the former is at a huge disadvantage. Apparently, the banks told the authorities they would not lend to their weaker brethren until the Bank opened its wallet. The threat was credible and the Bank swerved."