The UK in recession
Posted on July 10, 2012
What have the following people got in common:
The UK government, financial regulators, my Gran, disgraced bankers, financial journalists, rating agencies, shareholders and Joe Public?
They all had a leading role in creating the financial crisis and ongoing recession.
The role of the bankers, including Fred the Shred of RBS and Bob Diamond of Barclays is obvious and very well-documented, but what of the others?
Financial regulators spent years over-analysing the nuances of marketing literature and debating with European counterparts on how best to create a single market for financial products- something which never seemed entirely relevant, and with prevailing euro-woes it seems difficult to envisage that consumers would shop around for financial products in different countries.
My gran- who died at the age of 91 five years ago, may be considered blameless, as she spent the last few years of her life in a care home. She seldom went out, but that reckless lack of spending meant that she 'hoarded' her savings until it ran out, and ignored the government's exhortations for people to help ‘spend our way out of recession’.
That brings us onto government. It was always convenient for politicians to seize on the financial crisis as a problem made by bankers, but in reality the crisis was just as much made in Downing Street, which over many years (he says to stress the apolitical nature of these comments) set all sorts of bad examples on fiscal prudence, whilst continuing to promote the notion that our big banks and investment companies must be protected as they were creating real jobs and prosperity for all, rather than as now seems clear, for the few.
Financial journalists meantime have shown a great capacity for making a bad problem worse. Nothing sells papers like bad news, and as best exposed by the run on the bank at Northern Rock, sensationalist coverage can cause real harm and undermine public confidence.
Rating agencies too have exerted excessive influence and along with shareholders forced companies to focus on a quick profit rather than sustainable long-term growth.
And the public themselves have had a central role to play, by taking on ever more debt and exempting themselves from the consequences. There is a deep-seated belief in get rich quick schemes, which helps explain how fraudsters find a too willing audience for their scams. It explains how the carpetbaggers of building societies believed they could earn an effortless bonanza without the ensuing drop in service and performance that followed.
In short we all must take some responsibility for the extended recession in the UK. Whilst it is tempting to keep blaming the banks, the truth is that we have been reckless as a nation, and will only dig ourselves out of recession by a concerted effort, to act responsibly, decently and morally and to appreciate that actions have consequences.
That said, at least some of the people in some of our major UK banks have behaved very badly, and the government must act to safeguard the interests of the nation and those of consumers. But that kind of change will be painfully slow if the timeplan for instituting the recommendations of the Walker Review are anything to go by, so consumer can act themselves now- in an earlier blog I mentioned the move your money campaign, who report that already this year half a million people have switched away from one of the big banks. But that still leaves most of us that haven't...
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