Debate Magazine

"It's Different This Time"

Posted on the 13 September 2017 by Markwadsworth @Mark_Wadsworth

From City AM:
British banking is an “accident waiting to happen”, according to a new report from think tank the Adam Smith Institute marking the 10-year anniversary of the Northern Rock crash.
Today’s paper, authored by Durham University finance and economics professor Kevin Dowd, also claims the Bank of England’s stress tests are “seriously flawed” and that banks are still too highly leveraged...
“It is disturbing that 10 years on from Northern Rock, the best measures of leverage – those based on market values – indicate that UK banks are even more leveraged than they were then. The biggest risk facing the UK banking system now is the Bank of England’s own complacency...”
The findings of the report have drawn criticism from a number of figures, including Jayne-Anne Gadhia, chief executive of Virgin Money, which now owns the “good” assets of Northern Rock.
“My experience, and the objective data, say to me that the interventions that have been made since Northern Rock crashed mean that a crash of that type, in my view, could not happen again,” she told City A.M.

There's a credit crunch/land price bust every eighteen years, no amount of banking regulation will prevent that, you've got to change the tax system (or adopt other measures to depress land prices).
Even if that were fixed, banks are run by criminals. There's another scandal every couple of years. There's a good list here. Libor fixing, PPI mis-selling, totally unnecessary interest rate swaps, money laundering/assisting with tax evasion, and rigging exchange rates. Not to mention the usual background insider trading, market rigging, overcharging etc. And that's just UK banks. I once found a longer list going back decades and all of it seemed rather familiar.

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