[Closed] Bankers: was it really their fault?

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Ultimately, the management of the banks went down a risky path

Very true, but don't stop there, it's the next bit that's so important (especially if we want to play the blame game).....WHY?

IMO it is best studied in conjunction with politics and philosophy. This makes it a more "real" and useful subject.

Perhaps - although IMO this still doesn't excuse the preponderance of PPEists inhabiting Government, who insist that market platitudes are a sound basis for policy. The small print in current healthcare reform is chock-full of received wisdom about "competition" that makes very little sense on the ground (not least in acute care) - and it's grimly amusing to see Monitor [the [s]Mckinsey alumni job scheme[/s] health regulator] belatedly discovering just what an [i]utter[/i] clusterfug the ConDems have unleashed (excepting those who regard such fragmentation as the [i]actual[/i] plan, of course...).

Does money actually exist?

Chainreaction vouchers, innit. Actually, as a single bloke with no real responsiblities, I tend equate money with 'time'.

Edit: E.F. Schumacher's joke is still doing the rounds:

I was sitting on a train the other day in England and found myself in a compartment with three gentlemen who were having a heated debate. I couldn't help hearing what they were saying and I gathered that one of them was a surgeon, one was an architect, and the third was an economist. They were discussing whose was the oldest profession. After a totally inconclusive debate finally the surgeon said, "Look here, come off it? I mean, there's no doubt: if you know Genesis, the Lord took a rib out of Adam to make Eve, and that was a surgical operation."

But, unabashed, the architect said, "Well, long before He did this He had created the whole universe out of chaos: that was an architectural job."

And the economist said merely, "And who created chaos?"

WHY?

IMO it is best studied in conjunction with politics and philosophy.

I might also point out that, in the case of HBOS, the Risk Control function was chronically under-resourced and that the warnings they tried to flag up were ignored by those at the top. I'm still amazed that we've seen none of those responsible charged with some sort of corporate fraud (other than Peter Cummings) and that the only censure was the loss of a knoghthood or two. Andy Hornby, the man in charge at HBOS has since picked up another role at bookmakers Coral. Personally, I'd have moral reservations about employing such a shyster but maybe he's already proved he's good at gambling and taking other folks money.

Anyway, my point is that it's unfair to blame "bankers" as if everyone who worked in a bank was in some way complicit - and we should remember that many, many thousands lost their jobs.

I think when folk say bankers they mean the ones at the top making the decisions,the players of the market, the investors in the city, Hedge fund players etc rather than the person behind the counter in their local branch
I think everyone can see that difference

Good point JY! But seriously, economics addresses how we allocate scarce resources. Philosophy adds the question, "what is the right thing to do" and politics sets the context, "why are we doing it." Both make economics more useful and less abstract IMO.

I think the problem with the politicians is that they have broadly have the same frameworks. The enigma for me is ed balls because he writes very well and brings a quite different perspective. But then screws up in practice and when talking especially in the westminster village.

I'm sure I will get a shoeing for voicing my opinion, but it is the idea of a "growth" economy as a whole at a base level that caused it.

Money/wealth is like Energy. it CANNOT be created, nor destroyed. Any and all who are making a "profit" are making it a the expense of someone else in the system (on four dimensions, a this now includes the time axis). End of.

Unfortunately society sees this wealth accumulation as a thing to aspire to, the top gets heavier and heavier, the base gets narrower and narrower. it has a limit! it cant go on forever! in an idealistic term, we would all be super rich, when we were all super rich, we would all be just as rich as each other, and therefore not rich.

I recognise the system is hugely complicated, but on a base level the system has to conform to a certain set of physical laws, and it is currently trying (and succeeding) to dodge them, but as it climbs higher, when it inevitably falls, it just has further and further to fall.

I obviously wouldn't want it to happen to me, or anyone else, but when the banks fell, due to bad decisions they should have been allowed to fall. this would force people to voice how much risk they were prepared to put up with the banks taking with their money. As it was/is, people go for maximum return because they know that if it doesn’t work out the government will give them their money back anyway (which will then be taken from future taxes)

I have no problem with a capitalist system as such, but it has to recognise it works both ways! This obsession with "growth" is so stupid.

Yes you SHOULD be able to buy a house, you borrow money off the bank (cash that is in the bank from other people), and PAY IT BACK. If the bank doesnt have the cash to lend, it shouldnt lend it!

Why is socialist SUCH a "dirty" word? That rubbish they were bonking on about how Ed rubber bands dad was a Marxist? as if Marxism was on a par with Naziism. Hating one random group of people, and not believing in "profit" are not really comparable.

Money/wealth is like Energy. it CANNOT be created, nor destroyed

Money and wealth aren't the same thing, but you are wrong on both counts Imo.

defining:

Money: tokens used in substitute of actual things when exchanging things for different things (or services)
Wealth: accumulation of the above

Please explain

Wealth can be created. It is the basis of civilisation. If I had to make everything that I use I would be very inefficient. Grow my food, build my house, treat myself when I am ill etc etc. The fact that we specialize means that you can create a surplus which you then trade for things you want. Also known as profit. Something like a bike can be created because I make a profit which I then spend on a bike & lo! bicycle manufacturers appear to fill that desire.

I believe, personally, you are mixing up profit with efficiency. You may not have to build your own house, but you do have to pay for it. That money pays the people who built it. Building a top end plastic bike frame would not be efficient for you to do yourself, but you could do it. A specialist has that market as they have the tooling and staff and skill etc etc in place. The costs for those overheads are spread over multiple consumers, but the costs remain.

But then screws up in practice and when talking especially in the westminster village.

Perhaps the other problem is they have to frame arguments in a way the person on the omnibus can comprehend - you often give economic answers that mean few of us have a clue what you are talking about* - perhaps this is what they need to avoid doing to the electorate and they sound dumb to you?

* Not a dig just saying if you use the language of economics few can follow your argument.

I wasn't meaning his stutter - that is unfortunate and he does very well to mask it. I mean that he has to play party political bullshit all the time, However, perhaps the biggest complement that he can be given is (1) he coined the best description of the UKs economic performance ("flatlining") and when the rest of the BS is stripped away, what Osborne implemented was pretty much exactly what Balls was calling for. In the end the Tories did not cut too far or too fast (to the dismay of many RWers) and the end policy was pretty close to what Balls was recommending. Not that either is likely to admit it!

But for me, Balls biggest sin as an Economist (and forget the rubbish about his job title as he was the main Labour economic brain) was to forget the essence of what his Keynesian training taught him and what he himself has written about. Under Labour, Gov finances were at one point coming under control and a true Keynsian would have adopted counter-cyclical policies to ensure we built up surpluses that would have allowed us to manage the downturn better, Instead in a mark of hubris, his trainging was ignored and we went on a fiscal gorge fest at exactly the wrong time making the subsequent downturn worse and reducing our ability to respond to it. For that (forgetting what he was taught and what he wrote himself) I find it hard to forgive him!

Can you stop making reasonable points as it hurts to much to agree with you 😉

Indeed we should have banked some for the bad times but they did not need to as they had ended boom and bust

Both make economics more useful and less abstract IMO.

What we need is an academic discipline that involves critical thinking about the past (so as to avoid repeating mistakes).

We could call it 'History'. 😉

True - currently looking for which Unis offer History, Philosophy and Politics for number 2 son!!

May be more useful than PPE!!

May be more useful than PPE!!

I dunno, IME, Personal Protective Equipment has its uses.

Good luck with THM junior's application. My head spins when I reflect upon the fact that it was nearly 20 years ago that I filled out my UCAS form... 😯

It was a lot easier back then. Perhaps NWind can give us tips!!! Still a year away from submitting for number 2.

I thought you would have had him darn't pit by now thm? 😀

Nah, he didn't even help with the grass today. Writing homework essays on Kant instead. The surreal life of the modern teenager!!!! He did get short bike ride in though so I will let him off!

@Junkyard - going back to yesterday; yes shareholders money is the basis for loans. Don't think about the trades on the stock exchange but the original issue of shares, "real money" moves from shareholder to bank.

There was a comment earlier about banks and capitalism (banks being the peak of capitalism I think), the two are inextricably linked, to have have a healthy vibrant capitalist economy you need a healthy banking system. What we are seeing now is that with the banking system damaged (due to out doubted excess) the general economy is suffering. Capitalism as we see it certainly isn't "perfect" but it's certainly proved to be the most effective and dominant system.

Don't think about the trades on the stock exchange but the original issue of shares,

I could live with being a bit poorer and a lot fairer personally though its a minority voice in the main.
this is not what i would call effective personally - the top 0.001% have more wealth than the bottom 99.9%
thats 91,000 v 6 billion ish!!
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