On the subject of the bankers who approved all the dodgy deals that led to the crash, who made it possible for them? In this country, at least…
A very good point Mr Woppit, and something which is well worth remembering – good on you for bringing it up.
As molgrips suggests, deregulation of the financial services industry was an absolutely vital and central feature of the 'Thatcher revolution'.
When Thatcher came to power in '79 the Wilson government had placed very strict credit controls. For example banks were only allowed to lend for specific purchases, and the borrower was forced to contribute at least one third of the purchase price. And there was no such thing as 100% mortgages, and certainly no 110+% mortgages, iirc a minimum of 10% deposit was required.
Thatcher immediately set about scrapping credit controls and deregulating the banks. This was partly due to her unwavering commitment to laissez-faire economics and the 'invisible hand' of the market.
And partly because she was committed to cutting back on wages – one of her mantras at the time was "we've been paying ourselves too much, for doing too little" and therefore credit had to be made more easily available to the ordinary consumer. Her counterpart in the US, Ronald Reagan, also deregulated the US banks.
It was should be noted that Thatcher's commitment to laissez-faire economics and the invisible hand of the market was always very selective. She certainly didn't, for example, extend it to the setting of interest rates, which was kept totally under political control and used it as a means of controlling the economy – with such devastating effect.
The Thatcher/Reagan revolution led to massive profits for the financial institutions – in fact embarrassingly high profits. So much so, that Thatcher was forced to slap a windfall tax on the banks.
The Thatcher/Reagan revolution also unleashed new levels of greed by the financial institutions. A level of greed which became blind and in denial of the risks. A level of greed which was only concerned with short-term results.
It also created a culture of culmination of material wealth and property ownership, driven by easy and irresponsible credit. Eventually the chickens had to come home to roost, and they did, in 2008, starting with the US financial institutions.
Still, never mind. When the going was good, many people got very rich. And when things went a sour, well, as the OP points out, it's always a 'win win' situation for the people who really matter. So I'm sure that if Thatcher hadn't lost her marbles, she'd be cool with it all.
But is there any culpability on the part of New Labour in all of this ? Too **** right there is – they had 12 years to consign Thatcherism and Reaganomics to the dustbin of history, but they chose not to do so. Something which I will never forgive them for.
