Politics | 14 February 2009

It cannot be much fun to interrogate men who are already broken, but the Treasury select committee had assembled on Monday for a show trial rather than a genuine cross-examination of witnesses. Sir Fred Goodwin, former head of RBS offered a ‘profound and unqualified apology for all the distress that has been caused’. And how well it would have suited the MPs around that table if this had been an admission of guilt not just for the banking crisis, but the wholesale collapse of the global economy. Such an act of ‘closure’ — if anyone had been convinced by it — would shield many of our politicians from the humiliation they deserve.

For a bubble to exist, the entire political and financial establishment must climb inside it. When the bubble bursts, as J.K. Galbraith observed, they then enter a state of denial. New financial instruments and techniques were waved through and the debt-fuelled speculation was ignored.