It is a fascinating feature of this great financial disaster that everyone — or at least everyone sensible — is confused.
It is a fascinating feature of this great financial disaster that everyone — or at least everyone sensible — is confused. I do not mean the basic, widespread confusion about terms and processes — about what is short-selling or a derivative, what are monolines, HELOCS, etc. I mean confusion about what is good news and what is bad. Has America nationalised its banks, and if it has, is that good or bad? Was it good to allow Lloyds to swallow HBOS, because it saved the latter, or bad, because it overthrew competition requirements and created moral hazard? Was it good that Gordon Brown met Sir Victor Blank at a party and told him he could push through the Lloyds deal in defiance of competition law, because that showed masterful crisis management, or bad, because it was cronyism? Why was it clever to save AIG but good to let Lehman Brothers go? Is it good to turn Morgan Stanley and Goldman Sachs into ordinary commercial banks, because now they can no longer behave in their former racy way, or bad, because they have now been officially placed in the ‘too big to fail’ category, and are therefore protected from their own folly? Behind all these questions is an even bigger one. Why is it that government, which we generally, rightly, consider more inefficient than business, is nevertheless the authority to which we look to save us in such a crisis?
The Labour party conference’s response to these problems has been to expend emotional energy on attacking something of which we shall now see very little for a year or two — the City bonus.
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