Sunday, August 31, 2008
Help me on this, I am no expert. Isn't 'in sixty years' the most significant phrase in Alistair Darling's interview? Here is my theory. All the exotic financial instruments that flowered in the markets in recent decades were off-balance sheet ways of circumventing the capital adequacy requirements imposed on banks in an attempt to prevent another Wall Street Crash. Whatever the claimed benefits of these instruments, the financial system was in breach of the spirit of the law. The banks cheated and failed to be the one thing they sell themselves as being - prudent. That system has now collapsed. By 'sixty years' Darling means Britain's financial difficulties after the war, but he is also indicating that the massive breach in the post-Crash banking provisions requires a new wave of regulation and control of the markets - not necessarily more but different. If things are as bad as Darling says and unemployment rises significantly, then this new wave - New Deal? - will be more radical than we can yet imagine.
Posted by Bryan Appleyard at 7:55 am