Some choice paragraphs from a scathing new Martin Wolff column on the trouble with banks:
The world has witnessed well over 100 significant banking crises over the past three decades. The authorities have even had to rescue important parts of the US financial system – on most counts, the world’s most sophisticated – four times during the same period: from the developing country debt and “savings and loan” crises of the 1980s to the commercial property crisis of the early 1990s and now the subprime and securitised-credit crisis of 2007-08.
No industry has a comparable talent for privatising gains and socialising losses. Participants in no other industry get as self-righteously angry when public officials – particularly, central bankers – fail to come at once to their rescue when they get into (well-deserved) trouble.
Nicely put.
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Not a fair criticism at all – and believe me, I’m the last one to defend what many of these guys did to cause their problems – but at the end of the day the banking system provides such value to the stability of the overall economy that they deserve their due reward and it’s in the best interest of the system as a whole to protect it when its in distress.
Just my two pennies.