“Banking may well be a career from which no man really recovers.”
- John Kenneth Galbraith.
How much of the bailout money is actually supporting companies that provide jobs ? That was the question asked by entrepreneur Luke Johnson in his regular and typically outspoken column for the Financial Times last week. He answered it anecdotally, with reference to a “chilling conversation” with a senior banker, in which it emerged that almost three-quarters of the taxpayer lifeline provided to support British banks has gone to property lending. As Johnson sharply observes,
“A distorting addiction to real estate is part of why it all went wrong in the first place.”
You can give a banker money, but
you cannot make him lend. Or at least, not to those causes most worthy of the
aim. Gillian Tett, writing for the FT on Friday, pointed out that when Japanese
bankers, mired in their own credit crisis, were ordered to lend to small
businesses, they ended up directing loans to subsidiaries of Toyota – not
exactly what their governmental overlords intended. If both bankers and
politicians were constrained by appropriately powerful oversight, perhaps
financial crises would be less infrequent. That suggests that there may be a fundamental
problem with the democratic process itself.
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