I saw a re-tweet this morning which looked very binary in its perspective. I am not sure our current financial crisis can be viewed in such a simplistic manner.
The tweet said ‘there’s prob no choice re cuts, but annoyed that history is being revised so that financial crisis is due to public spending, not the banks’ (for the sake of discretion, I have avoided naming the original poster of the tweet and the person who re-tweeted it).
Firstly, I am not really sure that history is being re-written but here are my thoughts on the current financial crisis and some of the reasons we are in the mess we are.
1.The last Government they are at fault for a number of reasons; ‘the end to boom and bust’ ethos peddled by its Chancellor; the growth of our public sector (having been at hospital today – the admin of a hospital does give the impression of large and inefficient); and the public praise of bankers who behaved in an irresponsible manner.
2. Consumers – they took their spending lead from the government and spent money they didn’t have with the expectation things would always get better.
3.The Banks – yes they are partly to blame – they were given the opportunity to make lots of money and they took it.
4. The regulators who allowed banks to behave like this. As someone who works in the financial services community, I was and still am amazed at the culture that was allowed to exist in small sections of the banking community.
However, while it is easy to blame bankers for a set of circumstances they contributed to, we must also realise that a strong financial services sector will be one of our keys to financial recovery. One of the reasons the UK Government borrowed less than initial forecasts was due to tax revenue from this sector.
It is now time for us to learn from our mistakes and sort out the economy – hopefully through public sector cuts and through increased tax revenue as successful business pay more tax in line with their business growth.