This is from a very interesting article by the ever-astute Ambrose Evans-Pritchard in today’ Daily Telegraph:
“Let us all agree that top bankers behaved very badly. Let us agree too with Vince Cable that the fraternity operated like a cartel, rewarded far beyond ability or worth to society.
That said, the global crisis would have occurred even if bankers had been saints. The roots lie in the “China effect”, the world “savings glut”, and the whole way that globalisation has worked for 20 years.
The rising powers of Asia and the oil bloc accumulated $10 trillion of reserves, flooding bond markets with money. Japan put $1 trillion into play through the carry trade. Central banks in the West played their part by running negative real interest rates. They set the price of credit too low, especially in Club Med and Ireland.
All this combined into one colossal bubble. Bankers were the agents, not the cause. The witchhunt against them gathering force in this country has a nasty edge, and it has the character of a pogrom in much of Europe. We should be careful.
It is hard to see how this crisis can be defused. Germany’s Wolfgang Schauble has belatedly realised that the EU is playing with fire by pushing the UK too far. British exit would be “catastrophic”, he said, asking how the EU could convince anybody in Asia that it has a future if a key member is walking out.
This olive branch comes late in the day. Euroland leaders cannot exempt Britain from the Tobin tax because they know that their own finance will migrate en masse to London if they do, yet they are too committed to this suicidal enterprise to retreat altogether. So we must fight.”