A few months ago, I tried to reply to a post in The Badrash about the banking crisis but I think it was far too long... I was cleaning up my hard drive when I came across the text I had written at the time. So this is a bit of a recycled text from Q4 2009 but still valid nevertheless:
They are even talking about it in Australia.
So that is what I compiled and wrote around mid-October 2009.
Since then, a few things have happened.
9 Dec 2009: S&P places Spain sovereign debt outlook on negative watch. Edward Hugh expands and explains. But check this older post for a back-to-basics explanation and background on the whole fiasco.
3 Feb 2010: BBVA presented results in Q1 2010 and people started asking questions [again] about NPL (non-performing loans), or mortgages in arrears/default to you and me.
17 Feb 2010: JP Morgan issues a report on regulatory reform and capital requirements of the banking sector, looking at dynamic provisions, one of the idiosyncratic features of the Bank of the Spain regulation of the banking sector. This report vindicates something I wrote many months ago in someone else's blog and at work in 2008: "..dynamic provisioning or not, Spanish banks are toast. Would you be saved by an airbag if you were driving at 200Km/h?".
18 Feb 2010: Credit Suisse publishes a research note on Spanish banks. Top read.
And of course we have the whole sovereign debt crisis in Greece and moving westwards across the Mediterranean (and Ireland) into what the europhobe and ignorant anglo-saxon media have termed the PIGS.
So let's recap:
1) The banks get themselves into a mess of their own and end up insolvent or bankrupt.
2) Sovereign states (ie: taxpayers) come to the rescue of the banking and wider financial sector and inject billions of euro/pounds/dollars into the financial system.
3) Now the financial sector turns their attention to the fiscal position of sovereign states and demand that spending be curbed or taxes raised to reduce debt.
4) Politicians across the western world get ready to cut public sector investment (that's schools, hospitals, police, transport, and so on) and/or lower corporate taxes to attract foreign investment and encourage growth.
And then when people complain about this rotten state of affairs, they are labelled populist and that banker-bashing is childish.
If I was a teacher/policeman/nurse/bus driver/social services officer about to lose my job because of the demands of the very people that got bailed out by the taxpaying public I would feel nothing but hatred for any manager/front office dumb-ass working in the financial sector who is still defending the indefensible against any logic.
There is no other "industry" in the world of business that can get away with deception, duplicity, theft, tax avoidance and an absolute disregard for the wider common good in such a massive scale as the self-serving, socially useless banking and investment sector.
And what can be done about this?
Nothing, absolutely nothing because our politicians are all in the pockets of the financial sector. It is all very depressing.