Economy & Banks

I hear that again and again, but I don't think it's that simple.

I think what happened during the 'good times' was a massive erosion of the state, which has reduced its ability to act as a safety net. Tax evasion via tax havens on a massive scale and other factors are chiefly responsible for the apparent lack of reserves now.

I'm not a statist and I won't defend all the public spending I have seen in the areas of transport and planning, but there is still a huge untold story there. I don't know if we'll ever get truly balanced reporting on it; for one, it just seems to be too complex as messes go.

I wouldn't lay the blame solely at tax avoidance/evasion. The boom/bust in reserves were significantly influenced by the boom in stamp duty revenues from housing mania, which dried up when prices started to stagnate. This revenue stream isn't likely to come back soon, given that house prices are only just starting the long slow drag to the bottom of this cycle.

I expect that when we look back on all this, the intervention (interest rate cuts) that stopped the world econmies going into recession in 2001/2 will be seen as the catalyst for the financial armageddon, as deregulation sped up after this to "help keep the economy moving".