City Diaries: Your comments

BBC News website readers have been sending us their comments on the latest City Diaries. In the latest instalment our diarists reflect on the fact that the credit crunch is now two years old. What lessons have been learnt and what lessons do we still need to learn? Here is a selection of your comments.

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YOUR COMMENTS

Your diarists speak more sense than a lot of our leaders

Jonathan, Manchester

Your diarists speak more sense than a lot of our leaders. Free markets require careful regulation - not with micromanagement and politically driven decision-making that our current government favours - but instead with an overview that enforces rules even-handedly. Regulators should understand that competition is for the benefit of the customer (us) rather than the producer (banks). Above all regulation should ensure that we do not get into a situation where 'profits are privatised and losses socialised'.
Jonathan, Manchester

Politicians and commentators keep talking about things getting back to "normal". But what is normal? Being able to get a no deposit mortgage you cannot afford if the base rate goes up a couple of points, while having tens of thousands of pounds of credit card debt you cannot pay back? I'm afraid not. The lesson our society desperately needs to learn is that we all need to live within our means - from individuals to governments. If we are not, then the government of the day needs to take action such as raising interest rates and imposing credit controls to choke off any excesses before catastrophe hits. This will be politically unpopular but essential. Many governments, from Mrs Thatcher's to the current one, have simply followed the free market dogma and allowed debt to build up unsustainably. If the herd is allowed to run unregulated it is inevitable that the cycle of boom and bust will continue.
Andrew Edgington, Stowmarket

Many of us are blameless and resent hearing that we all somehow caused this crisis

P Thompson, Otford

Four superb analyses. I have read these columns with interest since they began and have seen them develop from an attitude of defensiveness and even aggressive finger-pointing at all but the banks to a well-rounded and objective analysis. I will say again that many of us feel blameless, most of my friends have no debt other than the necessary mortgage and live within our means. We were getting rather fed up having those responsible and who benefitted in the heady markets, telling us that we all somehow caused this crisis. All columnists rightly point out that there are systemic issues that are not being addressed. Is it any wonder when we have let finance become bigger than everything, even government? Where is the incentive to change? Either we force a rebalance or there will be further painful problems.
P Thompson, Otford

The thought of our politicians coming up with an answer to greed and stupidity seems far fetched. Their own track record speaks volumes; grabbing all the expenses they can, many of them seem to be unable to understand the more complex nature of business, markets and economics. Look at their management and waste in MoD, IT systems, NHS, etc. In most cases they react in haste and we all regret it in the long run.
Lixxie Scot, Glasgow

The FSA was a useless tool for monitoring the city's risk exposures

Alastair, London

I agree very little has been learned and financial institutions are charging ahead making much more than ever before in increased margins and fees. The FSA was a useless tool for monitoring the city's risk exposures and still is. It just shouts louder now, doing and achieving nothing constructive. It should have seen this coming with the massive increases year on year of the amount of CDO and CDS business being reported to them. Banks also should have been aware that these transactions could not be sustained.
Alastair, London

Why should my small current account be able to be part of the basis for investment gamblers to speculate, lose and land me with long-term, increased taxes thanks to the bail out? We need some kind of separation of investment banking/bankers so that they bear their own losses.
Michael Locke, Berkhamsted, Herts

Anthony's comments are naive at best. He can't compare Barings and LTCM. Eddie George let Barings go bust. If the FED had done the same with LTCM we may not be in this situation. When Antony states "The US Government made a catastrophic error..." he is just plain wrong. The best thing they could have done is let AIG fail and take Goldman Sachs and Morgan Stanley with it: bigger fall, but a generation of taxpayers have been saddled with debt both sides of the Atlantic and the lessons have not really been learnt.
Michael Lewis, London

The lesson that needs to be learnt, is that this recession has nothing to do with bankers. If there is any scapegoat it is government regulation. But really this is a case of greed and everyone wanting a bit more. Ambition is great, but that is different to greed. It was the normal person who took out these ridiculous loans. So why do they now turn around and blame another member of the circle? The capitalist system doesn't need transforming, however the overly-materialistic mindset of some people does. That is the real challenge.
Roberto, London

We recently had our best sales month for a year and our cash balance at the bank is actually larger than it was 12 months ago

Chris Green, Newport, Gwent

Laura says that she will only resume lending to companies with a better credit rating than her bank "which means only the top businesses, ... rather than small and medium sized businesses." She assumes that SMEs will not be profitable. Our company is a small electronics manufacturer/exporter and was hit hard by the effect of the credit crunch on our customers. Sales dropped 40% overnight in Oct 2008. To cope with this we went on a four day week and had to make redundancies but we also intensified our sales effort to find new customers in new countries.

These efforts have been successful as the economy in the world outside Britain is recovering much faster. We recently had our best sales month for a year and our cash balance at the bank is actually larger than it was 12 months ago. No doubt this gives us a bad credit rating in her eyes as we don't need to borrow any money. For her to assume that only large companies can be successful and SMEs are not worth considering is a sweeping generalisation which is totally unwarranted.
Chris Green, Newport, Gwent

There is deep anger that the taxpayer has had to bail out banks only to find, a little later, that many of them are made redundant while banks make profits and bankers continue to draw large bonuses. This cannot happen again. The public will not allow politicians to repeat the exercise and politicians are reluctantly beginning to realise this. Breaking up banks so that they can be allowed to fail may not be the whole solution but it must be part of it. But we are moving too slowly and it seems likely we will see a repeat crisis where over-large banks are again in crisis. Since they will not be bailed out again, they may well bring down the economy with them.
John Annan, Tiverton, Devon

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