It was supposed to be "never glad confident morning again" for capitalism. After the popping of speculative bubbles during the Great Crash of 2008, surely we weren't going to carry on as if nothing had happened? Well, I am afraid to say, ahem, yes, that it sort of looks like that.
The Chancellor of the Exchequer, Alistair Darling, announced plans to tighten up bank regulation on Wednesday that were widely denounced as feeble and the ever opportunistic George Osborne, the Shadow Chancellor, said that he would publish an alternative White Paper later this month.
Then, as if to underline the fact that nothing much has changed since the crisis, the Nationwide Building Society introduced a mortgage scheme that allows borrowers to take loans worth 125 per cent of the value of the property they are buying. It is being made available to existing borrowers whose loans already exceed the value of their homes and who want to move. Actually the best thing such borrowers could do would be to stay put or downsize and the best thing the building society could do would be to avoid excessive risk.
As for mouth-watering pay for bankers, the Chancellor recently approved the decision by the Royal Bank of Scotland to grant its new chief executive, Stephen Hester, a £10m pay deal. Mr Darling commented at the time: "I've always said that there's nothing wrong with a bonus that incentivizes people to take a long-term view and claw back if they don't actually make those requirements, and that applies from the top to the bottom of an individual bank."
Yes, indeed, but £10m? Would Mr Hester have walked away if the value of the reward had been, say, only £8m? And would it have mattered if he had departed?
So why is it business as usual? Chiefly because the big trends in trade and finance, global as they are and beyond the control of a single country, haven't changed. Fast-growing Asian economies will go on generating excessive savings that will be invested, partly at least, in Western financial markets. Globalisation will endure, only slightly inhibited by fresh protectionist measures, and will exert a downward pressure on inflation and interest rates.
Pope Benedict acknowledged these unchanging realities in his encyclical letter, "In Charity and Truth", published this week. "Economy and finance, as instruments," he wrote, "can be used badly when those at the helm are motivated by purely selfish ends. Instruments that are good in themselves can thereby be transformed into harmful ones. But it is man's darkened reason that produces these consequences, not the instrument per se. Therefore it is not the instrument that must be called to account, but individuals, their moral conscience and their personal and social responsibility."
Moreover, contrary to expectations, voters showed no inclination to give left-wing parties a special boost in the European elections that were held last month. Centre-right parties gained in Germany, France, Italy, Belgium, Britain, the Netherlands, Portugal and Spain, and across most of eastern Europe. Only Sweden, Denmark and Greece were exceptions.
Electorates, thinking pragmatically, seem to have concluded that the 21 European governments of the right have not managed the crisis as badly as all that.
However, as far as pragmatism goes, nobody can outdo Angela Merkel, the German Chancellor. At a meeting of European finance ministers last week to discuss the reform of bank capital and accounting rules, her representatives lobbied for a temporary loosening. The German delegation didn't succeed, but it will try again.
The truth is that German banks are sitting on hundreds of billions of losses that they do not care to acknowledge. Fortunately that may not matter as much as it would elsewhere for the government itself and state governments own much of the system.
So instead, enthusiastically aided by the French, the Germans concentrate on trying to tighten up the regulations of financial activities in which they play a small role but which are chiefly conducted by the City of London such as hedge fund management and trading in exotic instruments like swaps and derivatives. As a result we also, equally pragmatic, stoutly defend our extensive financial sector. "Never glad confident morning again"? Probably not, but the sun will continue to shine on financial markets.Reuse content