We shouldn't play the blame game, it is said. And why not? Because it's a self-indulgent, self-righteous inquisition that has no practical use but just satisfies some low part of ourselves that Christianity failed to cauterise.
Nonetheless, let's play the blame game. It is exactly what we should be playing. If no one's to blame, no one will really be punished and the whole thing will happen again.
First: the Prime Minister. Because the political cycle is faster than the economic cycle it is very, very rare for a politician to reap what he has sown. We now have the man at the helm who has run the economy from one end of the cycle to the other. The whole thing has taken place under his rules, his structures, his management.
And if he were to take the blame he'd change the way politicians think about their role: "I wanted you to think I understood the complexity of the financial world, but no one can. I told you I knew everything, but in the scale of things I knew an insignificant amount. I also spread responsibilities so there'd always be someone else to blame. I told you I could make the weather, but now I find I've lost my umbrella."
Second: the rating agencies. These institutions are at the heart of the crisis. They took fees from banks to rate their assets' riskiness. A better rating (the famous triple-A) cost more than a lower rating. This was no technical error, was it misfeance? Put 200 of them on trial and send the guilty ones to prison along with bent solicitors.
Third: remuneration committees. These are revolutionary cells of professionals who have captured the big organisations that host them. They are directors who have ratcheted up directors' salaries. They've detached themselves from the rest of the world. They can only be humbled by shareholder action groups. This may happen as the recession deepens. Here's a question for them: if bonuses are paid when targets are met, why aren't they clawed back when things subsequently go so wrong?
If we can muster enough indignation, we may get the directors and senior managers to knock a zero off their salaries until they've brought their banks back from the brink. Such a gesture of remorse might create an entirely new mood of recovery.
Incidentally, it's a public sector phenomenon too – why should chief executives of councils, or BBC managers earn so much more than the council leaders, or the PM? Is a smoking outreach diversity co-ordinator really worth as much as an MP? They're not the same as bank shareholders. These may have driven the collapse by demands for ever-higher returns, but by God they have been punished. They've lost 90 per cent of their investment.
Fourth: the chairmen, directors, and non-executive directors of the financial institutions. They allowed themselves to be cowed and baffled by experts. They didn't dare say: "I can't understand these new financial instruments and therefore I can't estimate the risk they present. Clearly, I am not a fit custodian of our shareholders' capital. Unless we desist, I can only resign."
Fifth: credit derivatives. I tread warily here because I don't understand them. But if they spread the risk so thinly that it disappeared, then it is probably true that in the opposite economic conditions, they will maximise the risk so that everyone is affected. It's a start anyway.
Much done, much to do, as they used to say in happier times.Reuse content