One of the few gleams on the horizon in recent months has been the speech organised by the Occupy movement last month and given by Andy Haldane (a member of the Financial Policy Committee of the Bank of England).
You can even find it on the Bank of England website here
For several years he has been a voice of sanity, and of some remorse, about the global financial collapse for some years. This time, he is agreeing that Occupy has been not only morally right in the issues that it raised, but analytically right also.
His speech begins to answer the question posed some years ago by this website – what have the events of 2007 meant for us ordinary people. Below is a brief section of his speech:
‘All in, this support to the financial sector amounted to perhaps as much as two-thirds of annual GDP in the UK and US, somewhat less (but still rising) in the euro-area. Those government transfers were not shared equally even across the financial sector, with a strong skew towards institutions deemed too-big-to-fail. This protected species status meant large institutions benefitted – indeed, continue to benefit – from an implicit subsidy from the state.
This subsidy is big. For the global banking system, it may currently amount to as much as several hundreds of billions of dollars each year. By comparison, that is multiples of the global aid budget. For UK banks, the subsidy amounts to tens of billions of pound each year. That too is multiples of the overseas development budget. These are extraordinarily large, and peculiarly-directed, government transfers to one sector.
If banks have been the winner from these transfers, then the wider economy has clearly been the loser. The damage wrought by the pre-crisis debt mountain has been huge and is still rising. The cumulative loss of output relative to trend is already fast approaching one year’s output in the UK. As context, only world wars come with a heftier price tag.
The strain is being felt by many homeowners, companies and, increasingly, governments. In the US alone, more than 4 million homeowners have so far lost their properties. Many more households and companies globally can only support their debts at near-zero interest rates. They are zombies, caught in a debt trapThe strain is being felt by many homeowners, companies and, increasingl
The financial press say that Andy Haldane will be Governor of the Bank of England, but not this time. Please may it not be long.