Good article here -Breaking the Banks- on the theme of the financial crisis and after. A couple of choice quotes below:
When an institution becomes so important that it cannot be allowed to fail, that implicit state guarantee removes any incentive – other than a purely moral one – to behave prudently. If the banks didn’t already know that the taxpayer would insure their losses, they do now. None of the new regulations proposed to require banks to hold more capital, change their remuneration packages and so on get anywhere near tackling this issue. And unless it is tackled the banks will simply carry on as before and we’ll all end up insuring them as before.
Now the reason to separate deposit taking and payment systems from the rest of banking is that these two activities are broadly speaking the things we need banks to do for our economies to keep functioning. These were not the areas of the banks that failed, but they would have disappeared along with everything else if major banking groups had been allowed to collapse. So we bailed out a whole load of speculative proprietary and frankly dodgy trading activities that should have gone to the wall in order to keep the cheques flowing and people’s savings in tact. Monumentally expensive and entirely avoidable. We literally can’t afford this to happen again.
Why not go one step further and use the Cornish Community Banking system or a Cornish Credit Union? Equally the Local Exchange Trading Schemes in Cornwall provides an alternative system for those sick of lining the pockets of others. For more information on alternative economics try: New Economics Foundation.