Finally

At last, Allister Heath has said what most other people are too afraid or too stupid to admit: that bankers, and specifically their bonuses, had but a supporting role in the financial crisis and subsequent economic downturn. Bashing then is not just pointless, it is counterproductive and does not address the true reasons for the crash - which means it may happen again.

The seeds of the crash were sown years ago, with an oversupply of cheap money from China and the East. This funded our addiction to debt in the West. More than. Hence the continued downward pressure on interest rates despite the increasing debt levels. Add to this the central bankers' focus on price inflation, rather than asset values (despite the efforts of William R White), which encouraged a housing boom of epic proportions. Low inflation, rising personal wealth (on paper) and access to easy credit along with changing attitudes towards debt made us believe that the good times would never end.

The banks had their role, of course. Collateralized debt is a sensible way of spreading risk, not an investment opportunity itself, but in world of cheap money and a relentless search for higher returns, the latter was always going to be the case. Irrational exuberance took hold and the financial system collapsed. Being the the lifeblood of the economy, it took it down as well.

However, the instability was already there, in the form of assets bubbles and unsustainable personal and corporate debt. Think of all the leveraged buy-outs and sizes of the numbers involved. Think of all how many people had multiple credit cards, using new ones to pay off old ones. Remember that it was sub-prime losses that triggered the loss of confidence in asset-backed securities. In this sense, CDOs were not the problem, just the messenger.

The moralistic finger-wagging by politicians of all stripes in the direction of the financiers is all about deflecting blame. They know that, as overseers of the economy, they could have prevented much of the pain. As individuals it is easier to march on London and kick in a bank shop window than to admit that we are in debt because we lived beyond our means, spending money (credit) on crap and not saving nearly enough.

It feels good to make jokes about The Shred, or to call everyone in a suit a bastard. Hypocritical politicians had fun grilling bankers in public, ignoring the campaign contributions or other benefits received in the past. But by ignoring our own culpability we lose sight of the changes we need to make: save more, consume less; encourage the banks to hold more reserve capital, make it possible for even the biggest to fail without taking the whole system with it. And politicians must address the global macroeconomic imbalances that precipitated all of this...and still exist today.