We could and should be taxing bank profits an extra 10%, according to tax campaigner Richard Murphy, to cover the cost of that unseen insurance.
Simply wonderful, don\’t you think? Higher taxes are indeed the solution to everything.
So, what actually happened? We had a regulated banking system. We also had a shadow banking system which grew up along side it. The regulated system indeed did have that insurance, the shadow not. The regulated banking system faced higher costs as a result of both the insurance and the regulation.
The shadow banking system, without insurance, fell over. As banking systems without insurance tend to do (this should be at the heart of any critique of what was going on. Banking systems without insurance will, not might, but will, fall over. We should indeed blame bankers, regulators, economists and Uncle Tom Cobbleigh for forgetting this basic point in their euphoria.).
However, the cost gradient, from regulated to shadow, led business to move from regulated to shadow, making the crunch, when it came, worse.
So what does Ritchie propose? That we should increase the cost gradient, that we should push more banking from the regulated world to the shadow.
Oh, well done sir, well done indeed, a work of friggin\’ genius.