In the last 25 years we have allowed banks to balloon in size. Until the 1970s, banks\’ assets as a percentage of UK GDP remained steady at approximately 50%. By 2006, after decades of deregulation, banks\’ assets as a percentage of UK GDP were more than 500%.
We\’ve abolished capital controls you know. Finance has gone international. And as it happens, the City has become the centre of those international financial markets.
You would have thought that someone bright enough to get into Goldman Sachs would have known that. Or perhaps being stupid enough to leave there to go to the new economics foundation explains it.
For example love, we really don\’t give a shit about the size of the assets of UK domiciled banks. We\’re completely uninterested in the question in fact.
We do care about their liabilities, this is true, but not their assets.
Think for a moment, if those assets were entirely financed by capital we wouldn\’t care at all, would we?
Quite, it\’s the liabilities which are important, not the assets.