The banks should have gone bust to begin with. It would have been catastrophic, but I think that should have happened. It was like a person that had grown a massive cyst on its head the size of a balloon. Realistically it should have been burst and operated on as it was kind of nasty. Instead the cyst is now the size of an entire village. I still think that morality means you admit you made a mistake and do something about the cyst. It will be even more painful, but do something as it looks and is hideous.
You can let the bank shareholders lose their money and sack and imprison the top execuatives but you have to guarantee the debts of any major bank or the entire system goes down and it destroys the real economy, we're talking situations far worse then Greece (Greece currently has 30% unemployment, debt compound trap etc etc) in every major country. Much cheaper to bail the baks out.
Regulate them afterwards by all means to prevent them doing it again and put bankers who break the rules in jail but impossible to let a big bank go bust.
The banks should have been allowed to fail several years ago. From this point on a bankrupt Britain is going to be held at gunpoint and the city of London with its legal team and Bank of England phantom money supply is going to carry on with what can only be described as rampant criminality.
My description of the massive cyst is apt because banks haven't changed. They are still insolvent and in turn the government is utterly broke. It would have been better to treat the cyst early and suffer the real pain as the moral hazard is now going to be kept on the books permanently and the UK is functioning as a protector of elite criminals and the rest of society has to pay for it on an almost permanent basis through financial repression. The average high street is a choice of bookie, pay day lender, or bank. Basically take a chance, tide me over, or financially repress me.
The Mt Gox situation is a good example of how to deal with a messy situation. You let the company go broke, some bitcoin is lost, the market goes down because of uncertainty, but in the long run every thing is clean as the bad apple is thrown away. The banking sector has done the opposite. The bad apples were reimbursed for their theft, are still getting filthy rich, and they print more of an ever debased and untrusted currency. The suffering and pain is temporary with Mt Gox and Bitcoin, it is permanent with the mafia Bank of England, The Tories, and the insolvent, fraudulent banks.
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