Bankers and the Blame Game

The BBC Today programme today covered an interview between Robert Peston and John Varley, CEO of Barclays on the extent to which the banking industry should accept responsibility for the financial crisis and the collapse in lending. This clip includes a section of the interview - the full version will be on Panorama - but the real value is the follow up discussion between Evan Davis and Professor John Kay in which John makes a telling point about the nature of banking risk. The kinds of bank loans that most of us need - to finance a home improvement, or a student loan or an extended overdraft to tide us over unemployment or a period of difficulty were not the types of risk-taking by banks that got us into this trouble in the first place - excessive leverage built on securitisation is the root cause of the crisis.

Evan Davis used to be taught at Oxford by John Kay - it was a delight to hear their conversation on radio this morning as I headed into the final furlong of the Christmas shopping - but the streets of my own home town were strangely quiet even by 11am when I headed home. Was it the same where you live?

John has a new book coming out next month which promises to be timely and enlightening - the title is The Long and the Short of it: A Guide to Finance and Investment for Normally Intelligent People Who Aren’t in the Industry - and it is available for pre-order now on Amazon.

Unit 3 Micro: Game Theory and Business Economics [21 May 2012]
Unit 2 Macro: UK Trade in Services [20 May 2012]
Unit 2 Macro: Bank Cuts UK growth Forecast for 2012 [16 May 2012]
Unit 1 Micro: Asymmetric Information [12 May 2012]
Unit 1 Micro: De-Merit Goods [12 May 2012]
Unit 2 Macro: Revision Notes on Supply-side Policies [10 May 2012]
Unit 2 Macro: Monetary Policy and Inflation Glossary [5 May 2012]
Unit 2 Macro: Trade and Balance of Payments Glossary [5 May 2012]
Macro Revision: Putting Things in Context [29 Apr 2012]
Unit 4 Macro: The Euro Zone Crisis (Revision) [22 Apr 2012]
Unit 2 Macro: Revision on Interest Rates and the Exchange Rate [3 Apr 2012]
Unit 1 Micro: The Collapsing Price of Carbon [3 Apr 2012]
Unit 4 Macro: Floating and Managed Floating Exchange Rates [2 Apr 2012]
Posen on slower growth in the UK compared to the USA [30 Mar 2012]
Unit 2 Macro: Revision on Capital Investment [30 Mar 2012]
George Buckley at the Millfield Economics Society [28 Mar 2012]
Beyond the Bike - Monetary Policy in Africa [28 Mar 2012]
Unit 1 Micro: Government launches New Buy Loan Guarantee Scheme [12 Mar 2012]
Mortgage interest rates, LIBOR and game theory [3 Mar 2012]
The Economics of Climate Change - Stern 5 Years On [21 Feb 2012]
A return to Glass-Steagall to prevent another crash? A lesson from economic history. [17 Feb 2012]
Unit 4 Macro: King on the UK Economy [15 Feb 2012]
Martin Wolf on Global Shocks [10 Feb 2012]
Unit 1 Micro: Can the UK Computer Games Industry Grow [24 Jan 2012]
Unit1 Micro: Processed Meat and Cancer Risk - Information Failure? [17 Jan 2012]
Unit 2 Macro: Frontier Markets - the New BRICS? [15 Jan 2012]
Beyond the Bike - The Importance of Remittances [15 Jan 2012]
Unit 4 Macro: Competitive Advantage in Trade (Some Videos) [12 Jan 2012]
Unit 4 Macro: UK Bond Yields Reach Record Lows [11 Jan 2012]
Unit 2 Macro: Quantitative Easing in the UK [8 Jan 2012]
Unit 4 Macro: Natural Disasters and their Economic Impact [7 Jan 2012]
Unit 4 Macro: Exchange Rate Economics - Where next for the US Dollar? [31 Dec 2011]
Unit 2 Macro: The UK Housing Market in 2011 [26 Dec 2011]
Economics of Deforestation [20 Dec 2011]
Unit 2 Macro: Mobile Phones and African Economic Growth [18 Dec 2011]
Beyond the Bike - What is the value of life in Africa? [19 Nov 2011]
Beyond the Bike - The Value of Money [19 Nov 2011]
LSE Lecture: Daniel Kahneman - Thinking Fast and Slow [15 Nov 2011]
Unit 2 Macro: Should the EU introduce a Tobin Tax? [14 Nov 2011]
Unit 1 Micro: Asymmetric Information - Buying a Used Car [14 Nov 2011]
AS Macro: The State of British Business [13 Nov 2011]
Eurozone crisis - a selection of resources [12 Nov 2011]
Unit 4 Macro: Should TNCs make full disclosure on factory wages? [30 Oct 2011]
Unit 3 Micro: UK Executive Pay - All in it Together? [29 Oct 2011]
Can the “invisible hand” solve Africa’s poverty? [13 Oct 2011]
Why Is Macroeconomics Such A Mess? [11 Oct 2011]
Unit 3 Micro: Tube Drivers set to earn £50,000 a year [3 Oct 2011]
Unit 1 Micro: Drink Driving and Government Intervention [26 Sep 2011]
Greek debt decision tree [25 Sep 2011]
Unit 4 Macro: IMF Flags up Risks of Double Dip [20 Sep 2011]
UK Macro: Risks of a Double Dip Recession [12 Sep 2011]
Mixing with the Nobel Economists [4 Sep 2011]
John Kay on the future of Economics [26 Aug 2011]
Unit 4 Macro: Evan Davis on Re-Balancing the Economy [25 Aug 2011]
Monetary Policy Roundtable [25 Jul 2011]
Unit 4 Macro: Dangers of High Inflation [11 Jul 2011]
Where there’s muck there’s brass [6 Jul 2011]
Global Economy: Increased risk of future shocks [28 Jun 2011]
AS Macro Key Term: Deflation [24 May 2011]
A2 Micro: Oligopoly [20 May 2011]
A2 Micro: The Importance of Profit [19 May 2011]
A2 Micro: Business Growth [18 May 2011]
A2 Micro: Ownership and Control in Modern Businesses [18 May 2011]
Unit 3 Micro: Diseconomies of Scale [18 May 2011]
UK Economy Update: What Mervyn Said [11 May 2011]
Electric car charging points ‘shortfall’ [11 May 2011]
Review of “Adapt” by Tim Harford [9 May 2011]
AS Micro: Offering heart drugs by default [5 May 2011]
A2 Micro: Innovation in Markets [4 May 2011]
A2 Macro: Back to Roubini - a Year On! [11 Apr 2011]
OCR F585 June 2011: Euro Area on the Rocks? [11 Apr 2011]
ECB breaks rank and raises interest rates [7 Apr 2011]
AS Macro Key Term: Aggregate Supply Shock [6 Apr 2011]
AS Macro Key Term: Expansionary Monetary Policy [4 Apr 2011]
Information Failures: Tesco and Second Hand Cars [3 Apr 2011]
A2 Micro: Updates on Competition Issues [2 Apr 2011]
Pacific Peso Reaches 29 Year High! [30 Mar 2011]
Progress towards low carbon economic growth [18 Mar 2011]
Why is the Yen appreciating? [18 Mar 2011]
Ireland - Mass Unemployment and Shrinking GDP [10 Mar 2011]
Information Failures: Health Warnings on Cigarette Packets [27 Feb 2011]
Information Failures: Ponzi Schemes [27 Feb 2011]
Mo Tanweer on Global Currency Wars [10 Feb 2011]
David Smith on Shifting Sands in the Global Economy [8 Feb 2011]
Martin Weale argues for higher interest rates now! [1 Feb 2011]
Regulation and the banking industry: reflections from Davos [30 Jan 2011]
Shorting the market - the vultures target HMV [23 Jan 2011]
Will we have to live with high unemployment? [17 Jan 2011]
What might dominate the headlines in 2011? [16 Jan 2011]
Environmental Economics: Five Fresh Links [13 Jan 2011]
Economics Q&A: Will the Government spending cuts affect inflation? [3 Jan 2011]
iLand - Shareholders and Taxpayers feel the Pain [24 Nov 2010]
Agflation - a new food price crisis in 2011? [18 Nov 2010]
What You Need to Know About Economics [18 Nov 2010]
Keeping the Plates Spinning - the Success of the Goodwood Brand [11 Nov 2010]
The Acid Burns Through - Requiem for Neo Liberalism [28 Oct 2010]
The Upside of Irrationality - Dan Ariely at the LSE [27 Oct 2010]
Predicting recessions - a mugs game [27 Oct 2010]
Risks of over-capacity in Chinese car making [17 Oct 2010]
The Costs and Benefits of Inequality [17 Oct 2010]

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