The Bankwatch

Tracking the consumer evolution of financial services

A failure of politics

The banking and economic crisis of 2007 has touched many aspects of our lives and a now a clear trend and fallout, is the failure of politics. 

I am biased but I look at Britain and believe there is still a hardy attempt there to keep things moving.  I watched David Miliband (Left) and Bronwen Maddox (Rightish journalist)  today being interviewed by Fareed Zakaria.  While they commented on the UK economy and the arguments for and against austerity and stimulus aspects to budgets, it was notable that they do not paint themselves into a corner that cannot be exited.

Now lets look at three other countries;  Greece, Italy and US. 

Taking the last first, we hear today that the Congress ‘super committee’ cannot agree on a new budget to get themselves back on track following the rating write down from AAA.  This hot on the heels of the budget decision failure in August.  Members of the committee on todays Sunday talk shows noted that the <insert party name> would not come forward with a <insert party line in the sand on taxes or medical care> therefore it is their <the other guys> fault.

In both Greece and Italy we learned a new word that was previously reserved for communist Chinas government – technocrats.

Italy forms cabinet of technocrats |

Mr Monti, appointed last week as senator for life, unveiled a cabinet list made up exclusively of un-elected technocrats after the main political parties refused to take up cabinet posts on offer. The new slimmed-down team includes three women and is dominated by academics and civil servants.

Greece is similar with an academic approved by both political parties to run things while the country takes the actions required by the Euro countries to get the support required to avoid sovereign collapse.

Relevance to Bankwatch:

Aside from general interest, this matters here and to banks but perhaps in a good way.  I have written before about how banks survive at the grace of the governments of their respective countries, but don’t listen to me.  This is my review of Taleb’s comments

It is clear that US politics have polarised to such an extent that the government is unmanageable. 

This only matters though when a figurative gun is held to the countries head as is the case in Italy and Greece, and in those countries the politicians backed off rather than allow their future be tainted by decisions required to fix the country’s problems.  They backed off to allow ‘technocrats’, unelected officials to make the hard decisions and they will no doubt swoop back in once debt and financial management is back under control.

What happens to America when the inevitable decisions required become inevitable.  Will we see some kind of technocrat intervention in the US so solve the apparent freeze in Washington?

Written by Colin Henderson

November 20, 2011 at 17:55

Posted in Uncategorized

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  1. […] a follow up to my ‘Failure of Politics’ post, here is succinct piece from Francis Fukuyama, Stanford Senior Fellow.  In particular […]

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