A Thirst for Vengeance

When the dust has settled on the financial crisis there will be a complete and detailed analysis by the politicians rather than the industry. The finance industry does suffer short memory syndrome and is able to move on regardless of the catastrophe until it unintentionally lurches into the next disaster. We have seen this reaction after every type of industry setback. It does not matter if it is a major breach of regulations or a rogue trader or breakdown in systems and fraud. It can overcome market corrections, changes in market structure, new laws and rules. The resilience of the markets and financial institutions is enormous and the reason is we all need them.

Sure we will moan and groan at the time but we always forgive and as profitability eventually returns, forget. The boom and bust nature of the market, so despised by politicians are the market mechanisms, which attract investment and create wealth and growth but also bring about the redistribution of wealth.  We can foresee the recovery because of how the finance industry has adapted in the past and we know that we will do all we can to accelerate any recovery because we need and want too. The western capital society is like a junkie needing its market fix to ensure that there is a brighter tomorrow, despite the odd market crisis.

Although the population at large might be quick to forgive and forget, this is very unlikely to be the case with politicians worldwide. On their watch the economic crisis has directly affected their social responsibilities and is a threat to their own livelihood. Many people will blame the policies of governments and wonder why markets are allowed to produce situations that increase their own debt and reduce their spending power.

For this reason I believe that the thirst for vengeance by the politicians will produce a review of the markets and a force for change. Heads will roll and some may be sent straight to jail. Already some people are discussing which Lehman executives are being measured for an arrow suite.

It will be the will of governments worldwide that will bring about the changes needed by the finance industry to not only rekindle confidence in the high street but also very importantly between the banks.