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The financial crisis in Britain developed similarly to that in America. Economic orthodoxy has dictated for 25 years in both countries that markets should be completely free and would find their own level. However, its proponents forgot that completely unregulated capitalism means that eventually human nature, in the form of greed, takes over.

Both the British and American governments freed markets from regulation in the eighties and nineties. "Greed is good" became the stock dealers' motto. No one heeded the warning when the Barings banking scandal erupted. Other rogue Traders appeared yet there were no exhaustive government enquiries to examine the entire financial trading business.

Margaret Thatcher told the UK, in the eighties, that financial services were the future and would replace the manufacturing and coal mining industries that her government wantonly and deliberately destroyed. She pronounced there was "no such thing as society only individuals". The financial dealers were rubbing their hands and getting greedier.

In 1997 the "New" Labour government carried on the now-accepted Tory/republican economic orthodoxy. Financial dealers were laughing all the way to the bank. New ways of dealing were unregulated and not investigated. Newspapers reported the boast of a hedge fund manager that he paid less tax than his cleaner did. Did that not herald that something was terribly wrong with the whole system?

The greedy financial traders invented more ways of dealing. They traded in shares that they did not even own. The practice of short selling, borrowing shares, selling them at high prices, buying them back at low prices returning the shares to the original owner, and making a vast profit for the trader, is certainly suspect. They began the dubious practice of betting that companies would fail. Stock markets are sensitive easily upset by rumour and innuendo. Some traders were betting that companies would fail but also using their knowledge of the workings of the markets to ensure that they would indeed fail, making enormous amounts of money in the process. These greedy traders finally did this to banking shares causing a run on banks, initially in the United States but also in the United Kingdom.

Simultaneously, domestic credit rules relaxed; for example, mortgage rules changed, mortgages were given to people who could not afford them also where mortgage providers had always required a deposit, 100% mortgages became freely available. People became used to easy credit and used it with alacrity, getting themselves in more and more debt. Banks made risky investments and sold those debts around the World until even they did not know where they ended up.

The British Government decided that everyone should aspire to own their home; successive governments sold off council (social) housing. All rented accommodation became extremely expensive. Housing is limited in the UK, especially in places where work is plentiful, so property prices soared. People's attitude to their houses changed, they became commodities from which to profit instead family homes.

The last portion of blame belongs to the people; we personally lived on credit and we allowed our governments to free the markets from regulation. Although there had been rumblings about dirty dealings in the City for years, we did nothing. We did not protest on the streets or write to the newspapers, or lobby our MPs. Now taxpayers are bailing out banks across the World. We must insist that Governments regulate the markets again; greed, stupidity and shady dealing must be illegal and The City rescued from greed. Banks must also be regulated and become trusting, trusted and trustworthy again.

Learn more about this author, M.Collins.
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