“In the five years before the onset of the crisis, across the industrialised world growth was steady and both unemployment and inflation were low and stable. Whether in this country, the United States or Europe, there was no unsustainable boom like that seen in the 1980s; this was a bust without a boom.”
The governor was critical of a banking system that had “overextended” itself, noting that, by the end of 2006, the banks had borrowed £50 for every pound provided by their own shareholders. Problems were building in the banking system, he said, noting “on all sides there was a failure of imagination to appreciate the scale of the fragilities and their potential consequences”.
King added: “In good times, banks took the benefits for their employees and shareholders, while in bad times the taxpayer bore the costs. For the banks, it was a case of heads I win, tails you – the taxpayer – lose.”
- Sir Mervyn King admits: we did too little to warn of economic crisis, Guardian.co.uk, May 2, 2017.
About the author:
Zhang Xin is Trainer at chinadaily.com.cn. He has been with China Daily since 1988, when he graduated from Beijing Foreign Studies University. Write him at: zhangxin@chinadaily.com.cn, or raise a question for potential use in a future column.
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