Those who were responsible for the financial calamities of the past few years have managed to wiggle out of any guilty pleas. That is unfortunate as their admissions of culpability would lessen the likelihood of a repetition of those events.
Blame primarily rests on the shoulders of policy makers south of the border. Thus, the one-time icon, Alan Greenspan, was head of the United States Federal Reserve System: he shrugged off any share of the blame.
He claimed, rather cynically, no one could have predicted lowering interest rates close to zero would have led to soaring prices of houses and other assets. He stated that, like Pontius Pilate, others were responsible and regulatory authorities should have checked the bubble in assets.
Then the present chairman of the Federal Reserve Board, Ben Bernacke, said in 2007 “the sub-prime (mortgage) markets seem likely to be contained.” Inasmuch as he and the then Governor of the Federal Reserve Bank of New York, and now U.S. Treasury Secretary, Tim Geitner, were the principal architects of recent financial plans, the misjudgment simply is outrageous.
For years those involved in recent programs believed they could defy logic and offer access to funds virtually interest free with no repercussions, entailing no longer-term troubles of any kind.
Then too many in government refused to recognize that removing gold as any form of backing of currency would lead to the printing of money and inflation. These same politicians then proceeded to sell off national gold reserves. Britain sold half of its gold holdings at $35 per ounce and then one quarter more at less than $300 per ounce. Canada has sold its entire gold reserves at a small fraction of the current price.
Joseph Stiglitz, a leading economist, described the government measures of Canada and the United states as “among the most costly mistakes of any government at any time.”
They and the rescue plans of banks reinforce the bad practices and shenanigans that were occurring. Banks had access to funds from the government basically interest-free, which they then loaned out to borrowers who really did not qualify for those loans. It has become apparent that banks are an oligarchy who get away with slipshod tactics and maintain power by lobbying legislatures.
Furthermore, corruption in financial circles has become a first-rate scandal, but securities commissions in all provinces ignore that. It is no surprise then that nefarious schemes have flourished.
The ultimate responsibility for the current financial mess rests with the public. They believed there really is no cost for government giveaways. Greed and stupidity fed those misconceptions.