Roger Nightingale, left, and Ian Morley have differing views on the global economy.(Picture by Adrian Miller, 0676523)
IF A bank is going to fail, the government should let it, according to global economist Roger Nightingale.
The outspoken financier made the statement at Old Government House Hotel as he went head-to-head with Corazon Capital chairman Ian Morley in an entertaining debate on the current economic situations affecting the world.
‘The concept of capitalism is that you allow the successes to grow and you let the unsuccessful fail,’ said Mr Nightingale.
‘If not, you stifle the success of the good.’ He said if countries wanted a good economy, it was absolutely essential that you let the bad fail.
‘If you reward a criminal for bad behaviour, you get more bad behaviour. What we have done by keeping the bad banks in place is we have ruined the banking system and if you ruin the banking system, you ruin the rest of the economy.
‘You don’t want bad banks, you want good ones.’
Mr Nightingale said poor politics had led to the situation, but Mr Morley, another economist, who, like his counterpart, regularly appears on news channels such as CNBC, Bloomberg and the BBC, said no matter how much banks were to blame, you simply could not operate without them.
‘If you let them fail you reduce all credit for everyone.’
The event, which was hosted by Corazon Capital and billed as The Great Debate, attracted an audience of around 80 people that included finance representatives, States deputies and sixth-form students from Elizabeth and Ladies’ colleges.
Other topics covered by the two forthright speakers were whether hedge funds were to blame for the credit crunch, whether a ban on short-selling was a good move and if government and central banks were to blame for the debt culture.
Both men agreed that a ban on short-selling had created more problems than it had solved, but only Mr Morley said hedge funds were not to blame for the crisis.
‘They get the finger of accusation unfairly pointed at them. But they could see it was not sustainable,’ he said.
Mr Nightingale added: ‘Hedge funds are about 10-15% to blame. They aren’t solely to blame but to say they are blameless takes it a little bit too far for me.’
Article posted on 4th December, 2008 - 2.30pm
3 Article Comments
Roger Nightingale is absolutely right,
The banks on many occasions have helped and let businesses go bankrupt and have not helped them out if they were in a difficult period even when the owners of the businesses were working without paying themselves. Unlike the bank managers who kept increasing there own wages and bonuses in fact taking money that did not belong to them!!
And now again, they are being rewarded for getting it wrong.
I now live in South Africa and the bank managers here, even have to share there cars when attending a bank meeting and don’t earn ridiculous wages. They should come and live here for a while and get them back to basics again!!
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I agree, who needs banks anyway. I am more than happy to continue paying for my lager and cheese products using cash. And the guy from the corner store that sells me bulgarian porn under the counter, does not – and never will – accept visa.
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I agree with one proviso:- as long as the bank regulators do their jobs properly so that depositors are not put at risk as happened with Landsbanki Gurnsey. The Guernsey regulators had a habit of telling the world how well regulated Guernsey is. We all now know that that was rubbish! Compared for example to their Caribbean counterparts, where most of the banks are of Canadian origin, Guernsey and the Isle of Man are very risky places to park your cash.
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