Tony Curzon Price (London, openDemocracy): Do you remember the torture of the high-jump competition at school? You knew that however good anyone was, the bar would inexorably be pushed higher. Eventually, everyone would fail.
I expect that those high-jumpers were training for life in the City. As Mervyn King pointed out in his evidence on Tuesday, a system in which fund managers were required to beat, every quarter, the average returns of all their peers in order to earn their mega boni was bound to eventually end in failure...albeit with some performance enhancement along the way. If everyone is good, the average rises, so it is ever harder to be regarded as "good". Competition of this sort is devastatingly efficient at exploiting the weakness of a system.
We can be sure that after 10 years of loose credit, every weakness will have been explored to the fullest extent. Sub-prime, CDO, SIV ... these are but the early, weaker chains of causality. The logic of the high-jump was applied to every market the City touched. That is why Bush's plan to solve the mortgage default problem in the US - fine as far as it went - hasn't actually done anything to reduce the suspicion that banks have of their peers. They are still not lending to each other: "If you're in anything like the state that I know I'm in, I don't want to lend to you" is what each one is saying.
When Lord Griffiths of Fforestfach, vice Chairman of Goldman Sachs, said, at an Evening Standard Influentials Debate, that we should not put a cap on City boni because that would lead all the star financiers to emigrate, I should have pointed out that this would increase overall national welfare, given the mess that these egomaniacs have made of the important, simple, social business of turning savings into investments.
