Overmighty banks lost the people's trust - they can't recover without regaining it [View All]

[CHIMO]

Confidence grows at the rate a coconut tree grows and falls at the rate a coconut falls. That exquisite simile from Montek Ahluwalia, an Indian policymaker, summed up the 2009 gathering of the World Economic Forum.

Political leaders arrived depressed and left almost paralysed with fear after exchanging horror stories of just how savage and sudden the downturn had been in recent months.

The herd mentality that created the unsustainable boom now threatens to turn recession into slump. Businesses have already written off 2009 and there are doubts about whether recovery will start meaningfully in 2010. Economist Joseph Stiglitz believes that, even now, there is a failure to recognise just how bad things are. Bill Gates, the Microsoft founder, says this is a four-year recession; if he is right that would put it up there with the Great Depression.

Politicians now have a choice. They say that they want a stable economic system. They say that there has been too much greed at the top and insufficient rewards for working families. They say they want to avoid protectionism. In that case they have to act and act fast. The public may trust government more than it does business. But there's not a lot in it, and unless there is rapid, verifiable change that trust will evaporate.
http://www.guardian.co.uk/business/2009/feb/02/economics-davos-credit-crunch-banking