The British government's nonchalant reaction to the recent LIBOR fixing scandal is worrying to say the least considering the trail of cooked books involved.

We have just watched a series of events unfold that in all rights should have dealt the death blow to the credibility of British banks and the public want blood but instead they must wait for the next couple of years for the findings of yet another puppet investigation. And that in the face of PPI mis-selling and interest rate derivative mis-selling as well as activity that is systemically corrosive to our economy.

If we are to believe Mervyn King's reaction in recent press conferences to the FSA findings then it must mean that Mr King actually lives on a remote Island in the Caribbean with no contact with the outside world, how else can we take seriously the notion that the Governor of the Bank of England was unaware of the moral depravity that constitutes the culture in the banking system and the extent of the immoral actions taken in such a degraded banking system?

But it is not just Mervyn King's reaction we should worry about, the harshest criticism from Downing street was akin to a school child being told off by a village bobby in the 1950's for scrumping apples, without the cuff round the ear.

Where is the power of parliament to immediately turn the justifiable public outrage into acts of law? Reaction was plentiful and harsh, even invoking anti-terrorism laws, when there was a perceived threat by a country like Iceland, whose banking system reduces the offshore savings of a cabinet minister to ashes.

If state capitalism (corporate socialism) cannot deliver then it is time to roll back the state and let the markets decide who fails and who survives. But the recklessness of banks has shown that the banks are more than aware that they became to big to fail and operated accordingly.

The trouble is the banks are far too powerful under our current economic and political construct for politicians to effectively deal with, in fact do more than occasionally posture. This is especially true in the UK where financial services are our main bread-winner. The alternative is unthinkable, the UK might, shock horror, have to actually start making things again as our main wage.

So what next Mr Cameron? Why not just arrest the heads of these banks for treason? Surely the recently enacted (2006) Fraud Act gives us enough teeth to bite hard? After all that is exactly what they have just done in the name of share-price and bonuses at the cost of the small businesses which might have stood a better chance of actualising a recovery.

And according to recent worries the tax-payer may also have been done up like a kipper as the Special Liquidity Fund the banks used to keep afloat was linked to LIBOR.

What's that Mr Cameron? Your hands are tied?

It's about time people started to think about the moral hazard of keeping money in the banks and dare I say it the questionable morality of business  loan/mortgage repayments to such institutions.

But the real stinger for the ordinary punter is that it doesn't matter how much they fine the banks, it will still come out of your wages! Why, because you are forced to use the banks to exist in our modern world, a victory the bankers won over us all decades ago, with the help of politicians.

I heartily hope that the US take a very firm line and then use their extremely powerful one-way extradition US/UK treaty procedures to get the guilty in front of their courts if our authorities do not have the stomach for it.

Bank of England-FreeFoto.com

Bank of England-FreeFoto.com

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