Financial Times FT.com

Why banking is an accident waiting to happen

By Martin Wolf

Published: November 27 2007 18:51 | Last updated: November 27 2007 18:51

Ingram Pinn illustration

Why does banking generate such turmoil, with the crisis over securitised lending the latest example? Why is the industry so profitable? Why are the people it employs so well paid? The answer to these three questions is the same: banking takes high risks. But the public sector subsidises this risk-taking. It does so because banks provide a utility. What the banks give in return, however, is gung-ho speculation.

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