Sustaining failure will cost us all dearly

THE phrase “too big to fail” became a national shrug of the shoulders, when the scale of the multibillion-euro rescue package, needed to revive banks that had been reckless with other people’s money, became apparent. 

The phrase, a collective doffing of the cap, reflected a resignation that bordered — and still does — on capitulation. That sense of well-honed resignation helped us realise instinctively we would not, unlike Iceland, where 26 bankers have been jailed, impose any real sanction on the handful of adventurers who brought this small, productive country to the very edge of the precipice. Events of recent days and weeks, months and years, suggest it is time to modify that phrase, to make it relevant to today’s circumstances and vulnerabilities.

At a moment when year-on-year motor insurance costs have jumped by 38% — in some cases that increase was 300%; when the housing market is gathering the kind of property-porn momentum that suggests another bubble in the making; when the realities of the private sector pension collapse are ever more disturbing; when health insurance costs climb at multiples of inflation; when historically low interest rates are eating savings, maybe it’s time to recognise that today’s financial sector — banks and insurance companies — are “too big to control”. In reality, they have been for a long, long, time. But that uncomfortable truth seems to cut more deeply each and every day, with each and every new imposition on consumers. The whatever-you-like-yourself tax deals, enjoyed by many multinationals inflames this narrative too.