Does anyone remember way back when banks operated on the basis of lending money at a slightly higher interest than they paid on the funds that savers deposited - and drew their staff's wages and their profits from the difference?
Seemed a straightforward and reasonable arrangement.
That was in the days before the rise and rise of investment banking, which is, in its more "sophisticated" forms, a euphemism for corporate gambling. It was before collateralised debt obligations and other kinds of mind-bogglingly complex "financial instruments" made their mark on the banking world, taking centre stage - making a small percentage of bankers unimaginably wealthy in the process.
That, it seems, was also well before the chickens of this brave new world - which so many people knew so little about, and even fewer understood - came home to roost.
If the notion of slicing up debt, "repackaging it" and "selling it on" seems counter-intuitive to the ordinary wage earner, well that is because, when you stop to think about it, it is.
If bankers or investment whiz kids are going to make money out of selling debt - negative money - then surely the effect of that is to increase the overall pool of debt. Simple maths: any amount multiplied by a negative number is still a negative number, only much bigger! It's a good wheeze until the whole system, spiralling upwards on cheap credit and the thermal updraft of optimism, stalls - as it did in the sub-prime mortgage crisis that helped to precipitate the global financial crisis.
Parts of the Western world are still paying the price, despite the billions poured in to support the very same banks whose practices arguably led to the meltdown. The United States is wrestling with record deficits and several countries in the euro zone teeter on the edge of bankruptcy.
Belatedly, almost three years to the day after Lehman Brothers collapsed, real action is being proposed, in the United Kingdom at least, to address this state of affairs. The Independent Commission on Banking has said that banks should ringfence their high-street banking business from their "casino" investment banking arms.
In other words, the commission is saying that the situation cannot be allowed to continue where the hard-earned savings of honest toilers are held hostage to the high-stakes gambling activities of high-rolling financial derivatives traders - and the like.
Not before time. And if you are wondering why they just didn't go the whole hog and separate off that element of the banking system entirely, that is because from being an "exotic" and "boutique" element of the banking sector decades back, "investment banking" grew like topsy to dominate it, dwarfing in significance - and status and power - its traditional and relatively safe savings and loan functions.
Our banks in this country were relatively, if not entirely, removed from the flagrant excesses of such practices, but of course we couldn't be, and weren't, immune from the global financial crisis.
I caught a brief discussion on the radio a day or two back about the relative significance of the GFC and 9/11, the 10th anniversary of which has just passed. The question was, which has had the greater effect on the world since: 9/11 itself and the wars that were prosecuted in response, or the spectacular unravelling of the global economy in 2007-08?
A couple of the panelists were of the view that it was the GFC, in particular because it affected the greatest number of people. This, the argument went, also pointed to a realignment of world economic powers - with China assuming greater dominance and cementing its status as the coming world super-power.
The money spent on the Middle Eastern wars of this past decade were trifling by comparison to that wiped from the balance books of Western economies by the financial crisis.
They have a point, of course, but it only goes so far.
What the United States, especially, lost in the Iraq adventure - in addition to lives of its own soldiers and the trillions of dollars it has poured into this bottomless geopolitical snakepit - was genuine moral authority on the world stage. Saddam Hussein was indeed a terrible man, but the notion that he alone justified unilateral military intervention, an action that would cost hundreds of thousands of lives, including those of tens of thousands of innocents, is untenable.
Moral authority is not something that can be reacquired overnight. As the images of the last few days remind us, the atrocities of 9/11 were truly shocking, unremittingly callous and murderous acts. Together, their force was such that it knocked a country - and a magnificent, creative, democratic and generally wise civilisation - off its axis, a trajectory it has yet fully to regain.
The fallout from 9/11 should not be underestimated.
- Simon Cunliffe is deputy editor (news) at the Otago Daily Times.
