I cannot accept your canon that we are to judge Pope and King unlike other men, with a favourable presumption that they did no wrong. If there is any presumption it is the other way against holders of power, increasing as the power increases. Historic responsibility has to make up for the want of legal responsibility. Power tends to corrupt and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority: still more when you superadd the tendency or the certainty of corruption by authority. There is no worse heresy than that the office sanctifies the holder of it. Letter from Lord Acton to Bishop Creighton
To everything there is a season, and a time for every purpose under heaven, begins Turn, Turn, Turn by the Byrds. Within that perspective men play the parts assigned to them (sometimes poorly and sometimes exceptionally) towards some goal which may not, as Hegel, inter alios, assumed, by easy to divine.
Unifying and increasingly larger civilizations have been created by men like Cyrus, Alexander, Caesar, Mohammed, Charlemagne and Genghis Khan, to name a few. Whether this is for good or ill seems a matter of opinion but that these men played a large role in history is certain.
In more modern times, men like Washington and Napoleon played similar roles. The former managed to resist the temptations of power to which most men succumb, and thus helped create these United States. The latter could not resist temptation. He overplayed the given part, and ended his life in captivity.
From that perspective of purposeful history, Washington and Napoleon were asked, in a sense, to lead the effort to sweep away the Monarchical system which had run Western Civilization for centuries. Washington, perhaps due to his lack of skill as General compared to Napoleon, played his part well. His letters suggest an awareness of the role of Providence on his side and a sense that he was simply playing a role.
Napoleon, by contrast, called himself a liberator, and did free, for a time, Continental Europe from the old system and, I believe, helped plant the seed of liberation which eventually killed it. However, he, like most men who rise to positions of great power, succumbed to the temptation described by Lord Acton. He did not see that, as the Chinese might put it, the Mandate of Heaven was limited.
Big Finance, in a sense, played an important role in history as well. If you believe, as I do, that Capitalism, as classically understood, is a much better method of providing for man's material needs as compared to "rule from the top", whether by King or Committee, you might agree with the support Big Finance received from the late 70s through the end of the 20th Century. In this sense I agree, in part, with the views of Fukuyama's End of History. While I doubt the US model is an end, it seems a much better way station than the alternatives.
If the stock market crash of 1987 inspired a Mellon-esque liquidation would the Soviet Union have given way to the Russia we know today? If the Asian Crisis left those nations with the sense that their turn towards Western Capitalism was a mistake would China have continued its drive towards economic integration with the rest of the world?
Just as I can understand those who supported Napoleon early in his career, I can understand why many supported Big Finance when, from a purely economic standpoint, restraint seemed a wiser choice.
Napoleon, as we know, turned his back on the principles of the Revolution which gave him power and declared himself Emperor. Big Finance, in my view, turned its back on a key principle of Capitalism- a measure and procedure for failure- when they pushed the Financial Modernization Act of 1999 into law and used commercial deposits as assets to lever for speculation.
Since that time, Big Finance has successfully fought attempts to restrain its power. Like Napoleon in Russia, Big Finance suffered a terrible defeat in the arena of mortgage finance and credit default swaps. Also like Napoleon, Big Finance was not chastened by defeat, but rather emboldened. Like Napoleon, Big Finance pays no heed to old supporters' warnings. While Alan Greenspan doesn't strike me as a gifted economist, he has a proven knack for divining changing political winds. When he argues that banks which are too big to fail are too big, he seems to me to be sending a message that the political support Big Finance has long received is waning.
Big Finance, as I have been arguing, has as its greatest weapon the exorbitant privilege of unlimited US$ finance and presumed support of key politicians. They have bet heavily that this will continue.
Just today I find that Big Finance might have found its opponent- the counterpart to Napoleon's Wellington- in the person of the BoE's Mervyn King. Mr. King's declaration that Big Banks should be broken up sets the stage for Battle.
These words, from a recent speech by Mr. King are "fighting words": Whichever approach to the “too important to fail” problem is adopted, there is growing agreement that such financial institutions should, as I argued at the Mansion House in June, be made to plan for their own orderly wind down – to write their own will.
In support of this view he argues: To paraphrase a great wartime leader, never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform.
It is hard to see how the existence of institutions that are “too important to fail” is consistent with their being in the private sector. Encouraging banks to take risks that result in large dividend and remuneration payouts when things go well, and losses for taxpayers when they don’t, distorts the allocation of resources and management of risk. That is what economists mean by “moral hazard”. The massive support extended to the banking sector around the world, while necessary to avert economic disaster, has created possibly the biggest moral hazard in history. The “too important to fail” problem is too important to ignore.......
In other industries we separate those functions that are utility in nature – and are regulated – from those that can safely be left to the discipline of the market. The second approach adapts those insights to the regulation of banking. At one end of the spectrum is the proposal for “narrow banks”, recently revived by John Kay, which would separate totally the provision of payments services from the creation of risky assets. In that way deposits are guaranteed. At the other is the proposal in the G30 report by Paul Volcker, former Chairman of the Federal Reserve, to separate proprietary trading from retail banking. The common element is the aim of restricting government guarantees to utility banking.
I wonder what carnage the upcoming battle will leave in its wake? If Big Finance is broken up, will alternative investments like Gold become even more attractive?
Full Disclosure: Long Gold