Just occasionally the toxic liabilities hidden by common consent in the depths of the UK banks surface. I'm talking about the $10 trillion of worthless derivatives, of course. As UK banks' direct exposure to Greece was discussed, there didn't seem to be a problem; direct loans of some £1.6bn were outstanding, and at risk. Pfft. Our banks are big enough to swallow that. Then came the 'but' - in addition there were worthless derivatives of some $60bn linked to Greek activities, which a Greek bank failure would expose. Ah, that's different, then.
Until we insulate the working economy from these liabilities, until the Vickers reforms are implemented, we will all be held liable for these toxic assets. 2019 is far too far away. We need separation by the end of 2012 at the very latest. As the Euro zone disintegrates, as surely it will, so will European banks start to fall and like a Fred West Open Day, the bodies in the cellar will start to surface. The buccaneer banks with their toxic derivatives must be allowed to collapse and go if trade, manufacturing and the real economy, all of which are robust, are to survive.