Home > Finance and money > Can we please have a return to prudential banking

Can we please have a return to prudential banking

We live in era of “Debt and delusion”. The debt hangs around our heads, whether through the direct and conscious actions we made ourselves (such as credit card debt or a mortgage), or through being foisted upon us by our Gvts (see post “Crime and Collective Punishment”). The delusion is that this situation is just a temporary blip for which the good ship of global economic enterprise will right itself soon enough, i.e. that we can somehow grow our way out of the crisis.

If you have not heard of Peter Warburton’s book “Debt and Delusion” I strongly urge you to obtain a copy. Written in 1999 it contains such a prescient overview of modern finance that it still makes for a gripping read today. Not overly technical, but sufficiently powerful, subversive and ultimately critical of the complete lack of banking and credit creation supervision undertaken in recent decades.

The analysis contained within it, along with some choice quotes, were the back bone of the article “Securitise This” and my ICB submission.

As the book is out of print, I aim to provide a summary in the coming weeks. In the meantime here is a notable quote from one of the regular economic forecasts that Peter issues:

“I believe: that the economic progress and financial stability of the past 10 years are largely illusory by-products of reckless indebtedness and the pervasive influence of complex and illiquid financial instruments; that the drastic shift of focus towards investment banking and debt securities is eminently reversible; and that the credit and derivatives infrastructure of recent years will be partly dismantled as a result of the prevailing crisis. My judgement is that the policy framework installed in 1997 will not stand the test of time”

Market Compass 2008

History is slowly proving Peter to be correct. Only the media and policitians appear to bury these truths. To echo his final words on the subject:

BOTTOM LINE: Please can we have the return of prudential banking.

Categories: Finance and money
  1. mohenko
    March 19, 2011 at 12:13 pm

    Thanks for the tip. The book has been reprinted ( http://www.debtanddelusion.com/ ) though at $75 is beyond my means, so a summary would be very helpful.
    And thanks for shining the light …

  2. March 19, 2011 at 10:39 pm


    I was lucky to get a second hand copy about a year ago, for only £10-15. It’s now over £70 for a second hand copy on Amazon Market Place.

    I have put in a request on Amazon for the publisher to consider releasing as an e-book, so would be helpful if you (and any others out there) could also weigh in on this.

    In the meantime I will get cracking on producing a set of chapter summaries and choice quotes fromthe book.

    Keep nagging me!

  3. mohenko
    March 21, 2011 at 8:11 pm

    Putting my request in to Amazon, but I don’t do nagging, the summaries will be a nice surprise when (hopefully) complete..

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