Reader's letter of the day

From today's FT:

Sir, Of the manifold causes of the macro-economic collapse, having Europe's finance ministers pander to the pitchfork populism that currently revolves around the banking bonus system risks detracting from a broader policy debate regarding the political and regulatory mistakes which contributed to the crisis (Letters, September 4).

But perhaps that's the point: governments and their regulatory agencies practised policies that explicitly facilitated the speculative excesses of the housing boom. The ensuant, and ultimately unsustainable, pace of wealth creation saw bankers, alongside a much broader constituency of beneficiaries, act perfectly rationally as agents of a capitalist economy in maximising their utility function with respect to this wealth. That included borrowers of subprime debt, real-estate contractors, buy-to-let speculators, and the myriad of yield-hungry investors in its asset-backed markets.

Governments consequently reaped the political as well as the taxable benefits of spectacularly leveraged house price appreciation. That these governments largely squandered the opportunity for contra-cyclical deficit management reflects a propensity for the same preoccupation with short termism endemic in the high-octane capitalism over which they presided.

It remains the responsibility of government to regulate the excesses of its risk-bearing economy. Having systematically failed to do so, a substantive G20 policy rethink that goes beyond the trivialities of bankers' bonuses is the least that taxpayers deserve.

R Wise, New York.