The reason we are where we are is NOT due to
"fat cat bonuses"
It is all down to one reason and one reason only - the US State apparatus enacted a law FORCING lenders to lend to people who could not pay the loan back and whom they would never have wanted to lend in the first place. This is the source of the junk debt and too much debt in the US in general. This is the reason why vast amounts of SIVs containing unknown toxins were created and thus the market for such junk became liquid enough to enable the contagion to spread to the UK. This was just a natural reaction by the markets to mitigate and cope with the bad debt. This is the reason why institutions sought to insure against the risk and why then AIG was pulled into the miasma. The poison leaked out and contaminated the system.
Because of the law the lending was bad.
Because of the lending the debt was bad
Because of the debt the SIVs were bad
Because of the SIVs the assets were bad
Because of the assets the liquidity was bad
Because of the liquidity the banks were bad
And all, because of the bad State law.
So, before everyone thinks this is a time to "clean up the market", let them remember where the poison came from and who brought it about - The State. Who created the environment that enabled banks in the UK to offload bad debt? The State. Who was happy to see it happen and thus hide their ever increasing borrowing behind "prudent" GDP figures*? The State.
We do need to clean up the financial system - clean out corporatism and State meddling for a start.