We still need to ask the big credit crunch questions

Playing the ‘blame game’ is mostly viewed as a contemptuous pursuit. But a credible version of Credit Crunch Cluedo will be vital to our long-term prospects.

After the dotcom boom, instead of watching the banking system’s ever more elaborate risk-multiplication ruses, the DTI and Treasury pumped out reports about how to copy the enterprising success of Silicon Valley.

One of the few useful insights was that learning the lessons of failure was the surest way to ensure long-term success. In the context of companies, that led to a change to bankruptcy law in the UK. But the concept is as true for a person, or indeed a country.

Which is why I find today’s Treasury select committee report a letdown.

It’s not quite a whitewash, but it doesn’t really ask the very big questions which need to be answered if we can begin to rebuild our economy in the coming decades.

Obviously the bankers are blamed at every stage as being the principal agents of their own destruction. But bankers will always try to make as much money as they can bend the regulations to allow them to make. That is a constant. It is utterly to be expected.

The opposition will jump up and down about the prime minister’s establishment of the tripartite system, stripping the Bank of England of responsibility for financial stability. But we need more fundamental questions.

It strikes me that we have a political culture that lionised house prices and the success of the City as ends in themselves rather than means to an end.

Is Germany really worse off for having had no housing boom at all? And is it any coincidence that politicians, dependent on the votebank of the feel-good factor, might be tempted into benign neglect of a system that made everybody feel rich?

There may well be structural problems in the manner that politics and economics in Britain interact with one another, problems that were not solved by the independence granted to the Bank of England in 1997.

Now that the prospective cost of the banking bailout for taxpayers could plausibly range from £50bn to £200bn (that’s real money, not a theoretical cost), the credit crunch could reasonably described as the biggest failure of public policy in living memory.

The events of the past two years need to be seen in a two-decade-long context to establish whether it’s a temporary failure of bank bosses, or a more fundamental failure of the way we run the economy.

Errors as epic as this, need a similarly-sized inquisition. A credit crunch catharsis, if you like.