The Bankers Are Not To Blame

Whilst having lunch with members of my Spanish group, educated, more prosperous people than I, not all working in the state sector, I heard again the view expressed that the bankers are to blame for the financial mess in the Western world, and all the consequences that flow from it. The people who express this view are the same who like to blame Mrs. Thatcher too, for many of our ills.
The main gripe is that the banks were bailed out by the government here in the United Kingdom. Too big to fail, it is said. Fury, resentment - the financial crisis brought on by criminal bankers, who puzzlingly were bailed out by 'our' politicians. No doubt there was corruption, cronyism etc, etc.
Gordon Brown famously announced that he had abolished boom and bust, and sadly many people believe him, blaming criminals for ejecting us from the very Eden created by Gordon the Good.
In reality, the story is a little different. There may well have been skulduggery, and the ethics of the financial markets and, indeed, society itself may have nose dived in the past century, and no doubt the regulatory system was open to abuse.
However, the underlying cause is simply a normal business cycle. Capital moves into unproductive areas, e.g. housing or tulips, - a bubble is created, a crash ensues and capital is reallocated - 'real' capital survives, 'ficticious' capital is pared or eliminated.
 I had to agree with my liberal friends that the banks should have been allowed to fail. But they had not thought through the consequences, nor thought through, in a rigourous, non conspiratorial way the reasons for the bail out.
The consequence of allowing the banks to fail would have been high interest rates. Lending would still have been available for small and medium businesses, house prices would have crashed to an affordable level, causing pain to existing mortgage holders, and the after a year or two the adjustment would have been accomplished and 'real' growth would have resumed.
However, this did not happen, because there was one beast simply too big to fail - the government. The government was - and is now even more - in debt. High interest rates would have caused a government default. It would have been the end of the New Labour social and political revolution, a revolution created by indebtedness, and maintained by indebtedness by the New Conservatives.
Without the bailout, millions of parasites, the very people who blame the bankers, would have lost their incomes and their pensions.
To maintain their privilege it was necessary for the bureaucrats to keep interest rates low and to bleed the productive population over a period of years. Labour costs of the subject population are to be kept as low as possible. The third world is imported to drive down wages and to do the dirty jobs - nothing benevolent about that.
No, the bailout, the continued financial crisis has nothing to do the normal economic cycle, little to do with the wicked bankers. What turned a downturn into a catastrophe was the government and the political imperative of saving the Welfare Warfare state.