Gordon Brown now reveals that he wants banks to cap mortgages at 100% of a property’s value. Another “tough” initiative from the macho premier of Britain. It’s a meaningless gesture, yet another of those postures for which he is not properly challenged by the media.

The Bank of England is up to the same game. It is cultivating a climate of opinion to persuade people that action is being taken to prevent future financial crises. Senior economists at the Bank point to Spain, commending that country’s regulatory system. Again – where are the embarrassing questions?

The Spanish property bubble did not inflate on the back of 100% mortgages – or 125% loans, as in the case of Northern Rock. In that country, borrowers routinely had to put down 25% deposits. And yet, that did not stop a bubble inflating that was every bit as dangerous as Britain’s. So why does Gordon Brown think that a cap on loans in Britain will stop the next bubble?

Regulating till the cows come home

It’s true that the Spanish have a tougher regulatory regime for their banks. But, again, that did not stop their construction industry expanding all the way to a precipice – before tail-spinning into one of the worst contractions in Europe. So why does the Bank of England now tout the Spanish financial model as worth importing into Britain?

These initiatives are the huffs-and-puffs of people in power who do not want radical reforms that would prevent financial crises. Their tactic is to shape the public debate by chanting slogans that distract people from root causes.

Unhappily, the media is allowing people like Brown, and Bank of England Governor Mervyn King, to get away with it. Journalists are not asking the questions that pinpoint the source of the problem. There is a weakness in the market economy whose roots go straight back to the Treasury and the taxes that are applied to raise revenue.

We are not Simpletons

The 24-hour news cycle does not encourage the debate that is needed, to peel back the answers to relevant questions. But millions of people are now frightened for their futures. They are not Simpletons. They are waiting to read and hear the interrogations that explain why the western economy was run in a slipshod way.

So why don’t journalists take time out to reflect on what they’re all missing? Right now, the best story in town is the one that pins the guilt on the individuals, and agencies, that sought the power to shape our futures.

Politicians say that the global crisis is so critical that they don’t have the time to look for scapegoats. That’s another tactic to avoid personal responsibility.

I am not suggesting that we turn the lunch mobs loose.  But if we fail to demand a full account of why the lawmakers and regulators were asleep at their wheels, we will allow them to tout the snake-oil remedies that will nourish the next land-led boom/bust. And if we allow them to get away with it, this time, we will only have ourselves to blame.

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