"Those who fail to learn from the lessons of history are doomed to repeat them" - proverb
In the period of rapid deregulation in the mid-1980s in NZ known as Rogernomics, the share market became a kind of wild west for business cowboys. Any group of mates could put a "Corp" at the end of a name, float a public prospectus, and suddenly be listed on the stock exchange with millions of dollars to play with. Then Stock Exchange chairman David Wale said in 1987 that despite his position, even he didn't have a clue about what some of the new companies did. Fueling it all was the Bank of New Zealand or bnz as it now calls itself. The shonky deals of Fay Richwhite weren't enough; executives were paid bonuses to go and lend lots of depositors money to the new corps. Following the share market crash of October 1987 the house of cards that bnz had created come tumbling down. In his book "View from the Top", incoming Prime Minister Jim Bolger in 1990 relates how he found himself immediately having to deal with the bnz crisis. His immediate reaction was to just let bnz fail, but Treasury officials were horrified - with its 40% of NZ trading bank business, the effects on the NZ economy would be dire. So the new government had to bail bnz out.
Fast forward a couple of decades and the same sort of thing was going on in America - not so much with corporate machinations this time (although there was plenty of that too) but with so-called sub-prime mortgages. In other words banks and other lenders were fueling the property boom by giving anyone who wanted it, including unemployed, 150% mortages to go and buy houses. And that house of cards has come tumbling too.
According to France 2 news, the total annual bonuses that were being paid to executives of failed big financiers such as Lehman Brothers, Freddic Mac, Fannie Mae and AIG exceeded the French national defence budget. But the banker bonus is now making a comeback. Oh dear.
The Dutch government has decided to put a hefty extra tax on any bonus paid to a finance executive over 500,000 Euros (sorry, Rabobank girl) and the French want to do similar. It would be in all our interests if this became a general thing through the developed world, but whether politicians are aware enough to implement such here, and in Australia, is doubtful.