I have lived a longish life so far - hoping for a lot more. And in that life I have seen this sort of scenario of stupid bank lending repeated every 15 / 20 years.
Remember the bank of england lifeboat and the secondary commercial property lending crash? Latin American debt in 82. US saings and loan in the 90s. There was even one in 1825 and no I wasnt around then.
Banks make profit by lending on a margin. They are under pressure from the City to increase profits every year so they have to lend more every year. In an exuberant market the lending rises every year until exuberance flips into despair, asset prices fall and we get a crash.
One thing I would bet my house on - there will be another bank lending crisis sooner or later.
