The Parallax Brief has noticed recently the resurgence of the insidious and wholly egregious belief that what ‘really’ led us to the economic morass in which we currently find ourselves mired was people irresponsibly taking on too much debt. The idea that the financial crisis and subsequent recession were the fault of folk who took on debt they could never afford in order to live beyond their means has been around pretty much since the word sub-prime first entered the lexicon of economic disaster, but most recently it cropped up in an Observer piece written by Heather McGregor, an executive headhunter, to defend the bonuses paid to bankers. “What got us into this crisis,” McGregor argues, as if she were making a statement of irrefutable fact, “was over-borrowing, both personally and corporately…”

It’s easy to understand why this idea has become received wisdom throughout much of the conservative Right on both sides of the Atlantic. First, within this paradigm, the credit crunch was a kind of biblical punishment for the paucity of discipline shown by the great unwashed during the last decade — teaching a wholly justified and welcome lesson about moral hazards which befall those who succumb to consumerist gluttony. Second, it serves the purpose of getting the banks (key financial and ideological supporters) and the market (perfectly efficient and a panacea for all society’s ills) off the hook.

But being a convenient fit doesn’t make it right.

When someone applies for a mortgage or a credit card, there are essentially only two sides to the transaction. The first side is someone like you or the Parallax Brief: perhaps a primary school headmaster, or a couple who run their own bed and breakfast, or a call centre team leader, or the person sitting at the next to you in the office — but anyway, whatever their occupation or background, it’s a person who has more than likely had no training in the detailed criteria and methodology banks use to decide when to award loans to people and how much to give them if they do.

On the other side of the deal is a professional who has.

When the mortgage is finally approved or the credit card limit set, that wasn’t the decision of the layman applicant: it was the decision of the bank, the expert.

Nobody really knows if they can get a mortgage or exactly how much they’ll be approved for when they apply. Of course, we often have an idea, but that’s usually based on what has been awarded to friends whose financial situations we can compare to our own, rather than intrinsic knowledge of the banks’ methodology and rating system. Nor can the school headmaster or the B&B owner force the bank to give him them money. They can only apply then wait to see the bank’s diagnosis their ability to pay back the money.

Unequivocally, it’s the bank who decides on whether to hand out money, how much a person gets and for what, so doesn’t it seem more than a little disingenuous to defend banks by arguing that the credit crunch is our fault for taking on too much debt?