These days, lots of people ask me: "Phew! So, the crisis is over, right?" Wrong. The real crisis is in the DNA of the industrial economy — and it's just as lethal as ever. Most businesses are socially useless. They're about as useful to society (to paraphrase Gloria Steinem) as bicycles are to fish. Sound controversial? If it does, it only underscores just how out totally of touch with real value we've gotten. (Here, for example, are Paul Krugman, Simon Johnson, and Lord Turner all discussing social uselessness.) What has socially useless business cost just over the last five years? $12 trillion at a minimum. Those are the costs of the various bailout packages for socially useless banks.
American International Group Inc. suffered an 87 percent quarterly sales decline at its European life business as U.K. clients abandoned the firm, draining value from operations the insurer is selling to repay a U.S. bailout. AIG halted withdrawals on its Premier Access Bond investment offering in the U.K. last year, and the closure drove third-quarter European premiums and deposits to $256 million from $1.97 billion a year earlier. The investment, promoted to savers who wanted “easy access” to funds, was marketed by banks including Coutts & Co., which counts Queen Elizabeth II among its clients.