Business Secretary Vince Cable is warning another financial crash could be on the horizon because Governments have collectively failed to grasp the seriousness of the last one.
In an interview with the New Statesman, Cable says not enough is being done internationally in terms of financial regulation and the structure of the banks.
He says whether or not another crash can be avoided is what concerns him most.
He says: “I was very impressed with that Warren Buffett metaphor that asset-backed mortgage lending was the atomic bomb, and that there are hydrogen bombs out there. I just don’t think that collectively governments have got to grips with this at all.
“It is not imminent but you can see another bomb going off.
“You have got bits and pieces of regulation being put in place but it is very piecemeal. The structure of banks is being addressed in the UK but nowhere else. There is a bit happening in terms of complex derivatives, in terms of clearing house arrangements, though it is a bit limited.”
Reiterating comments he made in the Guardian on Saturday, Cable says there is a lack of popular understanding about how serious the repercussions of the recession and the banking collapse are, citing Indian billionaire Ratan Tata’s description of a wartime feel in Indian Industry.
He says: “We do not have that. There is not the recognition, to my mind, of the seriousness of the problem.”
Since coming to power in May last year, the Government has repeatedly blamed the deficit on Labour profligacy, but Cable says it is a “consequence of the banking collapse”.