The sight of different divisions of Britain’s Establishment tearing into each other may be entertaining, even amusing, to the great unwashed masses of us excluded by it, but it is hardly edifying and may prove counter-productive.

It all started with politicians attacking bankers after 2008. Then the mainstream media attacked the politicians over their expenses. The politicians took their revenge by setting up the Leveson Inquiry to attack the media. Now the media and the politicians have united to distract public attention by attacking the bankers again.

Most of these attacks are justified, or at least not wholly unjustified – although it now seems the Leveson Inquiry was set up in response to a claim that has been discredited. Politicians, bankers, and journalists in Britain have all behaved badly, and all need to change their operating culture.

However, if such change is to achieve the desired result, it must be considered carefully. Necessary reform does not serve its purpose when taken to unnecessary extremes. While it would be in the public interest to purge our current political class, our system of constitutional democracy must be viewed as the means to that end, not an obstacle to it. Equally, a general improvement in the ethics of reporting is not achieved by restrictions on freedom of the press.

As for banking, there is no doubt that the sector would be strengthened by greater transparency, by improvements to corporate governance, and by a more effective system for the redress of customer complaints. The problem is that these are not the issues being discussed in the current witch-hunt atmosphere, in which public, or at least political and media, attention seems fixated on the subsidiary issue of the remuneration packages of senior executives.

The hounding of Bob Diamond, Chief Executive of Barclays until last week, missed the point entirely. His position had indeed become untenable, but that was no cause for rejoicing. He was one of the good guys in 2008 and a force for stability in the current, politician-generated crisis. The British economy and the global banking sector are both weaker for his departure.

Like all entrepreneurs, we have our own bank horror stories, so it is hard for us to admit this, but we need the banks. They were a major factor in the extraordinary economic development of the West over the last 300 years and remain an essential component of our best hope for a satisfactory conclusion to the present turbulence. The banking sector is disproportionately important to the British economy in particular. The politicians and media need to show that they appreciate this, because, if Britain does not want the bankers, there are other countries that do.

The pundits had a great deal to say about the Bank of England keeping British base rates at 0.5%. Most other central banks are also keeping interest rates at a level so low as to be meaningless. The theory is that low interest rates encourage growth.

The theory may work on paper, but in the real world it remains just theory.

There is an increasing disconnection between the nominal rates set by banks and the rates actually being paid by customers. To be told that bank rates are low is an insult to small business customers who are commonly paying interest in double figures.

Many entrepreneurs are being forced to underwrite their businesses with credit cards – at a time when credit card rates are going through the roof.

Of course, there is a good economic reason for this: there is relatively little money available for loans at the moment, so it is only to be expected that the price of what money there is, the interest paid on it, should be high.

Fair enough. We cannot argue with the laws of supply and demand.

Banks remain in many people’s eyes as the bogeyman of the financial crisis and there are calls from some in the small business community that the banks should be “forced” to lend more. An increase in the amount of money being loaned should reduce the price of that money, the real interest rates being charged.

Yet is it right to “force” anyone to lend their money? Any loan should be based on a calm analysis of the business situation of both lender and borrower, and the loan should only be approved if it is likely to benefit both.

Just in case our last couple of posts are misinterpreted as another case of impecunious Brits taking jealous pleasure at the impoverishment of our once-wealthy American cousins, let us make it clear that we have a much bigger problem on our own doorstep.

The American problem is that recovery is too slow, but there is still recovery and the worst of the crisis is probably past, at least for the time being. The European Union, on the other hand, has not really addressed its deeper structural problem, and is therefore a crisis waiting to happen.

In fairness, the euro, the common currency of most EU states, is a symptom, rather than the cause, of this problem. There was always a hole in the deal: the euro is only as strong as its weakest economy. In particular, lax fiscal discipline on the part of a single Eurozone government undermines the whole currency. The mechanisms for imposing discipline were weak from the beginning, but everyone ignored them when times were good.

That is no longer an option. The party is over and the bill has just been presented. The EU, however, has even less leadership than the USA. The European response to the inability of overindulged states like Greece, Spain, and Ireland to pay what they owe has been described, elegantly but all too accurately, as “agreeing a funding mechanism but not funding it”.

Nationalised banks in Ireland are bust. This in turn puts pressure on the sovereign debt of the Irish government. Much of that debt forms a key part of the balance sheets of foreign banks – not least in Britain, which may therefore suffer despite the UK not being a Eurozone member.

This could impact on the whole economy. The equity market, still a little too bullish under the circumstances, may be in denial, but the rising price of gold suggests a lot of the smart money is playing it safe in anticipation of another crash.

Meanwhile, across the Atlantic, the Americans have some right to feel smug. The first phase of the infamous Troubled Asset Relief Programme – that is to say the initial bail out of the banks, as opposed to the later unnecessary “stimulus packages” – has been a qualified success. Buying up toxic assets, as opposed to nationalising banks, means the government has been able to get away with a quick “in and out”, with no longer term commitments on either side. Most of the American banks repaid the government very quickly in order to get it out of their hair, and stability was restored to the US banking system within months. Those who still carp about it can see the alternative in Ireland.

It seems sometimes that half of modern business life is complaining about bankers – and the other half is complaining about government.

Yet surely the notion that the two are working together to serve their own ends at the expense of everyone else is nothing but the stuff of extreme left-wing conspiracy theory?

We can no longer be certain about that. At a time when one would imagine that bankers would be hiding their faces, after the irrational greed of the banking sector turned an overdue but predictable recession into a near catastrophe, the links between government and big bankers are stronger than ever.

The new British government has just appointed Stephen Green, Chairman of HSBC, as its new Minister of State for Trade. His predecessor in that office, under another political party, was Lord Davies of Abersoch, who was previously Chairman of Standard Chartered.

It seems that, as far as British trade policy is concerned, political parties come and go but the influence of the big banks remains constant.

If that is not enough, surely it is odd that the British government was apparently informed of the appointment of Bob Diamond as Chairman of Barclays before it was announced to shareholders. The Chancellor of the Exchequer, the UK’s Minister of Finance, says he looks forward to working with Mr Diamond – a strange way to express the relationship between a chief regulator and his supposed adversary.

It should be stressed that this blog is not criticising Messers Green and Diamond as individuals, and that HSBC and Barclays were not among the worst run banks that had to be bailed out by direction injections of taxpayers’ money.

However, this chumminess between big government and big banks does strike a sour note at a time when millions of small businesses are still struggling to deal with the consequences of their combined incompetence.

It is also bad for Britain that the “voice of business” in British government circles is the voice of the big banks – who do not have the interests of other businesses at heart.

Where, we ask, in all this is the voice of five million small businesses?

As we get older, we have to make a positive effort not to turn into the bore who is always complaining how much better everything used to be.

Such complaints are unwise not only because they are tedious but because they are usually wrong – most things are much better than they used to be.

That said, it can’t be denied that progress in some areas has been accompanied by deterioration in others. In particular, we may be wealthier in financial terms, but is that at the expense of something more important?

In over a quarter of a century in business, this contributor has seen a definite decline in honesty in the daily transactions of commercial life. Where we could usually proceed on the assumption that most people would make an effort to keep their word, and be fair and reasonable in their dealings, it is now almost expected that big organisations in particular will try to chisel and evade their obligations.

Of course, there have always been chancers, but the worst offenders are now the pillars of the Establishment on whose reliability the whole economy depends: insurance companies, banks, pension funds, even government.

It is increasingly rare for insurance companies to pay promptly, and in full, money to which the premium payer assumed he was entitled. Insurers claim that this is, at least in part, because they are themselves increasingly victims of fraud – which is, of course, true – but we are entitled to ask if the chicken came before the egg in that sector?

The same is true of banks. They may claim to be the victims of bad loans, but they made those loans. There would have been no 2008 crash if bank managers were still reactionary but scrupulously honest old fogeys – think George Mainwaring in the British comedy Dad’s Army – instead of City wide boys looking no further than their annual bonus.

Yet government is the worst offender – because those at the top set the example for everyone else. Public service – once considered honourable because it was underpaid – is now a cash cow, and bureaucrats regularly misuse laws passed for legitimate purposes in order to raise revenues.

Public office is now an office of profit, as it was in the 18^th Century. So far from progressing, we seem to have regressed to the time of Oliver Goldsmith: “Ill fares the land, to hastening ills a prey, where wealth accumulates, and men decay.”

Remember 2008? Some people would like to forget it. They were the ones running around, predicting – in some cases without bothering to disguise their glee – the end of capitalism.

Some of us kept our heads and said “This too shall pass” – as, of course, it did. Yet the prophets of doom remain in high-salaried jobs with the mainstream media and government departments.

The same people were also very fond of lecturing us on how Spanish banks fared so much better in the crisis of 2008 because they were regulated more comprehensively.

This may be another of the pronouncements they would like to forget.

The EU has just carried out a series of “stress tests” on European banks. The much maligned British banks passed, but five Spanish banks did not.

This should not surprise anyone: more regulators do not mean better regulation – and regulation does not in itself instil a sense of responsibility.

Yet there is a deeper point. Despite over a dozen major crises, the West has enjoyed phenomenal growth since the development of modern capitalism in the late 17^th Century. Most of that growth has been due to the relatively high-risk investment strategies of banks following the “Anglo-Saxon model”. The alternative, investing mainly in government securities, would have left us in the Middle Ages, without the growth in private enterprise that is the foundation of modern prosperity.

The irony is that investment in government securities is not the safe option it appears. If the bankers of Spain and Greece thought the government bonds of their own countries were a firm foundation for their portfolios, they have been proved horribly wrong. It might actually be a safer strategy to broaden a portfolio with a few higher-risk loans.

This blog, which looks at things from the perspective of small business, treats bankers with caution, but we cannot deny that we need them – and, although they will never admit it, they need us. It is in our interest and theirs to keep banks lending to business, even when it seems riskier, on a superficial level, than sticking to government bonds or building up reserves. Business and banks should unite – for once – and speak out in defence of the “Anglo-Saxon model”. The evidence is on our side.