EDITOR'S TAKE: The pitchfork party have been led slightly astray

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With the possible exception of Nick Griffin, bankers are among the least popular people in the UK. No longer is it acceptable to be one in polite society. No longer do people even want to go into the industry - a new study by research company Universum reveals no banks at all in the UK's top 30 employers.

The situation has been brewing since the bailouts. When Obama met leaders of the largest surviving US banks at the White House in April, he didn't mince his words: "My administration is the only thing between you and the pitchforks," he is rumoured to have told them over a glass of water.

Six months on, and the pitchforks are still out. Moreover, they are being wielded with increasing ferocity. In the UK, that ferocity is likely to increase once a new government is elected next year and public sector cuts begin in earnest.

A friend who holds a senior job in a quango which will probably be eradicated under a Conservative administration sums up the prevailing attitude: "I am about to lose my job due to government cuts, and what's particularly galling is that the cuts are being made to reduce the budget deficit after we bailed out all these ******* in the City who are now paying themselves huge bonuses."

In the advancing 'age of austerity,' that sentiment is likely to be magnified. The Telegraph this week warned of horrors such as a 7p increase in income tax and an end to heating in schools as the government seeks to balance its budget.

As this situation hurtles towards us, banks aren't making it any easier on themselves by accruing apparently large bonuses. Nor is the popular press doing much to stifle the opprobrium.

Behind the deficit

It has been left to Goldman Sachs, which appears to have belatedly realized the damage to its reputation inflicted by the giant squid moniker, to try and defend itself (and by association, the industry).

This week, Brian Griffiths, an international advisor at Goldman, tried to argue that inequality is good, while Lloyd Blankfein endeavoured to make the case for Goldman's contribution to growth.

In the UK, however, it is more apt to look at the figures released this week regarding the British government's budget deficit.

As the table below shows, the UK budget deficit is 20% higher than it would have been without the bailout of the British banking system. However, even without 'financial sector interventions', the underlying deficit is high and rising.

Budget deficit

Source: ONS

This is partly because welfare spending is increasing. But it's also because the tax take is falling. If banks hadn't been bailed out, the economy would have collapsed and the deficit would have been larger still. By bailing out banks, taxpayers were effectively also bailing out their future selves.

It's also instrumental to look at precisely where the UK government money that propped up the financial system went: out of total 'interventions' of 142bn, 116bn went to Northern Rock and Bradford and Bingley - not to investment banks.

None of this is to condone excessive risk taking. Nor is it to suggest a return to the days of CDOs squared. It is, however, to say that if aggrieved taxpayers form lynch mobs to reclaim their money from investment bankers, they may not be in command of all the facts.

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