Re: The more it changes...
The City does many things. Some of them great, some of them average, some of them rubbish.
For example, with high frequency trading you can get all three. In a lot of cases, HFT performs a service to the market as a whole, by making transactions cheaper and quicker, and by increasing price transparency. There are various arguments why some of the HFT mob aren't performing a service, because they pull liquidity out of the market - and therefore why this might only be left to traditional 'market makers'. But in general it's not just coin-clipping.
One of the arguments I have very little patience for is the ones who say we can ignore the markets - because they're just being evil capitalists when they threaten us. This often goes with the narrative of 'markets attacking something'. It also often comes from people very hostile to the markets, but who want their money.
Take the example of the Eurozone. We had much smugness from our European friends when the US and our sub-prime markets crashed. I particularly remember Sarkozy, who'd said things about how he wanted to be the French Thatcher, and make the french economy more Anlgo-Saxon. But later moved into deriding the nasty anglo-saxon capitalist pigdogs - obviously for the easy popularity. The London markets were now a nasty parasite, and should be punished. This was a common theme from EU politics, although I particularly remember Sarko, few had been enthusiastic about the nasty anglo-saxons before the crash either.
Yet when it looked like the Euro might collapse, and so international finance was running away from European government debt as fast as its little legs would carry it - the very same people criticised the markets for 'attacking them'. When actually the markets were doing what they should have done - getting their clients' money out of Dodge. Well actually they shouldn't have lent it in the first place, but that was an equal failure of Eurozone politicians lying about how much they'd support the Euro, and markets for believing them.
So no, you shouldn't pray to the markets five times a day. Nor should you be too ready to listen them when they advise you on what to do, as it's bound to be self-interested. But on the other hand, you can't ignore them and ask them to give you loads of money, at one and the same time.
In the Brown Boom, I believe the City was providing something like 13% of our tax base. That ought to get them a little say in how the economy was run. Although with some wariness that this was an obvious bubble, so would drop. But equally, even though we're now not happy with them, the UK government is still borrowing over £100 billion per year, so if we don't keep at least some of them sweet, they may tell us to get stuffed. This can be overstated. Financial institutions are forced to hold government debt, for various reasons. But everything is fine, until faith is lost, and then it's very much not fine, and can go from fine to disaster in days. See the Eurozone for details. The Euro has been days from collapse at least twice now. Probably several more times, when the histories of the last minute crisis meetings get written up.