Join John Lanchester to talk about Whoops! - our book of the month - Tues 2 Nov, 8pm

(83 Posts)
GeraldineMumsnet (MNHQ) Tue 12-Oct-10 11:37:07

Hi everyone, Tilly is in outer circles of internet hell so am posting on her behalf.

We've chosen Whoops! by John Lanchester as our October book of the month.

It's highly topical given child benefit cuts and the impending comprehensive spending review (ie even more cuts) because it succinctly and wittily explains why the credit crunch happened and what led to the current dire financial mess.

We're really pleased that John can join us for our next book club discussion on Tues 2 Nov at 8pm.

Whoops! is out now in paperback (a manageable 200 pages). Read more about it and John's other books, plus glittering reviews of Whoops! by many book club authors we've already discussed.

Hope you can join us, should be a great discussion.

MayorNaze Tue 12-Oct-10 13:52:19

interesting...

UrsulaUndress Tue 12-Oct-10 21:18:24

A good guest. Haven't read Whoops! yet but I do read him in the LRB. And loved his memoir. So if I can get my hands on Whoops I'll be along...

HobbitMama Tue 12-Oct-10 22:09:44

cool - will try and get hold of that and be there for the chat this time!

poppyknot Tue 12-Oct-10 22:53:23

I knew little of economics and had to mug up quickly a couple of months ago. This book was a godsend and a very good read to boot.

Looking forward to this.........

bran Wed 13-Oct-10 22:17:53

I've just downloaded it to my iPhone. It will hopefully be good for reading in tiny chunks, eg while waiting for the DC to come out of school.

poppyknot Thu 14-Oct-10 11:37:21

I found this Guardian podcast with the man himself... How the Financial Crisis has effected Culture.

MayorNaze Sat 16-Oct-10 08:02:11

i'm sorry, i have got to p50 and am no clearer

i need diagrams i think...confused

mollythetortoise Wed 20-Oct-10 10:00:08

I read Whoops about 5 months ago. It was the first time I felt I had a much better understanding of what went wrong with the worlds finances.
It is a brilliant book, easy to understand for non economists and full of real world examples to show how this does effect the ordinary man on the street.

Although I accept that the banks needed to be bailed out at the time (Oct 08) as the result of not doing this would have been chaos, I am now very very angry that the banks having taken billions of tax payer funded support are now lobbying to carry on exactly as before and seem to have won the argument - bonuses are back and corporation tax has been reduced and banks are being allowed to carry forward the losses of 08/09 to offset the tax due on their profits in the future.

Plus the blame has been laid at the door of the public sector and the public sector workers rather than then bankers and the banks.

John, did you think when you wrote the book that by Oct 2010 the bankers would be back in charge again or does this not surprise you?

GeraldineMumsnet (MNHQ) Thu 21-Oct-10 11:13:57

Hi everyone, thought you might like to see this vid with John Lanchester discussing the bankers' attempts to pass off the financial meltdown as a stroke of bad luck hmm

Looking forward to tomorrow evening's chat, we are ready to send advance questions to John so please post them here and we'll kick off with those at 8pm tomorrow...

poppyknot Mon 01-Nov-10 13:34:19

I am reading through it again (and enjoying it although it does make you cross!)

Does he think that our understanding of the financial situation is hindered by the fact that the reporting of it seems to boil down to one or two buzz words or situations. In the middle of 2008 (or so) we had a lot on sub prime mortagages in America. And then it was short selling (which I still don't really get). And then 'too big to fail'. And then there was RBS and Sir Fred's pension. And now with the cuts it is 'the bankers' but no one can actually say why other than the fact that they seem to be very well paid and get huge bonuses and were bailed out by us 'the tax payer'. And now the public sector seems to be in the firing line.

I know that John was initially intending to write a novel based around this time but that there would have to be too many explanatatory breaks in it. (I'll tell you why.....). Is the novel writeable now?

I think that maybe Alan Johnson could have this as one of his economic primers. Has John had any feedback from those in power (or wanting to be)?

personanongrata Mon 01-Nov-10 20:25:56

John, hope this doesn't sound critical, but I didn't find the book funny (as some reviewers suggested it would be) but more savage (Modest Proposal incredulity type of thing).

Is your faith in human nature still intact after writing it (if it was before)? You're careful not to demonise all bankers, but they're not exactly clamouring to put their own house in order, are they? And CEOs pay up by an average of more than 50%? Same old, same old, it seems.

(Oh, and can you please put me and my DD out of our misery and explain the army selection test you mention in the bit about false predictions of how people will behave - pole, wall etc. We couldn't figure out how you'd get everyone over. Clearly not officer material!)

Thank you.

grandmabet Tue 02-Nov-10 14:33:56

Hi John

I found it very interesting but agree that it wasn't very funny. But there are still two things puzzling me: 1) Did the bank that made a $16.8B profit pay back the $10B owing to the taxpayer before paying bonueses, and 2) If you had some spare cash would you put it into property or some other investment?

And, not really a question, but a nudge. Did you read Sebastian Faulkes' novel A Day in December which touched on the banking crisis and does I think suggest that there is room for another novel on this theme?

Bye

AsterixNotTintin Tue 02-Nov-10 19:02:19

Hi John
Thank you for writing this book. My mind still boggles at the financial world, but I'm a whole lot closer to understanding it than before.

I can't quite remember if this quote came from the book or not, but there was an American senator who said the bankers should apologise or commit hari-kiri - or preferably both. What do you think the bankers could do to atone?

Could there be any way that an independent body assess the culpability of each person in charge of deals, from CEO downwards, in every British bank and demand an amount to be paid back by that person to the taxpayer over a number of years?

I can't help but feel there has to be some personal attachment of blame - if you are intent on making yourself a packet, then you should be prepared to lose yourself a packet too. None of them have lost anything.

LeninGuido Tue 02-Nov-10 19:24:02

.

AttilatheHen Tue 02-Nov-10 19:29:17

John,

I don't think you're being quite honest, or clear, or perhaps you don't know, about the banking crisis. You've pin-pointed a lot of greed and nasty doings, but that doesn't explain why they were allowed to happen in the first place, and it doesn't explain what will happen now.

Allow me to challenge you: all of our money (98%) is created by banks from nothing, literally the tapping of a keyboard, and issued as loans (debt).

This means that no matter how much money we have in the economy, there is always money leaking out in terms of debt repayments, and the value of that money is eroded by inflation. So, more money has to be brought into the economy so that there's money to pay the debts, keep things going and deal with the inflation.i.e there has to be more borrowing; people have to be given every opportunity to borrow.

We get ourselves into a cycle. However, finding people/companies to keep on getting into debt so this upward spiral can continue is difficult. The fact that banks were lending to the very poor is a sign not only of greed and stupidity, but that nearly everyone else had had enough debt as they were prepared to take on. And the system needs more and more people to take on debt. So the banks looked for a group that would take on debt - the poor.

When the subprime market started to collapse it was a sign that the money supply was going to start shrinking. This means that we'd be poorer and we'd still have debt round our necks, so banks started to hoarde and wait for the bad news - who had made so many bad loans they'd go bust. (Truth is, when the money supply starts to shrink good loans turn to bad loans, so the banks, by freezing credit just accelerated the process of crisis and recession.)

As you know, as the money supply falls, people, lose jobs, debts can't be paid and we go into a Depression. The only thing that has prevented that so far is unprecedented government action. In the UK almost 1/3 of tax receipts have disappeared! So, we're borrowing (180 billion a year) just to standstill.

We will pay higher taxes, have less services and have poorer jobs to pay for debts created by the banking system; we have to borrow to have money in the economy (That's the way it works, even if you personally haven't borrowed yourself). We'll be debt slaves ultimately, and as things stand, the vast majority of us will be in that category, and our children. All for the banking system and who it benefits.

Your book doesn't tackle this. Are you worried you'll be called a Marxist?

poppyknot Tue 02-Nov-10 19:34:42

Hi John

Sorry my questions were addressed in a rather stilted third person. I'm not usually that formal......

poppyknot

AttilatheHen Tue 02-Nov-10 19:42:28

Sorry, I didn't mean 'honest'. I mean in sufficent depth. I apologise.

bran Tue 02-Nov-10 19:55:50

Damn, I haven't finished yet. I've still got one child to force get to bed and there's no sign of DH who was definitely going to be home by 6.46 today. hmm

Can I just say John that I'm hugely impressed that you managed to hold on to all that info long enough to write it down in book form. I have a degree in Maths and Economics (from a long long time ago) and I still found that things that I understood as I read had slipped out of my mind by the next time I picked up the book. Of course the memory loss could have been caused by only reading the book in 5-10 min chunks on an iPhone while waiting in the school car park, with a toddler in the back seat screaming "Me play with iPhone mummy". grin

LeninGuido Tue 02-Nov-10 19:56:04

AttilatheHen, so it will just happen again?

Evening all

I'm thrilled to introduce our Author of the Month, John Lanchester.

John, thank you very much indeed for joining us tonight. I thought we might kick off with the advance questions above, and then the floor is open...

And a quick reminder to everyone, including those who haven't read WHOOPS!: all questions (about the financial crisis, previous books, writing life, etc) are welcome, don't hold back.

And finally my question:

I was intrigued by your analysis of the breakdown of communism leading to the trigger-happy Anglo-Saxon financial culture that we believed to be the only true path. Now that our model has failed too, what do you think is the right path to create a fair society (or making everyone have 'enough' as you put it in the last chapter)? If our economy isn't based on financial services, what do you think it could be based on?

And have you read the Will Hutton book (I think called The Fair Society)?

(sorry, make that three questions)

JohnLanchester Tue 02-Nov-10 20:03:10

Hello everybody, and thank you very much for inviting me to do this. It’s my first ever live webchat so forgive me if I’m slow and/or useless.

Mollythetortoise, I did think the bankers would stage a fightback but I’ve been uttely amazed by how successful they’ve been and how completely the politicians have allowed themselves to be steamrollered. The opportunity to start getting to grips with the banks, which was strongly present in the aftermath of the bailout, was allowed to slip past and things seem to have gone straight back to the way they were, except with dramatically less lending to businesses and individuals. As for the bonuses they’ve gone back to paying themselves, well. I’m at a loss for words. 2008: we bail out the financial sector. 2009: they go back to paying themselves record bonuses. And apparently 2010’s bonus pools will be even bigger. That really is beyond shameless. I certainly didn’t foresee that and if you’d told me that was what was going to happen I don’t think I’d have believed you.

mollythetortoise

I read Whoops about 5 months ago. It was the first time I felt I had a much better understanding of what went wrong with the worlds finances.
It is a brilliant book, easy to understand for non economists and full of real world examples to show how this does effect the ordinary man on the street.

Although I accept that the banks needed to be bailed out at the time (Oct 08) as the result of not doing this would have been chaos, I am now very very angry that the banks having taken billions of tax payer funded support are now lobbying to carry on exactly as before and seem to have won the argument - bonuses are back and corporation tax has been reduced and banks are being allowed to carry forward the losses of 08/09 to offset the tax due on their profits in the future.

Plus the blame has been laid at the door of the public sector and the public sector workers rather than then bankers and the banks.

John, did you think when you wrote the book that by Oct 2010 the bankers would be back in charge again or does this not surprise you?

JohnLanchester Tue 02-Nov-10 20:03:58

Poppyknot, yes, buzzwords do dominate and there’s something almost comic about the way there is an official issue of the day which keeps changing. The trouble I think is that this stuff is hard to summarise in the soundbitey way that all news media prefer.

As for the novel, it’s not just writeable but written, in draft form anyway, but it’s not about the crisis per se. (I feel shifty giving more details about it—please excuse me.)

I’ve not had so much as a squeak from anyone in power but I’ve had much more positive feedback than I was expecting from people in the world of business and finance. The interesting thing is how many of them are completely furious with the banks, based on many years of negative experience. I’ve been really surprised by that.

poppyknot

I am reading through it again (and enjoying it although it does make you cross!)

Does he think that our understanding of the financial situation is hindered by the fact that the reporting of it seems to boil down to one or two buzz words or situations. In the middle of 2008 (or so) we had a lot on sub prime mortagages in America. And then it was short selling (which I still don't really get). And then 'too big to fail'. And then there was RBS and Sir Fred's pension. And now with the cuts it is 'the bankers' but no one can actually say why other than the fact that they seem to be very well paid and get huge bonuses and were bailed out by us 'the tax payer'. And now the public sector seems to be in the firing line.

I know that John was initially intending to write a novel based around this time but that there would have to be too many explanatatory breaks in it. (I'll tell you why.....). Is the novel writeable now?

I think that maybe Alan Johnson could have this as one of his economic primers. Has John had any feedback from those in power (or wanting to be)?

JohnLanchester Tue 02-Nov-10 20:04:27

Personannongrata, I know what you mean—it’s a question of tone and these things strike one differently. I did get steadily crosser as I was working on the book. My faith in human nature is about where it was. Our capacity for greed is nothing new, I think, but we have acquired some new ways of indulging that greed. Also: some social norms have perhaps slipped to make open greed seem normal, even admirable, in a way which wasn’t once the case.

As for the army selection test, the wall and the pole and all that, I’ve had it explained to me but I have no idea how it works in practise. (I think the modern version involves bodging together a temporary bridge to cross a small river.) I know a couple of people who went through it who said it was easier to work out in practise than it was to explain—but maybe, as you suggest, it’s just a question of the difference between officer material and the rest of us...

personanongrata

John, hope this doesn't sound critical, but I didn't find the book funny (as some reviewers suggested it would be) but more savage (Modest Proposal incredulity type of thing).

Is your faith in human nature still intact after writing it (if it was before)? You're careful not to demonise all bankers, but they're not exactly clamouring to put their own house in order, are they? And CEOs pay up by an average of more than 50%? Same old, same old, it seems.

(Oh, and can you please put me and my DD out of our misery and explain the army selection test you mention in the bit about false predictions of how people will behave - pole, wall etc. We couldn't figure out how you'd get everyone over. Clearly not officer material!)

Thank you.

JohnLanchester Tue 02-Nov-10 20:05:04

Grandmabet, yes Goldman did pay back the $10 billion before paying themselves another $16.8 billion. I’ve no idea what I’d do if I had some spare cash, apart from paying down the mortgage. (A financially minded person would probably say that that was a form of investing in property.)

I haven’t read Sebastian’s book yet, but I’m going to once I’ve got my own novel completetly out of the way. I read pretty widely but when a book is even very roughly in the same area, or I think it might be, I steer clear until I’ve got my own thing done. You know how it’s hard to hum a tune if a different tune is playing on the radio? It’s a bit like that.

grandmabet

Hi John

I found it very interesting but agree that it wasn't very funny. But there are still two things puzzling me: 1) Did the bank that made a $16.8B profit pay back the $10B owing to the taxpayer before paying bonueses, and 2) If you had some spare cash would you put it into property or some other investment?

And, not really a question, but a nudge. Did you read Sebastian Faulkes' novel A Day in December which touched on the banking crisis and does I think suggest that there is room for another novel on this theme?

Bye

JohnLanchester Tue 02-Nov-10 20:06:08

Asterixnottintin, do you really prefer Asterix to Tintin? (Maybe that’s a different conversation.)

A French economist chum of mine thinks that what we should do is create a legal responsibility attached to any lending, which follows the loan wherever it goes—in other words, if money is leant in a reckless or predatory way, the loaner is liable and so is anyone who buys or trades that loan. An interesting idea, but I’m not sure how workable it is, because the whole mass of interlocking loans is so complicated and so international that I’m not sure it would be doable. The international nature of banking is a big part of the problem here. So the short answer is, I don’t think it can be done.

You’re right, though. The people ‘to blame’—that’s a shorthand idea but I think we both know what we mean—have got away for the most part unscathed. I think people are going to get more and more annoyed about that as the economic hard times really start to bite.

AsterixNotTintin

Hi John
Thank you for writing this book. My mind still boggles at the financial world, but I'm a whole lot closer to understanding it than before.

I can't quite remember if this quote came from the book or not, but there was an American senator who said the bankers should apologise or commit hari-kiri - or preferably both. What do you think the bankers could do to atone?

Could there be any way that an independent body assess the culpability of each person in charge of deals, from CEO downwards, in every British bank and demand an amount to be paid back by that person to the taxpayer over a number of years?

I can't help but feel there has to be some personal attachment of blame - if you are intent on making yourself a packet, then you should be prepared to lose yourself a packet too. None of them have lost anything.

JohnLanchester Tue 02-Nov-10 20:06:54

Atillathehen, there are lots of different ways of telling the story of how we got here. Your focus on debt is one way of doing it. The debt bubble has been passed around the world for the last several decades—the thing that’s different this time is that it’s we in the developed West who are sitting on the debt bomb, whereas the last several debt crises have been in far off countries of which we know little (Russia, South-East Asia, Latin America—and that’s just in the last 15 years or so). A big part of what happened is that politicans wouldn’t tackle inequality directly, so people who wanted a higher standard of living were encouraged simply to borrow the money to buy a richer lifestyle. Cheap credit—debt—was used as a salve for rising inequality. Not a very effective salve, to put it mildly.

AttilatheHen

John,

I don't think you're being quite honest, or clear, or perhaps you don't know, about the banking crisis. You've pin-pointed a lot of greed and nasty doings, but that doesn't explain why they were allowed to happen in the first place, and it doesn't explain what will happen now.

Allow me to challenge you: all of our money (98%) is created by banks from nothing, literally the tapping of a keyboard, and issued as loans (debt).

This means that no matter how much money we have in the economy, there is always money leaking out in terms of debt repayments, and the value of that money is eroded by inflation. So, more money has to be brought into the economy so that there's money to pay the debts, keep things going and deal with the inflation.i.e there has to be more borrowing; people have to be given every opportunity to borrow.

We get ourselves into a cycle. However, finding people/companies to keep on getting into debt so this upward spiral can continue is difficult. The fact that banks were lending to the very poor is a sign not only of greed and stupidity, but that nearly everyone else had had enough debt as they were prepared to take on. And the system needs more and more people to take on debt. So the banks looked for a group that would take on debt - the poor.

When the subprime market started to collapse it was a sign that the money supply was going to start shrinking. This means that we'd be poorer and we'd still have debt round our necks, so banks started to hoarde and wait for the bad news - who had made so many bad loans they'd go bust. (Truth is, when the money supply starts to shrink good loans turn to bad loans, so the banks, by freezing credit just accelerated the process of crisis and recession.)

As you know, as the money supply falls, people, lose jobs, debts can't be paid and we go into a Depression. The only thing that has prevented that so far is unprecedented government action. In the UK almost 1/3 of tax receipts have disappeared! So, we're borrowing (180 billion a year) just to standstill.

We will pay higher taxes, have less services and have poorer jobs to pay for debts created by the banking system; we have to borrow to have money in the economy (That's the way it works, even if you personally haven't borrowed yourself). We'll be debt slaves ultimately, and as things stand, the vast majority of us will be in that category, and our children. All for the banking system and who it benefits.

Your book doesn't tackle this. Are you worried you'll be called a Marxist?

LeninGuido Tue 02-Nov-10 20:13:25

So, what do we do? How do we protest?

JohnLanchester Tue 02-Nov-10 20:13:32

I agree with the idea that we have to 'rebalance' the economy—everybody seems to agree with that. It's a bit like being in favour of oxygen. We need more manufacturing and more emphasis on our strengths in areas such as higher education, the arts, clean energy, and so on. It would have been nice if the media and the government had made more of a fuss about the fact that in the same week, a British-based scientist won the Nobel prize for medicine on Monday (for inventing IVF), then another two won the Nobel in Physics on Wednesday (for inventing a form of carbon called graphene). Shouldn't that have been the occasion for, I don't know, a national holiday maybe? To make the point that research is a great national strength that needs to be encouraged?

Sorry, I haven't read Will Hutton's book, but I know I should.

TillyBookClub

Evening all

I'm thrilled to introduce our Author of the Month, John Lanchester.

John, thank you very much indeed for joining us tonight. I thought we might kick off with the advance questions above, and then the floor is open...

And a quick reminder to everyone, including those who haven't read WHOOPS!: all questions (about the financial crisis, previous books, writing life, etc) are welcome, don't hold back.

And finally my question:

I was intrigued by your analysis of the breakdown of communism leading to the trigger-happy Anglo-Saxon financial culture that we believed to be the only true path. Now that our model has failed too, what do you think is the right path to create a fair society (or making everyone have 'enough' as you put it in the last chapter)? If our economy isn't based on financial services, what do you think it could be based on?

And have you read the Will Hutton book (I think called The Fair Society)?

(sorry, make that three questions)

AttilatheHen Tue 02-Nov-10 20:16:01

John,

I don't think you're quite responding to my point. The system IS a debt bomb. We're always in debt. Whether it's the managed debt accumulation of post-WW2, or the laissez-faire accumulation since Thatcher-Reagan. The system is based on debt. At some point, the debt becomes too much and overwhelms the system: 1929 and now.

I don't wish to discuss other countries debts. I'd like you to answer this:

Can we have economic growth without more people/companies taking on more debt?

If the answer is 'yes' please explain.

JohnLanchester Tue 02-Nov-10 20:16:15

Well, we can prepare to make a huge fuss next year, when the government's commission on banking comes up with its suggestions. These I suspect will include ideas about breaking up the banks about which the banks will immediately launch a huge fuss. We need to let the politicians know, and have in the front of their minds, the fact that we the electorate have not forgotten what happened and we are determined to have safer, better banks.

LeninGuido

So, what do we do? How do we protest?

poppyknot Tue 02-Nov-10 20:17:13

YOu said "more positive feedback than I was expecting from people in the world of business and finance. The interesting thing is how many of them are completely furious with the banks, based on many years of negative experience. I’ve been really surprised by that."

Is any of this feedback from those in finance from people close enough to feel guilt as well as anger?

Are there any gamekeepers turned poachers who might tell more?

LeninGuido Tue 02-Nov-10 20:17:18

Why is everyone so set against progressive taxation? Surely a tapered system would be best. Even if risks/ rewards/ bonuses remain so short-term, at least taxes and NI would be put back in the pot straight away.

LeninGuido Tue 02-Nov-10 20:18:18

Should we have a national stake in major banks? That's another way to regulate and redistribute.

bran Tue 02-Nov-10 20:20:19

I think that reading your book has crystalised my opinion that there many layers of fault in this whole thing.

Like you I was around for the UK house price crash at the end of the 80s/early 90s. DH and I had just moved to London and had been dithering about buying because we felt prices were too high so were renting instead. That bubble was widely analysed at the time and perhaps that affected our attitude to debt, but I have remained quite sceptical about 'good times' ever since. There is a whole generation, starting from just slightly younger than me, who were conditioned to be accepting of debt and so colluded with the bubble. While there would still have been a huge crash, and there is no doubt that there were many failures by all sorts of institutions, on an individual level many people would now be more comfortable if they had used any excess money to reduce their mortgages instead of buying treats, or if they had simply reduced their spending when they could no longer pay off their credit card.

When considering change do you think there is room for a bottom up approach as well as changes in legislation? For instance do you think personal finance taught in schools would have an effect on individuals ability to cushion themselves from economic swings?

SuiGeneris Tue 02-Nov-10 20:22:57

Do you really think it is responsible to suggest popular action about a subject as complicated as banking regulation?

What would safer, better banks look like?

On debt you make the point very well in the book: the banks lent the money, but lots of people were there, eager to borrow. Can we really believe that at the time (not now, with the benefit of hindsight) they would have rather not have been lent the money?

AttilatheHen Tue 02-Nov-10 20:23:22

I'd like to respond to your point about inequality too.

A man in China will work 15 cents an hour; in Britain, £5.25 est. The nature of global markets mean that jobs go to the cheapest labour markets. A politician would have to take on global capitalism to reverse that!

Yes, we could produce more here, but for less profit, and uncompetitively. I don't see how the current 10 million economically inactive, but of working age, population can find jobs when they are competing with those wages.

Unless, you're suggesting that government engineers equality. That's dangerously Left-Wing !

JohnLanchester Tue 02-Nov-10 20:23:31

I haven't heard a word from anyone who in any way feels responsible, or admits to feeling responsible for what happened. I have heard stories about people working in high street banks who quit their jobs because they felt the lending they were being encouraged to jam down the throat of consumers was morally indefensible—but I don't know any of those people directly and I don't know anyone who has managed to get them to talk on the record.

I know this is infuriating and hard to believe, but the fact is that many of the people involved in the best-rewarded parts of investment banking feel no guilt whatsoever about the recession. Many of them were very annoyed when bonuses were briefly suspended and regard their resumption at mind-boggling levels as no more than their just reward. A popular phrase during 2008-9 was 'I'm working for free this year'—meaning, multi-hundred thousand pound salary only, with no bonus on top.

poppyknot

YOu said "more positive feedback than I was expecting from people in the world of business and finance. The interesting thing is how many of them are completely furious with the banks, based on many years of negative experience. I?ve been really surprised by that."

Is any of this feedback from those in finance from people close enough to feel guilt as well as anger?

Are there any gamekeepers turned poachers who might tell more?

AsterixNotTintin Tue 02-Nov-10 20:24:38

Axterix beats Tintin, in every way.

Asterix: historically informative, witty, believable (in that magic potion accounts for everything), heroes you'd want to have a drink with

Tintin: dodgy made-up places, grindingly unfunny (sole jokes: Snowy gets lashed on whiskey, Calculus can't hear and Thomson twins fall over), highly improbable plots, a prissy hero that makes you want to stick a fork in your head.

But my husband and two sons would disagree. I'm trapped in a household of no taste.

Anyway, back to finance...

I am one of the Annoyed. I didn't buy a house, or borrow money, or spend very much at all, over the last 10 years. Mainly because I didn't earn enough to buy a house or borrow that much money. Towards the end of the book you say we are all to blame, but I passionately feel we aren't. Yes, if you borrowed way too much then you should now not complain if asked to pay it back. But there must be thousands of us who haven't?

What do your fellow writers feel (I'm imagining most of them aren't in the Notting Hill mansion bracket, although maybe they are?)

JohnLanchester Tue 02-Nov-10 20:26:42

Well, we do, in RBS and HBOS, thanks to the bailouts. A state stake in the other banks might well be something the famous commission suggests.

LeninGuido

Should we have a national stake in major banks? That's another way to regulate and redistribute.

bran

I think that reading your book has crystalised my opinion that there many layers of fault in this whole thing.

Like you I was around for the UK house price crash at the end of the 80s/early 90s. DH and I had just moved to London and had been dithering about buying because we felt prices were too high so were renting instead. That bubble was widely analysed at the time and perhaps that affected our attitude to debt, but I have remained quite sceptical about 'good times' ever since. There is a whole generation, starting from just slightly younger than me, who were conditioned to be accepting of debt and so colluded with the bubble. While there would still have been a huge crash, and there is no doubt that there were many failures by all sorts of institutions, on an individual level many people would now be more comfortable if they had used any excess money to reduce their mortgages instead of buying treats, or if they had simply reduced their spending when they could no longer pay off their credit card.

When considering change do you think there is room for a bottom up approach as well as changes in legislation? For instance do you think personal finance taught in schools would have an effect on individuals ability to cushion themselves from economic swings?

poppyknot Tue 02-Nov-10 20:27:17

That is so dispiriting but not surprising.

LeninGuido Tue 02-Nov-10 20:28:04

Surely interest rates have to rise and with that will inevitably come repossessions. Why don't we do 30-year fixed rate mortgages?

LeninGuido Tue 02-Nov-10 20:29:43

SuiGeneris - why shouldn't there be popular action? Lots of issues are complicated, it doesn't mean people can't demand more information and action to curb the worst excesses in an industry.

SuiGeneris Tue 02-Nov-10 20:30:51

Sorry, I cannot see the point of a national stake in some banks, unless those banks are to be the utility banks Lord Turner speaks of, i.e. banks that take deposits and lend (conservatively) to individuals and businesses.

But how would having a few nationalised banks avoided the crisis? The German Landesbanks (state-owned at least partly) were not exactly insulated from what went on in the States...

Looks like the banks can't win to me!

Be cautious and everyone slates them, after all you all bailed them out???

Don't be cautious, get involved in risky lending and again they are for the high jump!

poppyknot Tue 02-Nov-10 20:31:00

Who is on the commission? How nuch common sense is there?

JohnLanchester Tue 02-Nov-10 20:31:03

Yes, I completely agree about teaching personal finance.

The whole thing about attitudes to debt is deeply mysterious to me. I grew up being taught that debt was a bad thing, in and of itself—something to be avoided. That used to be a very widespread attitude in this country and it's strange that it seemed to vanish so completely in the last, what, three decades. Part of what happened is that the financial services industry rebranded 'debt' (a bad thing) as 'credit'—which sounds like a good thing, sounds like something we could all do with more of. So yes, people did make mistakes and indulge themselves, but they were strongly encouraged to do so, and the entire society's direction of travel was arguably askew.

bran

I think that reading your book has crystalised my opinion that there many layers of fault in this whole thing.

Like you I was around for the UK house price crash at the end of the 80s/early 90s. DH and I had just moved to London and had been dithering about buying because we felt prices were too high so were renting instead. That bubble was widely analysed at the time and perhaps that affected our attitude to debt, but I have remained quite sceptical about 'good times' ever since. There is a whole generation, starting from just slightly younger than me, who were conditioned to be accepting of debt and so colluded with the bubble. While there would still have been a huge crash, and there is no doubt that there were many failures by all sorts of institutions, on an individual level many people would now be more comfortable if they had used any excess money to reduce their mortgages instead of buying treats, or if they had simply reduced their spending when they could no longer pay off their credit card.

When considering change do you think there is room for a bottom up approach as well as changes in legislation? For instance do you think personal finance taught in schools would have an effect on individuals ability to cushion themselves from economic swings?

'We need more manufacturing and more emphasis on our strengths in areas such as higher education, the arts, clean energy, research'

I had this conversation with my husband, where I insisted that we could keep manufacturing alive in UK if we focused solely on high quality luxury goods. He thought even those now had to be made in China otherwise the figures would never add up.

What do you think we can manufacture?

And how do we make money from research? Does it get sold as a commodity?

JohnLanchester Tue 02-Nov-10 20:35:16

A simple example is forcing the banks to have much higher levels of capital reserves, along the lines of the Canadian banks which didn't go bust and didn't require a bailout.

Better banks would think more about the customer. Paul Volcker is hardly a dangerous anti-capitalist—he was President Reagan's Treasury Secretary. Just the other day he said that in the last several decades, during a frenzy of 'innovation' in banking and financial instruments, he could only think of one innovation which had benefited the customer: the cashpoint machine. Better banking would have more things like that—cheques which clear into your account the same day they leave the account of the person paying you, for instance.

SuiGeneris

Do you really think it is responsible to suggest popular action about a subject as complicated as banking regulation?

What would safer, better banks look like?

On debt you make the point very well in the book: the banks lent the money, but lots of people were there, eager to borrow. Can we really believe that at the time (not now, with the benefit of hindsight) they would have rather not have been lent the money?

AttilatheHen Tue 02-Nov-10 20:36:14

John,

I'll have to be Paxmanesque:

Can we have economic growth without people/companies taking on more debt?

(Even in your younger years the system was still built on debt?)

poppyknot Tue 02-Nov-10 20:36:36

I know about the curious debt thing. My parents have never had a credit card and were even wary for ages about the hole in the wall. Dh and I are not profligate but we do have credit cards and don't save for every big purchase......

SuiGeneris Tue 02-Nov-10 20:36:49

LeninGuido: how do you propose to explain regulatory capital, how it is set and consequences of the various options to the general public?

I think the risk of popular action in respect of complicated subjects is that "the public" is too easily manipulated by the conveyors of information. Inevitably the media focus on a few aspects of the complicated subject and readers then focus on an even narrower part, so that change brought about by popular action risks addressing only some of the problem, potentially resulting in worse outcomes than those it is trying to cure.

LeninGuido Tue 02-Nov-10 20:39:09

SuiGeneris - I'd rather attempts were made to educate and explain than we all just throw our hands up and carry on as we are.

champagnesupernova Tue 02-Nov-10 20:39:13

Hello

Sorry I'm a bit late and John, I must confess haven't finished the book yet blush.

So apols if you get to this later in the book and I haven't got there.

How much of the credit issues do you think is down to the L'oreal attitude "because you're worth it" -i.e. why not have x or y NOW?

I can remember as a graduate on a salary of peanuts at the time, £14,500 in London 11 years ago looking at my peers on the tube and adding up what they were wearing - designer handbag, top-end high street coat, high-street-but-still-£100 boots and wondering how on earth they afforded it?

SuiGeneris Tue 02-Nov-10 20:40:07

And capital requirements have already been increased, without popular action. The trouble with increasing them too much or too quickly is that it would stifle economic growth.

LeninGuido Tue 02-Nov-10 20:40:08

Online banking and being able to do a BACS transfer are good innovations.

JohnLanchester Tue 02-Nov-10 20:41:04

What about all those unfunny puns though?

No, not everyone is to blame. And the consequences, in terms of lost jobs, are going in many cases to fall on people who are blameless. I heard the wife of a firefighter who'd just been laid off saying, I think it was on the Today programme, 'Tell us what we did wrong? Tell us what we did that we should have done differently?' It was a question with great force, and one which a lot of people will be asking.

Most of the writers I know are like the rest of us, bewildered and anxious about the prospect of the next difficult years. As I say in the book, I think people are going to get steadily angrier.

AsterixNotTintin

Axterix beats Tintin, in every way.

Asterix: historically informative, witty, believable (in that magic potion accounts for everything), heroes you'd want to have a drink with

Tintin: dodgy made-up places, grindingly unfunny (sole jokes: Snowy gets lashed on whiskey, Calculus can't hear and Thomson twins fall over), highly improbable plots, a prissy hero that makes you want to stick a fork in your head.

But my husband and two sons would disagree. I'm trapped in a household of no taste.

Anyway, back to finance...

I am one of the Annoyed. I didn't buy a house, or borrow money, or spend very much at all, over the last 10 years. Mainly because I didn't earn enough to buy a house or borrow that much money. Towards the end of the book you say we are all to blame, but I passionately feel we aren't. Yes, if you borrowed way too much then you should now not complain if asked to pay it back. But there must be thousands of us who haven't?

What do your fellow writers feel (I'm imagining most of them aren't in the Notting Hill mansion bracket, although maybe they are?)

Taking a breather from credit crunch for a second...

John, what was the children's book that you most love/most inspired you, and why?

LeninGuido Tue 02-Nov-10 20:42:30

poppyknot, it's interesting, I do save up or just don't buy stuff, mostly because I had a modest student loan and overdraft just under twenty years ago and it took forever to pay off.

poppyknot Tue 02-Nov-10 20:42:36

I still wonder champagnesupernova. I think I am really a dour Scot at heart......

JohnLanchester Tue 02-Nov-10 20:44:53

Yes, quite a bit of it is to do with that—mind you, I think we didn't go quite as nuts here as people in some other countries. I met a waitress in a cafe in Reykjavik while I was researching the book. I asked her in what way her life had changed. She said that now, when she went on holiday, she'd go camping with her friends, and she no longer thought it was normal to take a plane to Milan for the weekend and go shopping on the via Linate—on the proceeds of her job in the cafe and the strength of the krona.

champagnesupernova

Hello

Sorry I'm a bit late and John, I must confess haven't finished the book yet blush.

So apols if you get to this later in the book and I haven't got there.

How much of the credit issues do you think is down to the L'oreal attitude "because you're worth it" -i.e. why not have x or y NOW?

I can remember as a graduate on a salary of peanuts at the time, £14,500 in London 11 years ago looking at my peers on the tube and adding up what they were wearing - designer handbag, top-end high street coat, high-street-but-still-£100 boots and wondering how on earth they afforded it?

SuiGeneris Tue 02-Nov-10 20:46:35

LeninGuido: Whoops is an excellent attempt at educating the general public about some of what went on, but even it, brilliant as it is, cannot convey the complexity of the subject and the trade-offs that must be made.

Champagnesupernova: personally I think a good proportion of what went on can be attributed to the attitude you describe. Arriving in London as a young graduate I was stunned to discover that my fellow trainees were thousand of pounds in debt AND were taking on more to buy a car, a flat etc. I can well remember a conversation with two of them who could not understand that it was nuts not to put x% of their salary in our employer's pension scheme, so that the employer would add 2x% to their pots. To their minds, that x% of salary was better spent on the car/flat deposit etc rather than on the pension or on repaying their debts. It took the entire evening to get them to understand they were essentially turning down the 2x% pay that could have gone in their pension pot. And these were very bright graduates from the best universities...

We've only got 15 minutes left so I'm just going to flag up a few unanswered questions upthread (apologies John if you're already onto them)

poppyknot - who is on the commission (about the banks)

Attilathehen - can you have growth without debt?

champagnesupernova - is the 'you're worth it' attitude to blame?

(and there's my ones too but I won't be offended if you don't get to them...)

JohnLanchester Tue 02-Nov-10 20:51:09

The first books I remember being utterly crazy about were—this is almost too embarrassing to admit—were the Billy Bunter books. Then it was Biggles, then Henry Treece, then I don't remember what until Tolkein. Because I grew up in Hong Kong the cultural frame of reference was slightly different and there are lots of great classics I'd never even heard of until I had children myself and started revisiting the area—I was forty before I'd even heard of Tom's Midnight Garden, which is pretty sad.

TillyBookClub

Taking a breather from credit crunch for a second...

John, what was the children's book that you most love/most inspired you, and why?

JohnLanchester Tue 02-Nov-10 20:54:06

The chairman is John Vickers, who is a tough-minded academic economist, no stooge, and one of the other four members is the FT writer Martin Wolf, who predicted something like the crash and has been very tough about the systemic failures in banking. So I'm pretty confident they'll come up with strong ideas; less confident about their implementation.

poppyknot

Who is on the commission? How nuch common sense is there?

LeninGuido Tue 02-Nov-10 20:55:41

Agree about pensions, it's the first thing people swap for salary at ours because they've got student debt and new flat costs.

AttilatheHen Tue 02-Nov-10 20:55:44

Thank you TillyBookClub for flagging up my question.

LeninGuido Tue 02-Nov-10 20:57:35

So why not just have progressive taxation SuiGeneris?

That hour seemed to go incredibly quickly - there's still so much I'd like to ask but we should let you go and have supper/a stiff drink/a rest from the keyboard.

John, thank you very very much indeed, both for coming to talk to us and for an exceptionally clear, fascinating and illuminating book.

Looking forward to your next novel and how all this plays out in fiction - are you allowed to tell us when it is likely to be published?

JohnLanchester Tue 02-Nov-10 20:59:01

You won't let me discuss other countries so it's impossible to answer. As you know, a debt somewhere is likely to be a credit held somewhere else, and the West's debt is largely owned by China—you could even argue (many do) that it's largely manufactured by China. You can't consider debt on purely a national and local level. So the short answer is no, but the consequence of growth are on the long, planetary view more important than those of debt. Most of the world is richer than it used to be, and lives a measurably longer and better life—which matters more than a largely abstract consideration of how levels of debt have grown.

AttilatheHen

John,

I'll have to be Paxmanesque:

Can we have economic growth without people/companies taking on more debt?

(Even in your younger years the system was still built on debt?)

Oh, and if you can possibly answer Attila's question in the next 2 minutes then that would be marvellous (but it might be rather a large question to pack into 120 seconds)

poppyknot Tue 02-Nov-10 21:00:57

Thanks John and everyone. I am a lot clearer grin

ScrimshawTheSecond Tue 02-Nov-10 21:02:39

Ah, my word, late as ever. Just wanted to say thanks for an interesting discussion, I shall seek out the book.

JohnLanchester Tue 02-Nov-10 21:03:31

Blimey, that zoomed past and was both great fun and very hard work. Thank you very much and I'm sorry I didn't get to answer every question.

I have to go finish-finish the book, which I hope will be in the next few months, and then the publisher will take about a year to bring it out. You can shorten that year but you have to be willing to tell them what's in it and so on before it's fully finished, and I prefer to get the whole thing done and dusted first. Thank you for being interested, it's a great encouragement.

Thank you again to everybody for your very bracing questions!

TillyBookClub

That hour seemed to go incredibly quickly - there's still so much I'd like to ask but we should let you go and have supper/a stiff drink/a rest from the keyboard.

John, thank you very very much indeed, both for coming to talk to us and for an exceptionally clear, fascinating and illuminating book.

Looking forward to your next novel and how all this plays out in fiction - are you allowed to tell us when it is likely to be published?

Sorry, crossed messages there.

Thanks again for a great evening. I hope that there's a copy of this book in every politician's pocket (maybe we should start a Mumsnet campaign?)

poppyknot Tue 02-Nov-10 21:05:10

Could we send them in bulk to the treasury?

SuiGeneris Tue 02-Nov-10 22:07:31

LeninGuido: I am all for progressive taxation but must have missed the link between what we are discussing and it.

AttilatheHen Tue 02-Nov-10 22:19:38

John,

Thank you for at least giving my question a shot.

I didn't want to discuss other countries because it clouds the issue i.e. the fundamentals of the money system. (I know profits have to be recycled but I don't think they can be held responsible for debt-money system.)

In the long term view people have benefited; but here's a thought.

Abraham Lincoln used non-debt money issued by a democratic government. He fought and won a civil war, industrialised the country, and set the groundwork for a trading superpower. Oh, and no unemployment either.

Perhaps capitalism would work even better under that system?

Avaggdu Tue 02-Nov-10 22:21:21

John,

What are your thoughts on the current UK's government persuing a political agenda to reduce the public sector workforce by nearly 500,000 people, with a resultant additional 600,000 job losses in the private sector, when there are already 2.5 million unemployed and only 0.5 million jobs available?

How is the private sector supposed to compensate for these job losses, and what effect do you think this will have on the economy?

Also, when there are alternatives to the public sector cuts (such as persuing legal tax evasion by corporations and banks), which could negate the need for these job losses and the resultant strain on the benefit system...do you think the current government's tack is intelligent, let alone moral?

LeninGuido Tue 02-Nov-10 22:22:50

SuiGeneris, that's because the link is in my head smile

I just think that there is a lot of unfairness around flat rates and there are always people on the cusp who suffer when systems are tinkered with. Make everything tapered and progressive and I don't think people would feel the bonuses and so on are quite so objectionable.

Avaggdu Tue 02-Nov-10 22:40:42

http://www.pcs.org.uk/en/campaigns/campaign-resour ces/there-is-an-alternative-the-case-against-cuts- in-public-spending.cfm

domesticslattern Tue 02-Nov-10 23:51:12

Thank you for coming on and sorry that I missed the webchat as RL intervened. Your answers are really interesting and I am greatly enjoying your book. Sorry I missed the chat.

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