On Radio 4's Start the Week this morning, one of Andrew Marr's guests was the Financial Times journalist Gillian Tett, author of Fool's Gold: How Unrestrained Greed Corrupted a Dream, Shattered Global Markets and Unleashed a Catastrophe. Tett, Marr told us, has been credited with being one of the first journalists to have spotted the then oncoming credit crunch.

Tett explained that "if finance is made out to be very complicated, only a small number of people understand how it works, and so the people who have that knowledge are in a very strong position." Later in the interview Marr gushed about those same bankers -- bankers who were called Masters of the Universe by their friends in the media -- that "we have to remember, these are very, very clever people." Tett, almost by reflex, affirmed this characterisation, and then moved on to explain a little more about the macho, hothouse atmosphere of the City. But it was earlier, when she said that "if finance is made out to be very complicated" that she had it down.

I'm not sure why, but it has become something of a commonplace that, amidst the ruins of the global financial crisis, one thing that journalists seemingly have to do -- perhaps embarrassed that, unlike Tett, they didn't see this thing coming -- is affirm the complexity of the financial markets and, simultaneously, the matchless intelligence of bankers and traders. This is a very curious and incredibly tendentious way of reading the banking collapse. Strangely, too, this constant affirmation of bankers' braininess runs alongside a conflicting narrative: that the slicing and dicing of debt got so complicated that the "very, very clever" bankers no longer understood their -- our -- level of financial risk. So, they were "very, very clever", but they (or their clients) didn't understand the tools they were using or what they were doing with them? If a gaffer gave one of his carpenters a saw and told him to hold it by the serated edge you wouldn't think that either the gaffer or the carpenter was much of a brainbox; quite rightly, you'd think both were idiots. Understanding what credit default swaps or collateralized debt obligations are doesn't make you "very, very clever" -- it just makes you expert of a very limited vocabulary. It is most akin to being a teenage boy. Our children can talk in acronyms, abbreviations and neologisms about stuff that we don't really have too much of a clue about, but it doesn't tend to make us think that they are geniuses. They aren't. And neither, Andrew Marr take note, are any of those stupid bankers.

Readers Comments

  1. Michael Richards Monday 27 April 2009

    What no-one seems to have said - least of all the Tory party who take great delight in crowing that it didn't happen on their watch - is that the collapse is, in effect, the [long] tail-end of Thatcherism. The collapse was fueled by personal greed, the rush for greater profits at any cost and lack of regulation in the financial sector - all of which Thatcher endorsed. Had Blair and Brown been a little braver in tackling some of the excesses of the Tory years when they took over, we might all have avoided the years of austerity that face us.

  2. Hi Michael, the long history of banking regulation after the '29 Crash and then banking deregulation after the end of the gold standard in the 70s is important, for sure. But Blair and Brown didn't lack bravery - they'd spent years "bravely" making sure that any future Labour govt would be seen to be a good friend to the banking sector, and by that they meant New Labour would accept monetarist deregulation of the markets as a given. They didn't lack bravery, they lacked the right politics!

  3. Unless of course we distinguish between 'clever' and 'intelligent'.

    As to Michael's comments, I am pretty sure the Tory front bench go to bed every night giving prayers of thanks that they didn't win the 2005 election. Also, not only did Blair/Brown not curb the excesses of Thatcherism, they actually extended it by permitting further deregulation as one of their first acts in 1997.

    Also, curious that bankers should be "called Masters of the Universe by their friends in the media" when that was an ironic coinage - wasn't it? - by Tom Wolfe in The Bonfire of the Vanities. But then irony lost was never much of a surprise where the media are concerned.

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