Evan Davis uncovers the City
And thank mammon for the BBC’s Evan Davis. He put all the bits of the current economic crisis together and explained it in one hour of relatively easy to follow narrative: sub-prime mortgages, securitisation, the credit crunch. It all makes perfect sense now. At least it did last night, after watching this first of three films from Davis about the labyrinthine workings of global financial markets.
Davis found so many neat parallels to explain what’s happened as mortgage markets have collapsed and economies have slumped into recession that at times it felt as if he must be making them up. US investment bank Lehman Brothers and British building society Northern Rock were founded in the same year: 1850. They both went to the wall on the same day in September exactly one year apart: Northern Rock in 2007 and Lehman in 2008. They were both led by highly competitive sports nuts(squash on the part of Lehman’s Richard Fuld and cricket on the part of Adam Applegarth).
The biggest surprise link used by Davis was that some of the boffins or rocket scientists who got their miles and kilometres mixed up in 1998 and ended up frying a multi-million pound space rocket in the martian atmosphere were also to blame for writing complex securitisation formulae some 10 years later that effectively sold risky loans back to the very institutions who were trying to get rid of them.
But the best unintended revelation from this otherwise fascinating film was that the former finance director of Northern Rock doesn’t wear shoes in his own home, nor slippers. And neither did Davis while interviewing him. See, they’re only human.
