Tweet
Some of us have gone through life not knowing enough about money. I now spend some small part of most days - wiling away my "moments of inanity" as George Eliot called them - wondering if my switch into premium bonds was really such a good idea or how soon the Dunfermline Building Society will adjust its savings rates, or congratulating myself on having the wisdom to take out a Northern Rock fixed-rate cash ISA at 6.2% when it was still available. "He handled them, he counted them, till their form and colour were like the satisfaction of a thirst to him," Eliot wrote of the miser Silas Marner and his guineas, "but it was only in the night, when his work was done, that he drew them out to enjoy their companionship."
There may be something of Marner in me, perhaps in most of us huddling over our savings and counting them, not out of pleasure as Marner did, but from fear. These are new developments. Until a few years ago I never gave money much thought. I was lucky: I earned more than enough to keep a comfortable house and a family. Also, money, one's own money, was repressed as a subject of conversation, and not talking about it was only one remove from not thinking about it.
Death is still regularly declared to be "the last taboo" in British society, and this week's fuss about filming a man taking his life in a Swiss clinic might seem to confirm it. But the truth is that money - again, one's own money - is a more forbidden subject. A friend once said to me that the world would become a better place if everybody had to wear a badge declaring, what they earned: "I'm a £65,000-a-year man" and so forth. I don't know. The envy and hatred generated might reduce the country to ashes. Here, because I'm writing a little about my new relationship with money, it seems only fair to disclose some amounts. But the taboo is very strong. All I will say is that, bearing the average wage in mind, my earnings would excite envy in many people and pity in a few; that I have savings, and no debts; and that my pension, when it comes, will be mainly supplied by the state.
My financial history began when my father took me to a branch of the British Linen Bank and helped me open an account (he'd just won £3,000 on the pools, which explained his own unlikely account there). A few years later the British Linen was subsumed into the Bank of Scotland. Thirty years later the Bank of Scotland took over the Halifax, with eventual results we all know, but in all that time I remained a loyal if latterly peevish customer; the amalgamation confused the organisation and the service went downhill. Looking back, I see myself as cannon fodder for financial capitalism, an inert consumer guided by the temporary wisdom of brokers and independent financial advisers whose quick words I barely understood and whose offices I was grateful to leave because, lucky me, I'd secured an endowment mortgage or (more recently and against my own instincts) a small 'personal pension plan' tied to the stock market. Editing a newspaper, I scanned the business and personal finance pages mainly for literals, though once I did try to get the business editor to explain what 'derivatives' were.
So far as I can see, none of this is untypical of the general population. We have led lives of shocking and unforgivable ignorance. A famous old ad for a private pension scheme showed headshots of the same man as he progressed from apathy to terror, all the time failing to provide for his old age. Aged 25, smiling, "They say my job doesn't have a pension." Aged 55, aghast, '"I really wish I'd done something about a pension." But it isn't just in ignoring narrow self-interest that we have damaged ourselves. As Britain's prosperity is now so dependent on the business of making money out of money, more so than any other country's, we might at least have made the effort to find out how it works.
True, there can be financial products so complicated, - wrapped inside riddles and enigmas and acronyms, CDOs and CDSs - that even financial traders themselves haven't understood the risks attached to them, hence our crisis. And professions have always seen jargon - the terms of the trade - as a useful means of empowering themselves by excluding outsiders. Priests used Latin and Brahmin pandits Sanskrit; even non-elites such as seafarers liked to keep understanding private, thus Richard Henry Dana in his Seaman's Manual of 1844: "Lift the skin up, and put into the bunt the slack of the clews (not too taut), the leech and foot-rope, and body of the sail; being careful not to let it get forward under or hang down abaft."
But with money we have not been curious enough and, when curious, too easily defeated. Partly our own lassitude and frivolity is to blame, but there has also been a great failure of journalism, in fact of all kinds of writing. We stub our toes on too many compressed or insufficiently explained ideas and think, "Well, I'll never understand this." At some point even the best financial writers let us down. JK Galbraith has some opaque passages in The Great Crash, Larry Elliott stumped me recently with bond yields (the returns get higher as the value of the bond goes down?) and the Nobel laureate Paul Krugman derailed me in last Saturday's Guardian with the concept of junior and senior shares. Big questions often remain. With one of the market's simplest techniques, short selling, I can still never understand why a trader can sell a share he doesn't own.
A couple of years ago at an Oxford conference I heard George Soros talk presciently about "leverage". Leverage, he said, was like driving along a straight, clear freeway with a sharp spike pointing from the centre of the steering wheel to an inch or two above your chest. All would be fine if the road and the traffic continued as they were, but any sudden application of the brakes would stab you through the heart.
It was a brilliant metaphor, though it left me unsure why leverage couldn't simply be called debt (of which it is a form). Then, a few weeks ago, the Guardian ran a piece by Soros that had originally appeared in the New York Review of Books, which is probably the most thoroughly and thoughtfully edited periodical in the world. I had mastered leverage by now, and I was reading Soros attentively until phrases began to occur - "draw down credit lines ... precipitating margin calls" - that returned me to the bunts and clews of the Seaman's Manual. The trouble is that "margin calls" take space to explain, and some knowledge has to be taken for granted in the reader. Online, hypertexts and hyperlinks come into their own; the printed page must rely on parentheticals or, at best, footnotes to describe things that are better demonstrated by example rather than mere definition. Still, we live in an odd media culture that can take three pages (with diagrams) on a football match, and an inadequate paragraph to explain something called "commercial paper", which drove Lehman Brothers over the edge.
I hate myself for my former apathy. How careless not to know more about how money worked, as though its world - "anger and telegrams" in EM Forster's phrase - were as remote as Middle Earth. Now the Marner aspect of myself is growing; today the Money section is the one I'll turn to first. That may not be good news for the government's Keynesian solution, as Marner wouldn't have liked Keynes and vice versa. What good was all his gold doing? None at all. But at least he still had it, buried underneath his own floor and in his own iron pot.
guardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds
More...
