This week I’ve spent two enjoyable days at the OECD Forum and among other sessions listened to Faisal Islam talk about his book The Default Line.
The Default Line: The Inside Story of People, Banks and Entire Nations on the Edge
He started by asking what should journalists – along with policy makers and economists – have asked or said before the crisis, when the good times were rolling? And have we learned the lessons since? He wanted to tell the human stories of the crisis as a way of shedding light on these questions. For example, the experience of one man in China to work in a factory in Guandong is a microcosm of the development of the global imbalances that grew so large in the mid-2000s – or so Faisal thought. But the man they chose by the time they got there had quit his factory job and become a punk hairdresser. So the story was also one of the nascent consumerism of China, and also the vulnerability of mobile labourers with their wheelie suitcases and hukou cards, and the downturn in factory employment in 2009 and 2010. The story of the crisis is one of a complex and interlocking series of currents around the world, he said. The stories help us understand them.
The book visits Greece too – the book opens with a cargo plane chartered to fly euro notes into Greece at the peak of its crisis because the share of bank notes in GDP rose from 6 to 25 per cent. People were taking cash out of their accounts. (I don’t blame them – I did the same on 2008.) meeting the demand was an amazing logistical exercise by the Bank of Greece – the country had only had the plates to print 10 euro notes in Greece; apparently only German-speaking countries have the plates for higher denomination notes.
Cyprus was on the itinerary too. It had its own plane full of notes flown in from Germany too. In contrast to the Greeks! who tried to keep it secret! the Cypriot authorities made it very public. Perhaps as a result, people didn’t feel the same need to take out cash because they knew there was enough there.
There’s Britain too, and the mortgage boom that had people buying houses on loans they couldn’t really afford, funded by wholesale money the banks and building societies had raised to fuel the bubble. Northern Rock was raising funds in Africa to fund 125% mortgages in the North of England. The book also takes in a Czech mathematician who dropped out of finance to become a Californian hippy. Iceland. The ECB and its focus on pizza prices.
All this and more. It sounds a rattling good read, which I have now bought.
The OECD forum had several Meet the Author sessions:
Average is Over by Tyler Cowen
How Much is Enough by Robert Skidelsky
The Entrepreneurial State by Mariana Mazzucato
Hacking Your Education by Dale Stephens
Exodusby Paul Collier
Frugal Innovation by Navi Radjou
The Last Vote by Philip Coggan
And last but not least
GDP: A Brief but Affectionate History by Diane Coyle