15 Apr 2013 03:30:52
Contrary to the endless bleating from coalition ministers about "Gordon Brown's debt" and "the mess that Labour left us", Peston is clear where the blame lies. It was the bankers, stupid. Plus the fact that for many years we in the rich world have been living beyond our means, our lifestyles funded by surpluses from countries such as China and the oil producers that kept their savings in British banks until the fateful day – 9 August 2007 – when the bond markets ceased to function.
For page after page, Peston describes the various scams the bankers were into, the massive over-leveraging, the invention of more and more complex and socially useless financial products, all fuelled by a toxic bonus culture. The one thing they weren't keen on – and this has been the case for decades – was investment in productive activity (manufacturing investment in Germany is 12 times that of the UK).
The tone is conversational. The reader is addressed throughout in the first person, which can be irritating ("I am going to get pedagogic on you"), but overall it is a lucid, expert account of a disaster in which we all have a stake and which is by no means over. If the euro goes down, we are all in deep shtuck.
As for solutions, there are no easy fixes. Regulate the banks, by all means; break them up even (although bear in mind that the City is one of the few areas of the British economy that still turns in a surplus). Insist that, if multinationals want to do business here, they will have to pay our taxes. Tilt the economy back in the direction of making things again and adjust higher education accordingly. Above all, Peston's message is that we may all have to adjust our expectations and prepare for a long period of low growth until we develop sustainable lifestyles.
