My history of British Manufacturing

My history of British Manufacturing
My history of British Manufacturing

Tuesday 13 October 2009


Don't be silly; a blog could not possibly do justice to this masterpiece. You'll be blogging Shakespeare next, and any way how come you haven't read it before?
You see it in Felix Holt, but here it is more subtle: the way the plot doesn't work in a linear fashion, but rather is a web of influences and linkages. It would probably be true to say that this book couldn't be written now since editors would stamp hard on the authorial comments. Yet they, with the thoughts of so many of the characters, serve to offer a deep insight into 19th century rural life. I want to tell my lecturer in rural history that this is a first class primary source. It has everything: reaction to the Reform Act, agricultural reform, absent clergy and the absolute domination of money

Thursday 8 October 2009

The deficit

In a much earlier blog I observed that what had happened was that public borrowing, which had previously been used to power the economy through recessions, had been replaced by private borrowing on an unprecedented scale. The dramatic reduction in the availability of credit has through the consequent recession caused a very large number of borrowers to default. The anticipation of this stripped banks' balance sheets of value sending them cap in hand to government who have poured in money like water. Government now wrings its hands at the deficit it is running and its own need for borrowing.
I can't help feeling that an economy which places sensible controls of private borrowing but which is realistic about the need for cyclical public borrowing is likely to end up healthier than the free for all which has got us into this very much larger mess.

Wednesday 1 July 2009

Broken Bonds

Broken Bonds is a novel about a man who sought to prove himself and was prepared to give anything in order to do so. He failed and sank. His wife Ally, as principal narrator, now seeks to make sense of what has happened. 

Ed Smith was among the first great rush of bright young men and women who flocked to City jobs with the promise of fat bonuses. Ed, though, viewed it as an opportunity to prove a point: that markets should be free from governmental interference, but that they can be modelled mathematically and beaten. He was a designer of Bonds, which were, in effect, investments in mortgages. The high return these offered was achieved by investing in mortgages which charged very high rates of interest after an introductory period with enticing low rates. These mortgages tended to be granted to people who were at a higher risk of failing to make repayments. In order to make the Bond marketable, these high-risk, high-return ‘sub-primes’ had to be mixed with more secure mortgages. Sophisticated computer models were used to evaluate the risk within the Bonds; however these models failed  to highlight the fundamental risk of a collapse in confidence. A key element in the plot is that Ed discovered that he could crack the model and so deliberately trick it into awarding a top rating to his Bond.  

Ally watched Ed being driven to prove himself, as they listened to his generation of banker being damned by comparison with her great Victorian banker forbear. He was prodded further on this quest for self-worth in a service at the church they attended, when they were also reminded that mankind already had all it needed, provided resources were shared and not wasted. Ed was struck by the contrast between this and the church’s appetite for ever-increasing income to pay for good works, and also his parents-in-law’s need for a retirement fund. 

Ed set out to create a Bond that genuinely provided high returns at minimal risk. However, all this effort ground to a halt with the crash of Northern Rock, an event that prompted his Bank to beef-up its internal regulation. His new boss, Jane, sat provocatively and critically as each new design failed the test of the new regulation. Ed began to wonder whether he could cheat the model mathematically.

Ally and Ed’s son, Paul, was in trouble at school. Ed was too busy, and a surprise invitation from her old college lecturer and lover, Martin, caused Ally to delay meeting his teacher. The Head summoned them both when Paul was excluded for bullying. Ed couldn’t be contacted, so Ally went alone. She knew that it was Paul who was being bullied and not vice-versa, yet her pleas fell on deaf ears. 

Ed came home to find Ally in despair. She was blaming herself for being at lunch with Martin, rather than pre-empting the problem with Paul. Ed decided to confront the victim’s parent. Through this encounter, he witnessed just how the sub-prime mortgages underlying his Bond were exploiting ordinary people. 

Ally found out that her parents had real money problems. She discovered that the charity, she worked for, was increasingly desperate for more income. The charity provided a refuge for girls and Ally discovered that a number had came to London to feed the appetites of bankers. All the time, Ed was becoming increasingly illusive.   

The Bank applied pressure on Jane for her team to produce the Bond that beat the model. She goaded Ed, but he had become reluctant having seen what he had. She preyed upon his pride and arrogance, and Ed created the sought-after Bond that appeared risk-free, but only because it mirrored the assumptions within the regulator’s model; it was in fact completely vulnerable to a market collapse, and Ed knew this. Jane lured him into talking up the positive side. They visited key customers and the Bank’s own head office. Ed was lauded by all. Finally, he gave into the temptation of Jane’s bed.

Ally heard from Ed’s friend and colleague, Tristan, what had happened. She opened her heart to her best-friend, Katie. In the conversation she found that Katie had also bought her house with a sub-prime mortgage. Ally heard more and more about her parents’ and her charity’s anxieties. She was being hounded by Paul’s victim’s mother. With Tristan, she visited a lap-dancing club, the haunt of bankers, to try to understand what Ed had been doing. 

The plan, which, unbeknown to Ed, the Bank always had, was to offload into the Bond all its most risky assets. It succeeded in doing this and Ed became a key member of the marketing team. The Bond secured a top credit rating because of Ed’s artful modelling. The market welcomed it, and individuals and charities piled in with their money. Ed achieved celebrity, but they were all riding far too high. Ed saw the signs of disaster, but his hands were tied; he had sold himself to the Bank.

In September 2008, Lehman Brothers collapsed. To everyone’s shock the Bond crashed too, bringing everything down with it, and Ed was left to sink. He had broken the bond of marriage, the bond of trust on which banking was built and had fallen into the bondage of selling all he believed. Ally was the recipient of the cries that should have been directed at Ed, not even at Ed, but at the bank’s management, perhaps not even at them. She turned to Martin in desperation. He was the rock she needed. He could see what has happened and counselled Ally. She confronted Jane and began to discover the chain of power and pressure that ran through the banking world.

Ed was living in a bed-sit also striving to make sense of what had happened. He had discovered that the market was a beast that demanded intelligent and strong regulation, a task to which he was ideally suited. He rediscovered himself and began to rebuild his life with the values he had discarded. Ally takes him back (or does she?)

Wednesday 24 June 2009


I am convinced that the single factor most responsible for the banking crisis was loose regulation. Gordon Brown almost admitted it in his interview with the Guardian; his excuse was the the rest of the world was de-regulating and he didn't want London to miss out.

Lord Turner, in his evidence to the Treasury Select Committee, voiced concern that the mood for regulation may be running out of steam. The suggestion of re-introducing the separation of retail banking from its investment counterpart has fallen on deaf ears. Turner is arguing for tougher capital requirements based on size and, presumably risk.

My question is: will regulation based on capital requirements work, when the experience is of massive values evaporating overnight?

Tuesday 16 June 2009

Bad old ways?

The Observer (14 June) offered in its leader a stark warning to the city and those concrned with its governance that it must not be allowed to slip back into its bad old ways. I am probably not the only person who would wish to take issue with the word old; the bad ways were new, the bad ways were post big bang, the bad ways emerged because light touch regulation allowed them to. A most telling comment was that the old (I would say new) way of doing things made some people very rich.'

Vested interests are thus very strong and very powerful. In exactly the same way as it was not in the interests of the city to say the emperor had no clothes, neither is it in their interests to question the substance of what might look like the green shoots of recovery. Anything which shows that the city is working is good news.

The tragedy is that just when strong government is need, we are having to live with a lame duck. It is sadder still that when a change in government does come, the forces which demand a strong performance from the city will both be vocal and may well be basking in a recovery of their own making.

Wednesday 20 May 2009

So, it was bonuses

I always remember a client years go who paid commission on the orders a salesman took. This was subsequently changed to giving commission on those orders which became actual sales delivered and paid in full.

The argument being made is that bonuses were paid when traders made money but no account was taken of risk. Well, the story would seem to be that when the traders made money, so did the banks and so did their shareholders. Without taking a risk none of it would have happened. So, does that make a risk OK?

Well, we can think of the RBS shareholders who received growing dividends and the value of whose shares rose dramatically for a long time. This was the upside of risk. The downside was when everything collapsed.

I'm not sure I understand what is proposed for the future. No risk, no bonus, dull dividends?

Sunday 3 May 2009

Carol Ann Duffy

In his Holy Week talks in Canterbury Cathedral Rowan Williams quoted from Carol Ann Duffy's sonnet Prayer and praised the way she uses poems as places where new combinations of words and ideas spring together. Saturday's Guardian leader quoted the first four lines:

'Some days, although we cannot pray, a prayer
utters itself. So, a woman will lift
her head from the sieve of her hands and stare
at minims sung by a tree, a sudden gift.'

The leader goes on to quote Robert Kennedy's complaint that GDP failed to measure 'the health of our children, the joy of their play, the strength of our marriages, the intelligence of our public debate - and the beauty of our poetry...neither our wit nor our courage, neither our wisdom not our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile.'

This is a timely reminder to put all of this finance stuff into some sort of perspective

Sunday 26 April 2009

Budget Deficit

The budget speech and articles in the Guardian which followed spoke of a mammoth deficit. This is not small beer by any stretch of the imagination.

If it came about because banks lent at high interest rates to people with no realistic means of repaying, we stand back and wonder. If these mortgages, sub-prime mortgages, were cleverly packaged with better fare and traded on, we sit back and wonder. If banks around the world invested in these bonds because they believed what it said on the tin, we sit back and wonder. If politicians now come along and blame the bankers, we should not sit back but ask how come the banks could lend as they did, sell the bonds they did and invest in the junk they did. Sure, they could have said no. But when everyone else was on the bank(d)wagon, it is brave man who stands on the side.

Surely the fault lies with those who allowed the creation of a banking world where all this could happen. Who deregulated? Brown was not alone.

Monday 13 April 2009

The Handmaid's Tale

I doubt that there is a book which draws so much sympathy from its readers. The story is devastating, but that is only part of what Margaret Atwood does. The heart of the genius of the book is not a real fear that what she describes could happen, rather an uncomfortable acknowledgement that it is a metaphor for the oppression that does happen in so many different guises.
At a slightly different level it is one of those books which reminds a would be writer just why they sweat blood. The enterprise is worth every drop if there is a possibility of getting anywhere near this quality of writing.

Thursday 2 April 2009

G 20

The more you look at this whole business, the more obscene, but also the more complex it becomes. The headlines about bank bonuses talk to the protesters, but also to the thousands who have lost their jobs simply because borrowing, ordinary business borrowing, became so difficult; they talk also to the thousands more who lost their homes. Massive bonuses were wrong; but who was wrong?

As my character Ed puts it, in a University town which is the most popular pub? The one which doesn't chuck you out at closing time, of course; the one which has the loosest rule book. These tend to be the places where trouble is to be found. So too with banking, loosen the rule book and the bastards will push beyond even their wildest imaginings. The recent book City Boy would seem to confirm this in spades. It is Lord of the Flies, isn't it?

All this would be bad, but not horrific, were it not for two things. The impact is global and massive. It came about as a result of the policy of western governments to let markets govern themselves.

Surely in a civilised society we all need boundaries?

Tuesday 31 March 2009

Trumpet by Jackie Kay

If someone dies and those around discover a secret which the deceased had kept closely hidden all their life, how best to tell the tale?
Jackie Kay offers each of those concerned their own voice. The deceased's spouse knew, well she couldn't not. But the deceased's son, the mother, the best friend? What of them? Kay throws in an investigative journalist for good measure and shows how the prospect of payment loosens or tightens tongues. It is tour de force in point of view.

Monday 23 March 2009

The Crunch by Alex Brummer

The interested reader of the financial pages will almost certainly have some idea of the causes of the woes that have hit the world economy. We all knew that borrowing had hit crazy levels; we all knew that house prices were defying gravity.

Words like toxic debt and sub-prime have been the stuff of bar room chat, but Alex Brummer has drawn the strands together and produced a coherent narrative. It is deeply depressing. It makes the calmest of men don the witch hunt uniform.

What is probably the worst of all, though, is that the cream of a generation, the very best brains, have been engaged in what is really the most enormous fraud. It is breathtaking stuff.

Notes on a Scandal

This is a beautiful book, but as an exercise in point of view it is a masterpiece.

There is a first person narrator, but one who has such a strong agenda. You just know that each of her observations is going to be coloured.

I do believe that, at last, I can see the narrative as distinct from the story, and oh how it adds to the pleasure.

Who is the protagonist?

The story is about Sheba, the account of her downfall; this is how it seems, but then doubts begin to creep in. The narrator, Barbara, is, like any narrator, in control of how the story is heard. Slowly, almost imperceptibly, we begin to see her hand digging deeper than the narrative into the story itself, then deeper than the story into being the trigger for events (taking the three tiers expounded by Bal amongst others). The is much more than an unreliable narrator; this is a narrator who is affecting the characters so much so that Sheba, who began by ignoring Barabara, ends under her power.

There is perhaps an echo from Hotel de Dream where Emma Tennant paints a picture of an author finding her characters in open rebellion.

Sunday 22 March 2009

First person pov

I have been sifting through, trying to find a first person voice for Icarus.

John Banville writes The Sea as first person, but as a recollection of something that happened some time before. He is in the present and recalls the past and move from present to past tense accordingly.

Graham Swift writes The Light of Day in first person present tense, but again slips into past tense for recollections.

Engleby is first person past tense, but then this makes sense when at the end the first person narrator explains that the account is his diary. Sebastian Faulks cleverly keeps this secret so that the account feels more like the action as it happens.

In Moon Tiger, Penelope Lively moves between first person present tense and third person past tense as she switches between the narrative of the story teller and flash back.

Graham Green, in The Quiet American, has his narrator write about his friend Pyle in the first person past tense. You don't get any real sense of it being an account of something that happened previously; there is no nagging imperative to imagine just where and when the narrator is recounting his tale.

Friday 20 March 2009

John Grisham, The King of Torts

I was advised to read a John Grisham thriller to gain a sense of the tension needed in The Icarus Bond.

I am half way through. Grisham is sticking close to Campbell's twelve parts and it works. There are places where, without pace, the reader might pause too long and dig up little flaws with some of the detail of the plot, but Grisham keeps you at it.

I miss the more fully fleshed characters of Richard Yates, but it is quite relaxing to have a more staightforward plot to read.

Wednesday 4 March 2009

Tax Avoidance

The dust is settling a little after the Guardian's crusade against the evil tax avoiders. There are to me two points which need to be made.

In the UK, Public companies owe a duty to their shareholders. In exercising this duty it is generally considered reasonable that they should minimise costs and maximise revenue. If taxation, which is a cost, is not to be minimised then they would be failing in their duty. So the answer is not to wring hands, but to open a debate over the duties of directors of public companies. If, however, taxation is a distribution of profits in the same way as dividend then the tax needs to be maximised. But what then about employee remuneration; is it a cost or a distribution? What about local taxes? This subject needs proper debate.

The second point is banal, tax avoidance is as old as the hills. I spent most of my career advising clients on how legally to minimise their tax bill. But the question is the same; is tax a cost or a distribution?

Friday 20 February 2009

Revolutionary Road

 I was guided towards this book as one which dealt with the world of work, which is relevant to the novel I am writing. It is remarkable.

It has the most authentic marital row I have ever read (page 40 of the Vintage edition).

It offers a wonderfully realistic picture of reading to young children (page 56)

Revolutionary Road gives a great sense of the feel of a 1960's office. The sense of annoyance with a young mistress, I suspect, must surely ring bells for any who have walked that path.

It is written at a good pace but with no strong plot; it is very much a book about the interaction of characters. Tennessee Williams said about the book, 'this is more than fine writing; here is what makes a book come immediately, intensly and brilliantly alive...a masterpeice'.

He's not wrong.

For me the best aspect of this book is the astonishingly realistic dialogue. Richard Yates obviously listens alot. But it is more than that, since he embeds the thoughts of the characters and allows them to use words in their heads which they dare not use out loud.

An intriguing character is John, a resident in a mental institution, who tells it as it is. He is the character, the only character who tells what he sees. He is the child, but with the maturity of the adult.

The dialogue tends not to be short and sharp, rather Yates gives the characters room for extended and involved conversation.

Great book

Friday 13 February 2009

The House of Sleep

Jonathan Coe's 1997 book is described by The Times as 'hilarious and devastating'. There are two very funny passages and the central plot, which never feels quite central is grim. The first funny bit is for us writers and is a delicious encounter between a commercial film director and a literary writer.

The story largely hangs on the symptoms displayed by people with sleep disorders and from time to time approaches farce. For me the heart of the book surrounds the relationships between a small group of students who were at university together and who later encounter each other (it is not a Peter's Friends!). This part is written sensitively and make the read worthwhile.

Wednesday 11 February 2009

I'm going on a witch hunt

Last night I sat and watched as the select committee questioned the four bankers who are being pilloried but also skapegoated for the banking collapse. This was poor drama, far too well rehearsed and so wide of the mark it was embarrassing.
I mean how convenient for RBS to have ABN to hand? How convenient for HBOS to have questionable lending decisions? How frankly undignified to have four unquestionably intelligent men in the dock.
Does anyone seriously believe it was their fault? As always on such occasions the metaphor is to be found in sport: if the rules permit it you do it, to do otherwise will guarantee defeat and defeat would serve no one admittedly least of all those set to gain most through their bonuses. The point though is surely that deregulation had made possible the fantasies of financial engineering that filled the balance sheets of financial institutions. So it was obvious that the brightest and best would be recruited to invent ever more fantastic devices and the banks would milk them dry of profit. Was I the only one to raise a slight eyebrow at the RBS results following the NatWest acquisition. I rather doubt that results like that didn't come just from cost savings.
The point though remains that the banks did what was only natural, given the environment in which they were allowed to operate.

Monday 2 February 2009

How do you write children as children?

Patrick Gale knows and you can see it in his Notes of an Exhibition. He has the siblings Garfield and Morwenna visit their mother in mental hospital where she has given birth to the new baby Hedley. The way they are shown to react has such an authentic feel to it. We are told when writing for children to write to their height. Gale knows exactly what that height is. We can say that his book is not strongly plot driven but the characters and their interaction is utterly compelling.

Saturday 31 January 2009

Shakespeare - AL Rowse and cutting edge language

The first biography of Shakespeare written by an historian.

The significance of this shines from the very first page as the reader is lead into the detail of life in Stratford. Rowse serves up the evidence he has unearthed of the financial and other dealings of the Shakespeare family and their circle. It has a flavour of archeology as the facts are presented and the reader is invited to help find into which sort of pattern they might fit.


The most exciting observation I have read so far is about the newness of language. We read Shakespeare and the King James Bible and weary sometimes at their antiquity. Wrong, wrong, wrong. These books were cutting edge of the new English language, quite possibly shocking but definitely the sort of thing bright young men and women would get very excited about.

This is the swinging sixties of the sixteen century

Wednesday 21 January 2009

Dot com - remember that?

Amid the really astonishing events surrounding the banks comes a thread of memory of quite why it was the FTSE last reached the 6,000's. The context is relevant and might well age me. Dear old Phillips and Drew, a massively respected name, stuck to the principle of value investment; you know, actually looking at what a company does and assessing the quality of its earnings. They fell in the league talbes whilst the flash boys all went for momentum investment; my favourite image of the round tray filled with water which sloshes to the side to which the trays is tipping at any one time; and the more it sloshes the more it tips've guessed.
Well, dot com was quintessential momentum, money piled in after money and values (what an odd use of a word) rose and rose. This is so like the other metaphor of the roundabout which spins for ever faster until some one blows the whistle and, another metaphor, the king is seen to have no clothes.
What strikes immediately as odd is how the banking sector seems to have taken the mantle of the dot coms. It is odd until we look more closely at what banking had become. Profits it seems came from clever financial instruments which defied gravity. So that they fell should be no surprise. The problem is that they were in the same banks which have serious job to do in any economy.

Monday 19 January 2009


The Graduation Ceremony at Exeter on Saturday brought it home. It is no longer numbers; it is names and faces and on Saturday they were mostly post graduate degrees.
I return to a piece I wrote with tongue firmly in cheek, as indeed we all did, as we argued that higher education should be only for the rich. Outrageous and wrong, but...
But, is it fair to take people through three years as undergraduates and then one doing a masters or solicitors exams or some such, with no real possibility of work? Or do we play a longer game and accept that first time round the right job won't come, but that there are other opportunities which will add something whilst we wait? It is the prospect of so many people educated to a level which the jobs market simply does not require. Or, again, is government thinking of a longer game? Or, as I have argued before, is it a device to massage the unemployment figures?
An honest and informed assessment would go down well.

Tuesday 13 January 2009

1599 A year in the life of William Shakespeare

My purpose in reading James Shapiro's superb work is to feel the world in which Chrispin Kyd lived. Chrispin is the hero of my teen fiction set in Elizabethan England. The initial idea was a trilogy with the first around Walsingham and spies. I am now attracted by the interpretation of Shakespeare's Julius Caesar and its implications for a bright grammar school boy. The key for me is to assess the degree to which such a boy might sense what is abroad politically.

Friday 9 January 2009

Will this recession pass?

Simon Jenkins in the Guardian of 9 January takes leaf out of the historian's file to assure us that all will be well.

As usual with Jenkins, there are buckets full of common sense slopping around everywhere in his argument. I'm with him in his jibes. I have to say the Bishops got my goat particularly with their hefty shutting of the borrowing the door so long after it would have done any good.

My question though is whether we are seeing something that has a substantial structural element to it. A friend told me that he had been away from Falmouth for the Christmas Holiday and returned to find third of the shops shut. This is an exaggeration, but the high street of smaller towns are beginning to look like mouths after a visit to the dentist. Retail is changing. My own village is awash with courier companies delivering on line purchases. It has been apparent for ages that the high street is made up largely of financial services, opticians, designer clothes and coffee shops. Soon surely it wil just be spectacles and cups of coffee.

But what does or should this mean for the economy? As pointed out elsewhere in Jenkins's article one third of workers are relatively untouched by recession, being on the public payroll; another cohort, those already taking their pensions, are in the clear. Those at risk are those for whom economic growth is a vital link in the chain. Many jobs go on from year to year simply because they need to be done; these surely are pretty safe. It is the jobs that come from someone taking risk to gain advantage that go in recession but even then not all of these.

But in the longer term, are these jobs less likely to appear in the future? I think not. the entrepreneurial instinct is firmly in place and will be bursting through any minute now.
The landscape though will change and this we must accept. Perhaps though the old labourites were right. An economy cannot exist happily on financial service and retail alone. some how, somewhere, someone needs still to make something.

Thursday 1 January 2009

Notes from an Exhibition - Patrick Gale

The teen novel is still in process but the hunger for something more substantial took hold. Patrick Gale is a writer in the ascendency. His book begins slowly. We are allowed to spend time with artist Rachel as she wakes and prepares to paint. It is a pleasant pace, with short moments when the motion quickens. I note the contrast with my own first draft of my first chapter where there is too little time for contemplation - this will be addressed.
Back to Notes from an Exhibition, the second chapter moves the pov from Rachel to her husband Anthony and a good number of years earlier at Oxford. The first point of note is ther similarity with the early part of Engleby but the second is the more technical question of the stance of the narrator. H. Porter Abbott in The Cambridge Introduction to Narrative explores the distance of the narrator from the characters (2002:67) and I sense that Gale is closer to Anthony than he was to Rachel. This may well change, but I note it as work in progress at page 18 of the 2008 Harper paperback.

Having spent time with Antony, Patrick Gale passes us on to his son Garfield, or rather not his son; Garfield being the child of the Professor whose brush off may have resulted in Rachel's first suicide attempt. The affect is fascinating. It is like looking through a prism, almost the same view but from different perspectives. The strong Quaker theme is encouraging for someone who wants to include a spiritual element in his writing. There are small hints of Joanna Trollope or even Mary Wesley.

Patrick Gale came to talk to us at the Professional Writing Course at University College Falmouth and was particularly helpful about the process of writing. He passed round the manuscript of his latest novel which showed the hand writing with which he starts and the manuscript alterations which follow. Then came the first typed draft, again with subsequent manuscript amendments. It is a process which demands discipline.

I have already begun to use the leather covered note book my wife, Maggie, gave me for Christmas! It brings to writing a sense that it is special but combined with the fact that it will alter, not least in the process of putting it onto computer.

Patrick spoke of how he wrote Notes on an Exhibition. I had already observed the way point of view moves and I asked him about this. He explained that he had written the book as really a series of short stories all around the heroine Rachel, and he had then placed them in some sort of order. It shines out that the story holds together through the relationship of the characters rather than through any clear thread of plot.

It is refreshing and inspiring.