London Review of Books: Cityphilia

There is a truly excellent piece by John Lanchester about the City of London in today's London Review of Books. It's the best writing about the City I've come across since reading Liar's Poker and Freud in the City.

Lanchester includes a personal reflection on the impact of the City's wealth on the rest of London, provides the best explanation of derivatives I've ever come across and gives an exemplary history of the post Big Bang era covering Leeson, LTCM, Enron, hedge funds and the recent debacle at Northern Rock.

While we watch as the impact of the CDO debt losses trickle through to the rest of the economy in 2008 we could worse than to reflect on how bad it could really get if we don't keep a closer eye on what the traders are up to: "In 2003 the total size of the world economy was $49,000,000,000,000. The total size of the derivatives being traded was $85,000,000,000,000. In other words, derivatives today are worth far, far more than the total economic activity of the planet. More than $1,000,000,000,000 of derivatives are bought and sold every day."

Comments

[Charles Frith]

I don't think the city boys and their egregious pay packets are anything to be proud of anymore. We always talk about how London is a financial centre of the world and yet it seems to me that this profession is a very solipsistic bunch that take very good care of themselves with little regard to their country. I generally look on city boys the same as if they are driving a Hummer. Which is another bette noir.

[Lee]

The quote from David Kynaston says it well: ‘the modern City is in many ways a cruel, heartless place, and its occupants work such cripplingly long hours that inevitably they lack much of the roundedness of earlier generations.’

A wonderfully British insult: lacking roundedness. Ow!