John Lanchester, How to Speak Money Meet the Author


John Lanchester, How to Speak Money

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Not it's time for this week's Meet The Author,

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with the journalist and novelist John Lanchester.

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The phrase interest rates crops up all the time when people are talking

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about finance and the economy, but how many of us can truly say we

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know what economists and bankers and politicians mean

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Or just why interest rates are so important.

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Step forward John Lanchester, whose book How To Speak Money, What

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The Money People Say And What They Really Mean, is a lexicon of money

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speak, from triple A ratings to zombie banks, via derivatives, risk

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weighting and something called the hot waitress index.

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John Lanchester started out as a novelist, but he is also

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a journalist who writes regularly about finance and economics and,

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which aimed to explain just why the 2008 crash happened at all.

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John Lanchester, since this is a dictionary, what is the hot waitress

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index? It is a nakedly sexist term people in Wall Street and the city

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use to describe the level of economic activity, one is looking

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out the window and counting the number of creams, and it is the idea

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that when the economy is thriving, attractive women get high`paid jobs

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as models and actresses, but being waitresses when things are doing

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less well. And interest rates come up when talking about money, and a

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lot of baggage that comes with that, which to the lay reader or Lesnar

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may not be evident. When people who understand money used AAA interest

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rates, what are they thinking about? It is the cost of money, which is a

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strange idea for civilians to think about. That money has a price, the

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interest rate is that price. And the rate at which you can invest without

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risk, because you can buy a government bond and now you will get

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your money back. So there is a J can't exceed ease of knock`on

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effects, the rate at which dismisses can borrow. When rates go up,

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business is harder, and harder to compete, if your business is having

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to compete with a high guaranteed rate of interest. And when interest

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rates go up, the currency goes up, sucking money into that government

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bond, life becoming much harder for exporters, because goods more

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expensive. And all these effects which compound and overlap, packed

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into two words, and people who understand money now and follow

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that, but you can be on the back foot and lose the train of the

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argument. So what is the purpose of this book? I was interested in the

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way city and Finance works, because it is such an essential thing in

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London and the UK more generally, but you look out the window and see

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the effects of finance in London, especially how it has changed. So I

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ended up educating myself to write the book and then being asked to

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write or comment about it. And what always happens, the common thread

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was always about explanation. That people really seem to feel the need

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simply to understand. Often linked to a scandal or disaster, something

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that has blown up, such as the situation with LIBOR, such as the

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gold spot price, JP Morgan lose $8 billion through their London unit,

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and some derivatives I still do not understand. But something that has

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blown up and what is it? You quote a conservative officer called Michael

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Oakeshott, and you set him opposite the tendency of economists to talk

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about science, and you clearly do not believe in economics is a

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science? Presumably you are hoping to draw us into that conversation?

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Exactly, the idea from Michael Oakeshott was seen to be a bit

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English, but it is very compelling, the idea that philosophy and

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history, across time, talking to the past, and also talking to each

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other, and economics is more like that, and my framing, my background

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is in writing, so I would see it as a question of language, but I do,

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and that is something basic about literally not understanding the

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words. And there is an element of responsibility about it. I have a

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Porsche degree from a Porsche University, working on a political

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magazine for ten years and I was nearly 50 before I knew what fiscal

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and monetary meant. `` I have Porsche degree. And after hearing

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that thousands of times over the radio. And that is what I would like

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people to do, too bothered to find out. And also political subtext, you

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are now find of neoliberal economics. Quick definition and what

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is wrong with it? The idea that you take away the rules and livery and

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open up markets, rapidly and openly, that the rich will get rich quick

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than everyone else, but everyone will get rich, so do you really ``

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so you deregulate and the trickle`down effect will make

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everyone better off. It would be fine if it works, but it would have

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trickled by now. It came in with Margaret Thatcher and Ronald Reagan

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at the beginning of the 1980s, but the previous approach was seen to

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have failed, which some people may call Keynesian, after John Maynard

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Keynes, had that field? She seems to be put in the `` John seems to be

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spoken about as being in favour of government spending. And that

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government spending equals a good thing. But are economies had become

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problematic. And bogged down. And clearly our moment of inflection was

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needed, a historic turning point, and very clear across the developed

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world that in the late 70s and early 80s something was needed. So I am

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not calling for revolution, but we need an equivalent inflection back

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to watch the fact that ordinary people's living standards have not

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improved. Three decades of these policies and the people in the

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middle are stuck, not fear that the rich get richer and the people in

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the medal more permanently stuck. John Lanchester, thank you very much

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indeed. The weather is out there right now.

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Some clear spells

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