How I Caused the Credit Crunch
It was me. That's what a bright, young, Eton- and Oxford-educated former banker called Tetsuya Ishikawa, who spent seven years at the forefront of the credit markets, admits about himself. During a banking career within some of the world's major banks, he structured and sold subprime securities to global investors. Now he confesses all in the form of a novel that is taking the bestseller lists by storm.
The title of his book, How I Caused the Credit Crunch, is as intriguing as its contents. Too often during the current financial crisis the emphasis has been on technical problems of risk management, and on what technical fixes now need to be imposed. Ishikawa's book provides, in contrast, a vivid reminder that financial markets are not the workings of cold mechanical forces, but of warm flesh and blood. Reflecting human choices, they have innate moral dimensions.
What is true of financial markets holds true for the rest of the economy. The attempt to understand and to operate in markets through the suspension of moral judgement forces economics and business into a moral vacuum that eventually suffocates them. Because they are essentially about relationships, markets require sound morals to survive. The credit crunch is as much a wake up call to the destructiveness that can occur when morals go wrong as 9/11 was to the destructiveness that can occur when religion goes wrong.
But attempts to use bad morals as an excuse to eliminate moral responsibility from markets - whether through the imposition of secular worldviews or of mechanical fixes - will be as misguided and counterproductive as the attempt to use examples of bad religion as an excuse to banish religion from public. For most people in the world, religion is the magnetic field in which they set their moral compass. It is the context in which they perceive and pursue visions of the common good, stimulated by the sense of personal moral responsibility that religion tends to engender.
This is what inspired Mel Gibson to ask the camera crew of his blockbuster The Passion to film his hand as that of the centurion holding the nails that were driven through Jesus' wrists. Gibson's act reflects a mindset Ishikawa's book can help stimulate. For while his spotlight is on bankers, Ishikawa insists that 'we are all responsible in our small way' and that 'the arrogance of the [banking] industry has gone out. There is a greater sense of humility'. Were we all to embrace such humility, the green shoots of recovery would be sooner to appear.
Peter Heslam
Links
Peter Heslam is director of Transforming Business at the University of Cambridge. Its website contains many resources relevant to the interface between ethics and economics.
For an article by Peter Heslam on 'Thrift as Solution to the Credit Crisis', published in the journal Faith in Business Quarterly, click here. This journal has published a number of articles on the financial crisis from the perspective of faith. Details of how to subscribe are available here.
Tetsuya Ishikawa's book How I Caused the Credit Crunch can be ordered here. For the website supporting the book, which includes video interviews with the author and a number of his articles, click here. The quotes from Tetsuya Ishikawa cited in Peter Heslam's Connecting with Culture reflection are from an interview with him posted here.
Breaking news about the credit crunch was broadcast an almost hourly basis by the BBC reporter Robert Peston. He has written an influential article on the BBC News website here entitled 'The New Capitalism'. There are many responses to it on his blog. His book Who Runs Britain? And Who's to Blame for the Economic Mess We're in? is available here.
A statement by Christians and Muslims in Manchester entitled Faiths and Finance: A Place for Faith-Based Eonomics is available for download here.
Paul Mills is a leading economist who has worked both for the Treasury and for the International Fund. A Cambridge Paper he wrote in 1995 entitled Faith versus Prudence? Christians and Financial Security has more recently taken on new relevance. It is available here.
The theologian Brian Rosner has written a lot about greed. A paper he's written entitled Greed as a False Religion published by the Kirby Laing Institute for Christian Ethics in Cambridge is available here.
The Templeton Foundation has been holding a public debate over recent months, widely reported in the press, on 'Does the free market corrode moral character?', involving leading academics, journalists and opinion formers. To read their responses to this question, click here.
The Acton Institute, a leading Christian think-tank, has a wealth of resources here that engage with the current economic crisis. A short book by the Acton Institute's director of research Samuel Gregg's is Banking, Justice and the Common Good, though it was written before the banking crisis. It can be ordered via the Institute's website.
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