This Time Is Different: Eight Centuries of Financial Folly

The credit crunch of 2007 became the financial crash of 2008 and the recession of 2009. But there has been much debate about the scale of this crisis, and how it ranks against previous events. Reinhart and Rogoff have produced the most detailed study yet of financial crises, going back as far as 12th-century China. This is a quantitative and statistical analysis; it does not attempt to provide a historical narrative of crises, but rather seeks to lay bare their anatomy, by systematically assembling all the facts known about them. The authors construct a large database of historical crises, and the book is copiously illustrated with tables and charts. There are a hundred pages of data appendices alone.

This book will be a vital source of reference in debates on the causes and consequences of financial crises. By cataloguing so thoroughly every known instance of financial crisis, it performs a significant service and opens up new lines of inquiry. In its first four parts the authors categorise different types of crisis and explore our varying historical experience of them. The last two parts are a self-contained exploration of what the authors call the "Second Great Contraction" - the sub-prime meltdown in the United States that began in 2007.

The book contains some theoretical analysis, but that is not its primary purpose. It does not seek an overarching theory of financial crisis, and does not analyse the meaning of crisis in any great depth. It defines crises mainly by quantitative thresholds and by certain events, and seeks to expose the patterns that different types of crisis exhibit. It carefully distinguishes between banking crises, inflation crises and debt crises, and the relationships between them. A banking crisis, for example, is defined by an event, such as a run on a bank, that leads to the government intervening to control or liquidate banks or forcibly amalgamate them. Debt crises can be either external or domestic, and involve governments defaulting on loans. What the book shows is just how widespread and recurrent such crises have been, and continue to be. This is a book of lists and tables, a must for anoraks everywhere. If you are at all uncertain about how many times Spain has defaulted in its history (answer: 13 - currently the world record), or what happened in the 1890 Barings crisis, this is the book for you.

It also contains a number of very interesting insights into the present financial meltdown. Reinhart and Rogoff present a mass of data to show that the events of 2007-2009 constitute a global financial crisis equalled only by 1929-32. They argue that it has been a transformative moment in global economic history that is likely to reshape politics and economics, in the way past crises have done. The effects of this slowdown will be particularly far-reaching, they think, because it is truly global. All emerging economies have suffered historically from all forms of financial crisis, yet although many of the more developed economies have reached a stage where they are no longer subject to defaults on their external debts, no economy is immune to banking crises.

In every cycle, at the top of the boom, many market agents, regulators, journalists and academics persuade themselves that this time it will be different, but it never is. The book argues that the warning signs of an impending financial meltdown were there for anyone to see, in the US, Britain, Spain and Ireland in particular. For example, between 1996 and 2006, the cumulative real-price increase in the US housing market was 92 per cent, more than three times the 27 per cent increase between 1890 and 1996. Yet numerous commentators produced ingenious reasons as to why facts such as these, and the spiralling of US external and domestic debt, were of no concern. Top prize goes to the theorists who argued before the crash that US foreign assets must have been wrongly calculated and must be actually far larger than official estimates. Sophisticated models were devised to explain this "dark matter" and how the US could finance its deficits indefinitely.

Reinhart and Rogoff also make chilling observations on the aftermath of severe financial crises. Asset market collapses are deep and prolonged, and are accompanied by steep declines in output and employment. At the same time government debt explodes, not primarily because of the cost of bailouts, but because of the collapse of tax revenues. The difficulty of managing all these developments at once is the reason that the effects on unemployment, house prices and output can be so long-lasting, extending for years rather than months. So far, China and India have been recovering very fast and growing rapidly, but their ability to continue doing so will depend on whether they can continue to avoid the spillover effects from the contraction in North America and Europe.

As Reinhart and Rogoff put it, "When a crisis is truly global, exports no longer form a cushion for growth." They admit that there is very little experience of global meltdowns, so we do not really know what to expect next from this one. The worst has so far been avoided by the quick and decisive actions of governments around the world. But if this book teaches us anything, it is that the effects of this crisis are going to be felt for a long time to come.

Andrew Gamble is professor of politics at the University of Cambridge. His latest book is "The Spectre at the Feast: Capitalist Crisis and the Politics of Recession" (Palgrave Macmillan, £14.99 paperback)

This article first appeared in the 04 January 2010 issue of the New Statesman, Gaza: one year on

Almeida Theatre
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Rupert Goold: “A director always has to be more of a listener”

The artistic director of the Almeida Theatre on working with Patrick Stewart, the inaccessibility of the arts, and directing his wife in Medea.

Eight years ago Rupert Goold’s Macbeth made his name. The critics were unanimous in their praise, with one calling it the “Macbeth of a lifetime”. Goold’s first Olivier Award soon followed (Enron won him a second in 2009, King Charles III nearly won him a third last year). It was a family triumph; Lady Macbeth was played by Goold’s wife, Kate Fleetwood.

Now the pair has finally reunited and Fleetwood is his undisputed lead. She is playing Medea in the Almeida’s latest and final play of its Greek season. Directing your wife is one thing. Directing her in a play about a woman who murders her children because her husband abandons her is another. And it’s been harder than Goold expected.

“You live with someone every day, and they don’t age because the change is so incremental, and then you do something together and you realise how much you’ve changed. It’s like playing tennis with someone after eight years: you’re completely different players.”

As it is, Goold thinks the director-actor relationship is inevitably fraught. “There is an essential slave-master, sadomasochistic, relationship,” he says. “The incredibly complicated thing about being an actor is you’re constantly being told what to do. And one of the most damaging things about being a director – and why most of them are complete arseholes – is because they get off at telling people what to do.”

Goold doesn’t. He’s as amicable in person as the pictures – bountiful hair, loose jacket, wide grin – suggest. And when we meet in the Almedia’s crowded rehearsal rooms, tucked away on Upper Street, 100 yards from the theatre, he’s surprisingly serene given his play is about to open.

He once said that directing a play is like running towards a wall and hoping it becomes a door just before the curtain goes up. Has the door appeared? “It’s always a funny moment [at the end of rehearsal]. Sometimes you do a show and it’s a bit dead and the costumes and set transform it. Then sometimes it’s perfect and the design kills it.”

We meet shortly before last Thursday’s press night, and he can’t tell how good it is. But it “certainly feels quite private. The idea that loads of people are going to come and watch it now feels a bit weird. You bring a lot of your sense of relationships and parenting into it.”

Goold has always argued that the classics wither without intervention. So in this revival of Euripides’ 2,446-year-old play, Medea is a writer and her husband, Jason (of Argonauts fame), is an actor. “But it’s not really about that… it’s more about divorce, about what it means to separate.”

“It’s about the impact of a long-term relationship when it collapses. I don’t know whether there is a rich tradition of drama like that, and yet for most people, those kind of separations are far more profound and complicated and have greater ramifications than first love; and we have millions of plays about first love!”

Every generation discovers their own time in the Greek plays. Goold thinks he and playwright Rachel Cusk were shaped by the aftermath of the 1970s in interpreting Medea; “That’s the period when the idea of the family began to get tainted.” And when critics praised Oresteia, the Almeida’s first Greek play and a surprise West End transfer, they compared it to the Sopranos.

Yet there is something eternal about these plays. Goold says it’s the way they “stare at these problems that are totally perennial, like death,” and then offer answers that aren’t easy. Medea kills the kids and a mother rips her son to shreds in the Bakkhai (the Almeida’s predecessor to Medea). Where’s the moral compass in that?

Except there is a twist in Goold’s Medea, and it’s not one every critic has taken kindly to. It was enough to stop the Telegraph’s Dominic Cavendish, otherwise lavish in his praise, from calling it “a Medea for our times”. Nevertheless, the reviews have been kind, as they often are for Goold; although The Times’ Ann Treneman was vitriolic in her dislike (“Everyone is ghastly. The men are beyond irritating. The women even worse.”).

In theory, Goold welcomes the criticism. “I’d rather our audience hated something and talked about it than was passively pleased,” he tells me ahead of reviews.

Controversial and bracing theatre is what Goold wants to keep directing and producing; as the Almeida’s artistic director he is in charge of more than just his own shows. But how does he do it? I put a question to him: if I had to direct Medea instead of him, what advice would he have given me?

He pauses. “You’ve got to love words,” he begins. “There’s no point doing it unless you have a real delight in language. And you have to have vision. But probably the most important thing is, you’ve got to know how to manage a room.”

“It’s people management. So often I have assistants, or directors I produce, and I think ‘God, they’re just not listening to what that person is trying to say, what they’re trying to give.’ They’re either shutting them down or forcing them into a box.”

“Most people in a creative process have to focus on what they want to say, but a director always has to be more of a listener. People do it different ways. Some people spin one plate incredibly fast and vibrantly in the middle of the room, and hope all the others get sucked in. It’s about thriving off of one person – the director, the lead performer, whomever.”

“I’m more about the lowest common denominator: the person you’re most aware of is the least engaged. You have to keep lifting them up, then you get more creativity coming in.”

It’s not always simple. When actors and directors disagree, the director can only demand so much, especially if the actor is far more famous than them. When Goold directed Macbeth, Patrick Stewart was his lead. Stewart was a movie star and twice his age.

“Patrick’s take on Macbeth… I didn’t think it should be played that way. I’d played him as a student and I had an idea of what he was.”

“But then you think, ‘Ok, you’re never going to be what I want you to be, but actually let me get rid of that, and just focus on what’s good about what you want to be, and get rid of some of the crap.’”

Goold doesn’t think he’s ever really struggled to win an actor’s respect (“touch wood”). The key thing, he says, is that “they just feel you’re trying to make legible their intention”.

And then you must work around your lead. In Macbeth, Stewart was “a big deep river of energy… when normally you get two people frenetically going ‘Uhgh! Is this a dagger I see before me! Uhgh!’ and there’s lots of hysteria.”

“So we threw all sorts of other shit at the production to compensate, to provide all the adrenalin which Patrick was taking away to provide clarity and humanity.”

Many people want to be theatre directors, and yet so few are successful. The writers, actors and playwrights who sell shows can be counted on a few hands. Depressingly, Goold thinks it’s becoming harder to break in. It’s difficult to be discovered. “God, I don’t know, what I worry – wonder – most is: ‘Are there just loads of great directors who don’t make it?’”

 The assisting route is just not a good way to find great new directors. “The kind of people who make good assistants don’t make good directors, it’s almost diametrically opposite.” As for regional directors, newspaper budgets have collapsed, so they can no longer rely on a visit from a handful of national critics, as Goold did when he was based in Salisbury and Northampton. And audiences for touring shows have, by some measures, halved in the past twenty years.

Theatre has also evolved. When Goold was coming through, “There were not a lot of directors who felt they were outside the library, so for me to whack on some techno was radical! Now it’d be more commonplace.” New directors have to find new ways to capture our attention – or at least the critics’.

But the critics have changed too. A nod from a critic can still be vital in the right circles, but the days when critics “made” directors is long over. “I remember Nick de Jongh saying, ‘Oh Rupert Goold, I made him.’ Because he’d put Macbeth on the front page of the Standard. I owed my career to him, and in some ways I did! But it's an absurd idea, that would not happen now.”

“It’s all changed so much in literally the past three years. There was a time, for better or worse, when you had a big group of establishment critics: de Jongh, Michael Billington, Michael Coveney, Charlie Spencer – they were mostly men – Susannah Clapp. And if they all liked your show, you were a hit.” (“They could be horrible,” he adds.)

“Now I get more of a sense of a show by being on Twitter than reading the reviews.” It’s “probably a good thing”, Goold thinks, and it certainly beats New York, where a single review – the New York Times' – makes or breaks plays. But it’s another problem for aspiring directors, who can no longer be so easily plucked from the crowd.

It’s no longer a problem Goold needs to overcome. His star could wane, but he seems likely to be among the leading voices in British theatre for a while yet.

Harry Lambert is a staff writer and editor of May2015, the New Statesman's election website.