The wise, the blunt and the Glasgow kiss

Here is what is shockingly different about Soros: he turned up without a minder, exhibited no pompos

At the annual conference of the billionaires' trade union, the World Economic Forum, you couldn't grab a coffee without stumbling on a huddle of plutocrats wringing their hands about the devastating consequences of de-leveraging. They were bemoaning the end of the borrowing boom of the past decade, when a great bubble of debt was created. That bubble has been pricked. Those who lent to us want their money back, or to charge us more for the loans they'll continue to provide. It may be years before debt becomes as cheap or plentiful as it has been. The very structure of our economy will change.

Why talk about "de-leveraging" rather than say that the time has come for us to repay our debts? It's because those who got us into this mess, the bankers who lent all this money and trousered huge bonuses for doing so, have a powerful profit incentive not to see the world in sharp focus. They made fortunes finding clever ways of shifting the vast cash surpluses generated in the huge exporting economies of Asia, the Middle East and Russia into loans to western consumers and companies.

They did this by converting what we borrowed into complicated financial products with confusing names, such as collateralised debt obligations and collateralised loan obligations, and selling them to investors all over the world. They saw this process as the equivalent of the creation of the internet, as a technological revolution that built a gushing cash superhighway linking east to west. So here's Peston's law of economic cycles: a crash looms when brainy bankers talk impenetrable bollocks to disguise the risks they're running.

We saw that during the internet bubble of the 1990s. We've seen it in the insane euphoria of Wall Street and the City of the past few years. When bankers drop English for bollockese, we're all in trouble.

They lent trillions of dollars to individuals and businesses that could never repay it. The most conspicuous example was those sub-prime loans to ex-cons and former bankrupts who wanted to join the property-owning classes. But the bad lending went wider than that. The losses on those loans are shrinking the capital of our biggest banks and making them much more averse to taking risks. So they're de-leveraging and most of us will end up poorer.

Brutal treatment

When I moved from print to broadcasting a couple of years ago, I was unprepared for being objectified. Or, to put it another way, when you are on screen people feel it's OK to comment on your qualities in the kind of brutal way they would never do if you were in any other job. If you want a flavour of this, click on my blog (, where you will find a choice selection of the wise, the blunt and the verbalised Glasgow kiss.

I quickly grew a rhino hide, and now think it's thoroughly healthy that licence-fee payers feel they own the BBC and have a mandate to give me advice. I only wish they had a similar sense of ownership over the companies they indirectly own through their pension funds. Our boardrooms would probably benefit if they had a stronger sense of the views of the millions of people they serve.

Anthropological rules

My book is about the vast fortunes generated by those who pumped up the debt bubble and about the naivety of the elite in the UK and US that encouraged this creativity. These themes are also explored in a BBC2 documentary I am making for early March.

The greatest challenge is coaxing billionaires and bankers when on camera to speak in a language their mums could understand. Many are incapable of doing so. But the great hedge-fund veteran, the trader who broke sterling, George Soros, is a lucid exception - as he is to almost all my anthropological rules about the behaviour of billionaires, formulated after years of observing them in their natural habitat.

I interviewed Soros on Saturday, and here is what was shockingly different. He turned up without an entourage or even a PR minder. He exhibited no pomposity. He was charm itself. And he spoke almost no bollockese.

Robert Peston is BBC business editor. His new book, "Who Runs Britain? How the Super-rich Are Changing Our Lives", is published by Hodder & Stoughton (£20)

This article first appeared in the 11 February 2008 issue of the New Statesman, Now it gets really dirty

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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.