28 Dates Later by Willard Foxton: Part Three, the Nerd and her Iguana

In which Willard encounters a fiscally prudent herpetologist.

So, for my third date, I was theoretically back in the realms of "normal" dating. I could steer away from the completely ridiculous niche sites that I'm doing for your benefit, dear readers, and concentrate on actually trying to find someone who I might be able to fall in love with. Yeah, maybe I am being unrealistic - but that's why I'm actually doing this.

Of course, it's me, so it never ends up that way - here's the Facebook chat to a mate this particular foray out into the wastelands of the internet produced:

Don't worry, we'll get on to exactly how a reptile of the family iguanidae got involved in a date. To be fair, it was probably my own fault for going on a website called "Geek2Geek".

Now, it was my desire to meet someone I might actually have something in common with to choose this particular dating site for a "normal" date - I am pretty unashamedly a bit of geek myself. I'm also not the kind of "soft" geek who is like "oh, yeah, I saw Lord of the Rings once, you know, erm, hobbits are cool". Not the kind of person who owns two "ironic" Star Wars T-shirts. I'm the real deal. World of Warcraft account; weekly 2000AD reader; I used to blog about model soldiers, for goodness sake. I occasionally write bitter reviews of how I feel "let down" by notable sci-fi writers.

I've never been lucky enough to date a girl who did anything more than really tolerate my hobbies - indeed, my longest term girlfriend once turned round to me in bed (we were living together at the time) and said "If I asked you to choose between loving me and toy soldiers, what would you choose?" I of course, replied "If you really love me, you wouldn't ask me to choose". Which obviously meant "FUCK YOU, MODEL SOLDIERS".

Not really. If she'd asked me, I'd have very reluctantly boxed them up and sold them, but I'm honest enough to admit it would have really hurt. I'll admit to a certain jealousy of friends who have lovely wives they can sit down and play X-box with, or curl up under a duvet and watch Aliens for the 200th time. I suspect Geek2Geek may not fit everyone's definition of a normal, mainstream, dating site of the Match/Soulmates variety - or does it? My own gut feeling is this sort of person, of whatever gender, is pretty common these days. I recently discovered one of my most stunningly attractive female friends is an avid roleplayer, for example (tragically, she's not attracted to men).

So I figured I could meet someone in that bracket. Now, I wasn't looking for someone with identical likes to me, just someone who might not react with abject horror if I said "so how about we go to that Alien movie marathon at the Prince Charles Cinema". Geek2Geek's community is pretty enormous, and although it's clearly bigger in the US than the UK, there were plenty of people in and around London. Within a week of trying, I'd arranged a date.

So, after work, I popped to a local pub and sat waiting for the person I was due to meet. She was 28, worked in "digital engagement", and in her profile picture, looked lovely, smiling, and obviously enjoying the great outdoors with flowers looped into her hair. Thus, I was a little surprised when someone who looked nothing like the picture tapped me on the shoulder and said "Hello, are you Willard?" Now, I understand in this online dating game, it's common to lie on your profile, but using a flattering photo from 8-10 years ago probably does you no favours. Yes, the person may meet you, but when they meet you, their initial reaction is always going to be "you don't look like your picture".

Indeed, where she'd had the picture taken (I thought it might have been at a music festival), she talked about how much she'd "had" to photoshop it. So, yeah. Digitally manipulated photograph. At least she was definitely on the level about her computer skills... So, we got to talking, over a couple of drinks. She talked about:

  • Water Filters - she does social media for a well-known brand of water filter, so, to be fair, this was in response to "so, what do you do for a living?". But her enthusiasm for them was, erm, palpable.
  • Social Media Jargon - She did at one point say, "I really love how you've diversified your personal brand", non-ironically.
  • Pensions - She LOVED personal finance. Loved it. I learned a great deal about retirement planning, the NEST scheme, SERPS and tax relief. It's fair to say, as a freelance journalist I didn't have much to add to this, but the look on her face when I told her I didn't have a pension at all at 32 was pretty priceless. It was the sort of look people reserve for those who say things like "So I said to the doctor, psychotic episodes be damned, I'm coming off those pills!".
  • Her beloved pet Iguana, Jolyon. Now, I have nothing against exotic pets, but I just find reptiles a bit repulsive. Well, I'll be honest, totally repulsive. She had photos of it (sorry, him) curled up on her duvet, with her in the bed, which to her was super cute, but to me were like some 21st century Hieronymus Bosch nightmare vision of hellish torture.

So, after about an hour, I explained I had a really important article to write the following day, made my excuses, and left, but not before saying "We should totally do this again, as friends." Pretty sure it was mutual; neither of us walked away from that date thinking "OMG that was the ONE". Probably for the best; even writing this, the idea of being woken up by a giant lizard crawling over me is making me shiver.

Now, I'm sure there's a fiscally prudent herpetologist for her out there somewhere on Geek2Geek; it's fair to say, that is not me.  So, back into the wilderness, it seems...

This post originally appeared at 28 Dates Later. Stay tuned as we catch you up with all Willard's disastrous dates so far over the next week.

This is exactly what Willard's date looked like. Photograph: Getty Images

Willard Foxton is a card-carrying Tory, and in his spare time a freelance television producer, who makes current affairs films for the BBC and Channel 4. Find him on Twitter as @WillardFoxton.

Getty
Show Hide image

We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?