Jaw-dropping anecdotes, Muslim jokes and Murakami’s sexy ear

Regular readers will remember Paul McMullan, the safari-suited defender of the tabloid press who was memorably recorded by Hugh Grant spilling the beans about phone-hacking in an undercover exposé for this magazine. The former News of the World deputy features editor turned the Leveson inquiry into car-crash TV on 29 November, coming up with a series of almost unbelievable anecdotes and quotes. He said that "in a bizarre way, [he] felt slightly proud" that the name-and-shame anti-paedophile campaign caused a riot that led to a paediatrician's house being attacked - and that "privacy is for paedos", anyway. He revealed that he was at journalism college with Michael Gove; that he dressed as "Brad the teenage rent boy" to get a story about a spanking priest; that he used a Hell's Angel as a private investigator; and that phone-hacking was no big deal, because Monica on Friends listened to her ex-boyfriend's answerphone messages.

Casually noting how phone numbers were traded between journalists, he told the judge: "I swapped Sylvester Stallone's mother for David Beckham." Jackie Stallone is an ex-Celebrity Big Brother contestant who claims to be able to read your future in your buttocks. David Beckham is an internationally renowned superstar sportsman. I'd call it the best decision McMullan ever made, if it wasn't for the fact that, when he tried to hack Beckham's answering machine, the footballer foiled his plan by picking up the phone.

The oddest moment, against stiff competition, was when he claimed that the source of the story about Grant's baby was a letter sent to his pub by one of the actor's friends. "I reckoned the tip was so hot, I was going to build a new toilet suite based on this!" he exulted.

The news channels have stopped covering the inquiry with the intensity of the early days, when Grant and Steve Coogan - and the McCanns and the Dowlers - appeared there. That's a shame, because the past few days have been much more revealing. On 28 November, Charlotte Church gave measured, undefensive and damning evidence about the pressures that were heaped on her as a teenager in the public eye, including a tasteful countdown to the date it was legal to have sex with her.

Having only experienced Church as the "voice of an angel" turned "hard-drinking ladette" of the tabloids, I was astonished by the sensible, intelligent woman who appeared in front of the inquiry. Sienna Miller - an actress I'm not sure I've ever seen act but whose love life and outfit choices I could recount to you in detail - was also impressive in acknowledging that what happened to her was distressing but in no way equivalent to the suffering of parents of murdered children.

The inquiry has been a depressing experience, although listening to the Guardian's Nick Davies - the man who exposed the hacking scandal - did give me some hope for my trade.

After hearing all of this, it seems probable that Lord Leveson will conclude that regulation of the press by the PCC has failed. But he is unlikely to be able to address the elephant in the room, although McMullan did towards the end of his extraordinary evidence: "Sometimes, I wouldn't have bought the News of the World even though I worked for it. But the British public did."

Relative values

One of the most common complaints levelled against lefty comedians is that they don't make jokes about really sensitive issues and instead stick to cheap shots about powerless minorities such as Christians and Etonians and the Queen. "It is hard to imagine Jimmy Carr or any of his cohorts making a joke about Muhammad," wrote Jan Moir in the Daily Mail on 25 November.

With pleasing synchronicity, I went to see Stewart Lee's stand-up set the same week, in which he tackles this idea head-on. (Incidentally, the pair have clashed before: Moir accused him of being part of a "cabal of foul-mouthed left-wing comics" in contrast to the blameless Michael McIntyre; Lee called her the Mail's "chief rage-monger".)

In the course of a clever but uneven set, Lee suggests that the real reason why comics like him don't joke about Islam is because they know very little about it and comedy relies on a shared cultural knowledge between performer and audience.
Nonetheless, Lee tries a typically twisting, self-parodying "Muslim joke" nonetheless - in the hope, he says, of a reviewer describing him as an "Islamophobic Michael McIntyre" or "the Sarah Millican of cultural relativism". Which I suppose I have done here. Hope he's pleased.

Rude v prude

Anyone offended by bad language - and even worse prose - look away now. The Literary Review has published the shortlist for its annual Bad Sex in Fiction Awards and there are some absolute stinkers on the list. The venerable Haruki Murakami's 1Q84 offers my favourite passage (sorry, it's impossible to write about these awards without becoming painfully conscious of stray innuendoes in your own writing). Prepare yourself: "A freshly made ear and a freshly made vagina look very much alike, Tengo thought. Both appeared to be turned outward, trying to listen closely to something - something like a distant bell." Freshly made?

Still, there's a point to all this sniggering behind the hand, as the Review's senior editor Jonathan Beckman pointed out in the Financial Times: "Prudishness lies at the heart of poor sex writing . . . Good sex writing, by contrast, is clear, precise and unillusioned."

Or, to put it another way, if you can't construct a decent sentence about this fundamental human experience, why should the reader trust you on anything else?

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 05 December 2011 issue of the New Statesman, The death spiral

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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?