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17 November 2021

“Capitalism’s over”: The man who made millions by betting the economy would never recover

Gary Stevenson, the Patriotic Millionaire and former trader, on predicting disaster – and why it can only be avoided by closing the wealth gap.

By Anoosh Chakelian

When Gary Stevenson was a boy, he woke up early each morning to wave goodbye to his dad through the window as he flew by on the train. As a Post Office worker, his dad rose at 5am every weekday for 35 years to commute from their two-bed terrace beside the railway track in Ilford, on the outskirts of east London, to his £20,000-a-year job. Stevenson would leave shortly afterwards for his paper round, which earned him £12 a week.

The middle child of three, Stevenson excelled at maths but was unable to afford school trips while a pupil at Ilford County Grammar School. He would watch the glass and steel towers of Canary Wharf being built on the deserted docklands in the distance – the iconic pyramid-topped skyscraper, 1 Canada Square, went up in London’s new business district when he was eight and he felt it was being built for him.

Now, this scene reminds him of the symbolism of the skyscrapers in Ayn Rand’s 1957 dystopia Atlas Shrugged. “I saw it on the horizon and thought: ‘That will be a place where I’ll get a job and make money. Why shouldn’t it be me?’ It was aspirational. It was on our turf, it felt like it could be ours.”

And so it turned out. By 2011, Stevenson was Citibank’s most profitable trader. After joining as an interest rate trader in 2008, when the financial crash shook the industry, he earned just under £400,000 in his first year. He’d just turned 23. The following year, he made his first million.

Now 35, having retired in 2014, Stevenson is an economist focusing on wealth inequality. Having been expelled from grammar school at 16 for a “drug-related” transgression, he nevertheless made it to the London School of Economics in 2005 to study maths and economics. “I used to wear Ecco tracksuits, I was pretty hood. LSE was international money – all Gaddafi’s kids and parents in the Chinese Politburo or Pakistani Air Force.”

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In his second year, he struggled to sell himself when applying for jobs. “Everyone had been trekking in the Sahara or was a concert-level pianist, and there was I, stuffing pillows at DFS,” he told me as we spoke over cups of builder’s tea on a picnic bench between the River Thames and Canary Wharf.

Instead, he won his City job in a card game – held to recruit one new trader from five participating universities each year. He likened it to “liar’s poker”, the eponymous game played by bond traders in the financial journalist Michael Lewis’s 1989 book of the same name.

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In his black T-shirt and hoodie, grey trackies and beat-up Puma pumps, Stevenson’s once legendary status in the temples looming over us would not be obvious to passers-by. Stevenson had cycled over from his nearby flat in Limehouse, east London, bubbling with easy charm and amusing anecdotes, despite having been out for his birthday the night before.

He told me how his fellow traders used to call him “Gary the geezer” – his east London accent a novelty. The Essex City boys of Loadsamoney Thatcherism were by then an anachronism. “There’s this myth of the cockney wideboy-trader and everybody loved me coming in, talking like a geezer, making loads of money,” Stevenson said. “Trading had changed from that stereotype towards being a lot of very posh people, elite universities, monogrammed shirts, expensive cufflinks.”

Growing up, Stevenson had never imagined such wealth. “When I was a kid, I thought if you made £60,000 you were a millionaire,” he told me, his green eyes squinting against the sunlight bouncing off the towers of his old workplace. “My dad worked so hard, and then after one year I made nearly £400,000. It was a way to give financial security to my family, but something about it made me feel sick.”

When he received his first payslip, he was struck with a memory of scrimping for the cheapest Tesco lunch during his school and student days: he would buy two scotch eggs for 75p. “I specifically remember sitting in that office, looking at this amount of money on this piece of paper, and just thinking: ‘All those motherfucking scotch eggs.’ All the times I picked the cheapest option, or skipped a meal.”

In that moment, Stevenson felt he had been “made to do this stupid dance of going to the supermarket and finding the cheapest thing my whole life”, while others were “making millions, just sitting at a computer” who he’d had no idea about. “It scared me,” he said. “It still does.”

While on the trading floor, he developed his theory: the impact of wealth inequality on demand was dooming the post-crash recovery. His job was to predict interest rates, which he described as a “pretty close proxy to predicting recovery”. While he read economic forecasts that rates would rise, Stevenson bet the opposite.

Back home, old friends and their families told him that they were remortgaging or selling their houses, saving up every penny, struggling to buy property or pass it down to their children. While his well-off colleagues were buying houses, the people of his past had no money to spend – wealth stopped flowing through the system. Therefore, went his theory, interest rates would never rise.

“It basically came down to one big question: Why are people not spending money?” he said. “They don’t talk about inequality in economics. I knew economists were not going to clock this, and most traders were from rich backgrounds so also didn’t understand why people weren’t spending.”

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He began to “bet really aggressively on there never being a recovery” and became a multimillionaire. “I knew the markets were wrong, I became obsessed with mastering this craft. It was surreal – very gratifying to be right, but what you have figured out is disaster.”

Stevenson spiralled into a moral crisis. After six years, he left the industry eager to develop his theory further – starting with a two-year master’s degree in economics at Oxford University. “It was like going from playing in the Premier League to pub football,” he sighed. While conflicted about the banking world, he nevertheless respected his former colleagues’ nous. Oxford’s economists, however, made him feel “depressed and disillusioned”.

“They’re so disconnected [from the economy],” he said of his professors. “These guys literally wear capes and teach in castles, and they’re just inverting matrices, doing galaxy brain maths. I started to think change was not coming from there.”

Instead, he immersed himself in the work of economists such as the French inequality experts Thomas Piketty, Emmanuel Saez and Gabriel Zucman, US household debt analysts Atif Mian and Amir Sufi, and Harvard macroeconomist Ludwig Straub.

Today, Stevenson is a member of the Patriotic Millionaires, the global movement of wealthy people campaigning to pay more tax, for which Abigail Disney, heir to the Disney fortune, is the figurehead. He believes a wealth tax, or even a 150-year time limit on wealth just to make the rich spend, could help.

Having saved up enough himself never to work again, he dedicates his time to explaining the impact of the wealth gap through media interviews and his own punchy YouTube videos. When Covid-19 hit, he predicted house prices would rise, against popular opinion (“the Guardian was saying they were going to collapse – obviously!”) and shopping would become costlier. He was right again.

“My grand, macro thesis is that real interest rates have to stay low, and that’s because the rich have all the wealth and like saving,” he reflected. “Now, no matter how hard you work, how smart you are, if you come from the ‘wrong’ family you’ll probably never own property. That is feudalism. We’re going back into a world of aristocracy. Capitalism’s over.”

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This article appears in the 17 Nov 2021 issue of the New Statesman, Democracy's last stand