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VINE VOICEon 23 April 2010
Robert Peston asks a question he is unable to answer. This was certainly the case on Black Wednesday as Kenneth Clarke admitted in a television interview.On that occasion Peston's argument that decisions taken by an international super-rich stateless elite have unduly influenced policy and over-rode policy makers seems true. In so doing they have scooped a disproportional amount of the nation's wealth and the gap between rich and poor has increased no less under New Labour than under the Conservatives. What does emerge from Peston's coverage is that there are times when it is far from apparent whether anyone is running the country.

Peston identifies inefficiencies within the decision making system of which pensions is a good example. In 1997 Gordon Brown raided the pension funds of final salary schemes, removing tax credit on dividends. the reason behind Brown's policy was clear. He wanted to raise revenue to reduce the structural deficit in the public finances. Treasury officials expressed concern but Brown went ahead. The result was a decline in income to pensions funds over a five year period from £7.1 bn to £3.3.bn. Final salary schemes collapsed. Yet Brown's policy was the logical extension of Nigel Lawton's 1988 decision to limit the amount of surplus schemes could retain and of Norman Lamont's reduction in tax credits to pension schemes in 1993. Both were designed to raise revenue.

The political myopia demonstrated by politicians then became a farce with the introduction of stakeholder pensions. Theoretically designed to prevent alleged mis-selling and provide for the less wealthy, the stakeholder became a tax-free vehicle for the rich. Pensions minister, Ian McCartney, ignored unwelcome research statistics because they came from a Conservative David Willetts. Lord Turner, who headed the pensions commission, noted the response to Willetts was an exercise in damage limitation. He observed, "It is a classic example of how power works and the misuse of civil servants. The extent to which civil servants apply their intelligence to supporting their minister rather than actually thinking is quite distressing." Their ignorance of the real world was such that he wondered whether any of them ever read the Financial Times.

Peston deals with a variety of issues including the fund raising activities of Lord Levy, allegations of honours for sale - police investigation of which was hampered and harried by the political class. It spoke volumes when three of Blair's nominees for the House of Lords, all of whom had lend considerable sums to Labour, were rejected by the Appointments Commission. Other parties were also implicated. All those nominated claimed to be resident for tax purposes (or if not resident would make themselves resident) although a number failed to fulfil their promise and others who were resident made themselves non resident soon afterwards.

Peston describes precisely how the international financial crisis arose through excess lending against insecure assets and provides insight into how leverage was used to acquire, asset strip and sell off businesses. He discusses at length the careers of retailers Philip Green and Stuart Rose, neither of whom appear as attractive characters. They, along with Lord Levy, reinforce the old adage it's not what you know but who you know which counts. The trio are able to network with the richest members of society.

Peston is excellent on investment banks, hedge funds and how the super rich, encouraged by politicians, act in their own interest and with little or no control. Rather like the British kings who invited the Saxons for protection they have found their position undermined by people who have no allegiance to the country and pay no tax. The bonus culture remains indicative of their exclusive concern with their own wealth, short term gain at the expense of long term benefit and their open clash with the values of a property owning democracy. Peston believes concerted action is required to prevent the super rich from avoiding tax. Of course, that can only happen if the politicians are prepared to take on the public's concern and tackle the issues.

Peston's analysis that public services will continue to creak as more demands are made on it, while those who could contribute a sizeable amount to the national treasury do not do so is close to the truth. The only answer is to grasp the nettle of reform but doing so is likely to reduce opportunities for the present generation of politicians to move into well paid financial sector jobs when they leave Parliament. Peston's book is a must-read for anyone wanting to understand how the international financial system works. Five stars without question.
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VINE VOICEon 23 December 2008
I liked this book a lot because it does not treat the reader like an idiot
What is also good is that he evidently has talked to the people involved and so it includes a huge amount of personal views from some of the main protagonists. His explanation of the greed of the finacial wizards, the wrong headed approach of the government and the effects on you and I is very clear - the only problem after reading this is that the depths of the problems in the financial sector look a lot worse and its clear that we as individuals will pay for this collective failure.
I did not give it five stars because of a style issue is that certain things were repeated a number of times so that it read a bit like a collection of essays but overall if you want to understand why we have the problems in the financial sector and now the real world economy then I can recommend this. Think of the plus when someone asks you what a Structured Investment Vehicle (SIV) is - and thanks to this you will know. You'll be bemused was to why it was ever thought a good idea, but you will know what it was and why valuing them became such a problem.
And finally it comprehensively shows the failings of the Prime Minister when he was chancellor - he may not have caused all the problems but the policies he pursued have made the problem worse for us all - and our grandchildren as well. Read this and I suspect that you will not see him as 'Super Gordon' after this.
Damm good read - making financial economics interesting !
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on 1 February 2009
Robert Peston writes excellent understandable and uncluttered english,dealing with what could be a complicated subject in a straightforward way [just like his television appearances].His detailed background knowledge of his subject, and the players in it,is impressive,and his explanations as to how and where the billions of all our money has gone,whilst not surprising,is most revealing.A must read.
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on 27 December 2008
To predict the future it is necessary to understand the past and Robert Peston's book is a valuable, well written and easy to read way to do this. It is the recent background to the business elite of a Britain that now faces an unprecedented financial mess

It gives colourful insight into the big personalities ( Philip Green, Stuart Rose, Allan Leighton ) the big financial organizations ( hedge funds private equity firms, and globalised investment banks) and the big politics which provide the backdrop to the dance of excess and greed that led us into the current melt down.

Much of the material is not new but it is very well told. It's a journalist's book rather than that of an historian. In truth it is really a number of different short books pulled together between one set of covers. It is a series of stand alone stories: Arcadia Group, Marks & Spencer's, Royal Mail, a who's who of hedge funds and private equity and the background to the sale of honours.

Peston has had a ringside seat for the past few years and this book allows us to share his privileged access. Most of the individual stories are fascinating, well written and related by a deeply well connected and knowledge insider. Although, to be honest, the chapter on pensions is rather hard going and only for real enthusiasts like Lord Turner who gets numerous mentions.

The title is a little misleading and echo perhaps of the seminal "Anatomy of Britain". by Anthony Sampson. "Credit Crunch: The Suspects" might have been a better alternative.

And finally in one sense the book is a mystery story. Does Peston like Gordon Brown and the Labour party or not? He seems unsure himself but at least it keeps the reader guessing.

All in all an adornment to any book shelf.
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on 9 January 2010
A collection of business case studies, from Philip Green and Stuart Rose to Goldman Sachs and Allan Leighton, with trips into the dark alleys of government donations and the arguably inequitable corporate tax system.

Contains details and interesting personal interview extracts you won't find anywhere else. But reads like an exam script where the question (who runs Britain?), while answered well, is accompanied with unnecessary layers of information which will be welcomed by those with more time on their hands.
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I think that my review is a bit late. The book refers to a Labour government but without any change in legislation, I would have thought that the situations described in the book are likely to continue.

The big overriding issue that faces capitalism in this country is increased globalisation. Capital and workforces are increasingly mobile so that national boundaries become less important or relevant. This is shown most clearly with private equity. When I studied for my accountancy examinations in the 1990s, I recalled studying different capital structures and looking at the effects of gearing on companies' financial performance. My natural instinct was that companies financed by excessive borrowing were far less stable and more risky than ones financied by equity and retained profits. The book shows the effects of private equity, in which individuals can raise enormouse amounts of money from lenders (and put up little themselves) in order to purchase companies on corporate performance. Some of these companies result in fantastic efficiencies in which the companies make large profits. Furthermore, with a relatively small investment, the Return on Capital Employed ratio looks very impressive. However, Robert Peston points to a number of failures. The key issue is that the risk appears to be unequally spread. As the enterprises are debt funded, there is considerably less corporation tax to pay (so the Treasury loses out) and the companies also lose financial stability. Employment prospects of the workers in these business have been shown to be jeopardised. The book showns how politicians have been weak in combatting this often cynical kind of capitalism for fear that private equity specialists may go to less regulated economies.

The book looks at a number of other issues, such as hedge funds and toxic debt. I am not sure I fully understand the former after reading this book so do not feel qualified to commnet. The latter issue is something to which I have given some thought. The key thing to bear in mind is that one person's debt is another person's asset. The money that is lent to a borrower to purchase a home is of value to the lender because it carries interest over a long period of time. It is also safe because if the borrower defaults on the loan, the lender can simply repossess the property and any outstanding repayments. As an asset it is saleable and markets have developed for the trade of packages of these mortgages, known as Collateralised Debt Obligations (CDOs). The problem with these loans is that too many were made to people in the USA who were considered to be NINJAs (no income no jobs or assets). When house prices began falling in 2007/8 and too many people began defaulting, these CDOs became toxic. I think Robert Peston tells this story very well.

For me personally, the most important chapter was the one on pensions. Unfortunately, it is also hardgoing and does not give enough weight to the underlying demographic issues. Working life is starting later and pension investments are required to finance longer retirements than originally envisaged. This is for more significant than the stories that Robert Peston focuses on in the book.

The book is a very readable journalistic journey. Robert Peston is great at writing about the various colourful characters in the business world and there are some great stories. However, it is not an analytical book that really explains the scale of what is going on. For instance, it does not give any numbers of private equity enterprises compared to the listed stock market based businesses. I also don't think the book answers the question as to who runs Britain.
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on 19 November 2013
This is a highly readable account of the UK's current problems, and still very relevant today, five years after it was first published. Peston writes clearly and his analysis is easy to follow and thought-provoking. A more accurate name for his book might have been its subtitle, "Who's to Blame For the Economic Mess We're In?" because the current title - "Who Runs Britain?" - is only tackled obliquely here. It's really a book about moneymakers and people buying influence. This is why I've given it four rather than five stars.

Some of "Who Runs Britain?" is explicitly speculative. One of Peston's biggest fears is that the financial-industry billionaires living more or less tax-free in Britain (and being encouraged to do so by Brown, and latterly Osborne) might well in the long term choose to use their money to found dynasties and influence politics. This is a very realistic anxiety, and Peston does his best to bring it out into the open. He's almost certainly right. "Who WILL run Britain?" might have been the best title of all.

The author has a talent for potted biography, and the chapters on Philip Green, Stuart Rose and Allan Leighton are amongst the most interesting and entertaining in the book (Green is especially interesting. If Peston is to be believed, he has an almost supernatural ability to know where any one person is, in London, at a given time). I felt better educated after reading this.
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on 5 December 2008
On the whole I have found this book to be an interesting insight into the working of the city and the type of people who make the decisions there. However, there are large protions of the book that go into too much detail, and even though I consider myself reasonably competent on the subject, i found the detail to be tedious and ended up skipping over paragraphs. The book is now also dated due to the fast moving events of the last year.
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on 18 February 2009
A very enlightening book. It describes how financial tricks have robbed the people of this country to enrich the few.

I learned a great deal and understand why we are in this mess.

It has only three stars because the book lacks structure and cohesion. It is repetitive and doesn't really address the subject matter as it relates to the book title.

Nevertheless, a worthwhile read.
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on 28 December 2008
I got the impression that Peston was urged to put out a book quickly, so he used a lot of his old archive material (Green, M and S etc). But it's worth it as there are some good chapters on hedge funds, and a reminder that our banks were actually borrowing to buy all that toxic waste, which somehow drove home the stupidity of it all.
Not as good as his scoops!
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