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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 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 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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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 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 9 April 2010
I've had this book sitting on the shelf since last April after buying it in a fit of enthusiasm one day. Truth be told, I was a tad wary of picking it up, thinking that I would understand not a word of it and be left feeling more bewildered than fiscally enlightened.

I couldn't have been more wrong. Rarely has a subject grabbed me with so much force and simply compelled me into sitting down and learning. I kept finding myself opening it up again while sitting at my desk, desperately trying to cram in a few extra lines between tasks. The writing is vivid and engaging, and the subject matter actually makes for eye-popping reading at times, which isn't something I thought I would ever encounter in a book dealing with that jaw-droppingly sexy subject that is finance.

Peston covers most topics economic, from private equity to hedge funds to collateralized debt obligations (I didn't even know those existed let alone what they were before!) and their relevance to the market meltdowns of 2007 and beyond. It really is a whistle-stop `tourist guide' to modern economics, a subject which, I would hazard, swathes of us know shamefully little about. I personally have been completely staggered by some of the things I have read here. Particularly shocking and upsetting are Peston's insights into the way in which our elected representatives have consistently bowed down to what he refers to as `the plutocracy' through generous tax treatment, special favours and even knighthoods.

It appears to me that the world of the uber-financials is a sort of sub-terranian environment within itself that many (most?) of us in our day-to-day lives are quite happy to completely ignore or dismiss on the basis that it's too complicated to even begin to try and understand. Well Peston has done all of the hard graft for us here. The book has evidently been well-researched and his arguments are presented in an extremely readable fashion. When I come to think of it, there's actually no good reason for us not to be clued up on these things, especially given the fact that we are all affected one way or another by the wheeling and dealing that goes on in our biggest financial cities. As far as the UK is concerned (and there are some fascinating insights into other countries as well), I'd definitely advocate Peston's book as a good place to start reading. Just clear your diary of all prior engagements first!
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on 15 February 2009
I first noticed Robert Peston on BBC news during the early days of the credit crunch, when he whipped up a feeling of excitement with his strange use of STRESS in the middle of sentences and hesitation when there was no need for a pause.
Having read the book I have come to the conclusion that it was updated to make it more attractive (and more sellable) by linking it to the current financial crisis. The first part of the title "Who Runs Britian?" is what the book is really about. The second part "..and Who's to Blame for the Economic Mess we're in" was probably tagged on later (by the publisher?)and is misleading.
Most of the movers and shakers that Peston talks about had little or nothing to do with the current crisis, unless you feel any successful entreprenuer is ultimately as culpable as the bankers.
The book describes the deals and life-styles of people like: Philip Green, Sir Arnold Cohen, Stuart Rose and Lord Levy. A lot of the book is based on interviews that Peston did with these characters. Only a small section of the book deals with toxic loans, SIVs and CDOs and the real causes behind the crisis. There is also an ambiguity about how much Peston admires these people and how much he dilikes them. Is he really happy being the journalist he is, or would he rather have been one of these city giants himself?
Ultimately the book is an interesting piece of ephemera. Personally, I would much rather read some of the weightier writers who do work for the Financial Times. People like Martin Woolf, Niall Ferguson and John Authers may not have all the contacts that Robert Peston has, but they have a deeper understanding of how the financial markets work and are therefore able to make much more profound statements than the more lightweight Robert Peston.
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on 16 January 2009
I bought this book on the strength of its title and the press reviews I had seen which implied it would provide a clear and systematic explanation of the economic mess we're in, and of what this means for government. Yet what I found instead were a collection of essays about different aspects of the financial system - such as private equity, pension funds, the retail sector (notably M&S), the Post Office, and the 'cash for honours' debacle, with only one chapter really devoted to the collapse of the sub-prime mortgage market (and that was written before the collapse of Lehman brothers and all the ramifications that had). Chapters 3 and 4 in particular seemed to be an extended biography of Sir Philip Green which I found so 'off-topic' that it almost made me give up reading the rest of the book. And although Robert Peston did explain all these different facets of the modern financial system in an engaging way, I often did not find it clear whether he was defending the system or attacking it. If the latter, it was not clear what he believes should have been done, or by whom, to have made things turn out better. One example of his muddled analysis struck me in particular. On the cash for honours issue, he concludes: "The leader of a party created to give voice to the neediest and most oppressed was attempting to confer political power on the wealthy for no other conspicuous reason than that they had the financial means to keep him in power." Put this way, the implication is that he should have abandoned the neediest and oppressed by not seeking donations from the rich to keep his party in power. But surely the real argument is not that Labour sought funding for its programme, but that it appeared to be rewarding donors with honours, just as (he claims) the Tories did. The fault was not having a better system for equalising funding between different parties.

I also found that this book was not quite the 'idiot's guide' I had expected from the reviews. Maybe the type of person who would read a book like this might be expected to know already what a hedge fund is, but I was left little the wiser. Fortunately, I could follow the broad thrust of what he was saying, and a lot of it was very interesting even though I was left feeling that I did not really understand how all these little pieces of the financial jigsaw related to each other, nor to the whole picture. All-in-all a bit of a curate's egg, but worth the effort.
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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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