Like most of us I have been reading a lot of commentary about the credit crunch lately. A more personal perspective about the City and the recent crisis is presented by John Lanchester in the latest London Review of Books. Here is a short extract from his piece, Cityphilia:
This uncritical and uninformed governmental Cityphilia received its biggest shock in decades this autumn, with the near collapse of Britain’s fifth largest mortgage lender, Northern Rock. Britain’s first genuine bank run in more than a hundred years shone a light in many places where the sun doesn’t routinely shine, and one of the first things to be brought into question was the ways banks work.
As I’ve already said, my father was a banker, and I grew up hearing about that mythical beast, the bank run. It was often spoken of but rarely seen in the wild. Bankers are said to dread a bank run, but my dad talked about them with a certain black humour. They were always a sign that somebody had fucked up, big-time. They can also be a sign that something in the financial system is fundamentally wrong.
The question hanging around in the residue of the Rock’s near implosion is which type of bank run this was – a fuck-up, or a harbinger of meltdown?