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How I Caused the Credit Crunch

It was me. That's what a bright, young, Eton- and Oxford-educated former banker called Tetsuya Ishikawa, who spent seven years at the forefront of the credit markets, admits about himself. During a banking career within some of the world's major banks, he structured and sold subprime securities to global investors. Now he confesses all in the form of a novel that is taking the bestseller lists by storm.

The title of his book, How I Caused the Credit Crunch, is as intriguing as its contents. Too often during the current financial crisis the emphasis has been on technical problems of risk management, and on what technical fixes now need to be imposed. Ishikawa's book provides, in contrast, a vivid reminder that financial markets are not the workings of cold mechanical forces, but of warm flesh and blood. Reflecting human choices, they have innate moral dimensions.

What is true of financial markets holds true for the rest of the economy. The attempt to understand and to operate in markets through the suspension of moral judgement forces economics and business into a moral vacuum that eventually suffocates them. Because they are essentially about relationships, markets require sound morals to survive. The credit crunch is as much a wake up call to the destructiveness that can occur when morals go wrong as 9/11 was to the destructiveness that can occur when religion goes wrong.

But attempts to use bad morals as an excuse to eliminate moral responsibility from markets – whether through the imposition of secular worldviews or of mechanical fixes - will be as misguided and counterproductive as the attempt to use examples of bad religion as an excuse to banish religion from public. For most people in the world, religion is the magnetic field in which they set their moral compass. It is the context in which they perceive and pursue visions of the common good, stimulated by the sense of personal moral responsibility that religion tends to engender.

This is what inspired Mel Gibson to ask the camera crew of his blockbuster The Passion to film his hand as that of the centurion holding the nails that were driven through Jesus' wrists. Gibson's act reflects a mindset Ishikawa's book can help stimulate. For while his spotlight is on bankers, Ishikawa insists that ‘we are all responsible in our small way' and that ‘the arrogance of the [banking] industry has gone out. There is a greater sense of humility'. Were we all to embrace such humility, the green shoots of recovery would be sooner to appear.

Peter Heslam


  markets are about relationships and have innate moral dimensions
humility will encourage the green shoots of recovery