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By Root 1594 0

in this chapter at this financial unsustainability, at government debt in particular. Our environmental legacy is not the only serious question about fairness between generations facing governments now. This debt is another potential burden people living now will bequeath to their children. Like the environmental burden, the debt burden will mean reductions in the amount that can be spent on consumption. However, the debt burden is less obviously catastrophic and urgent, more hidden—and what’s more, likely to be in part repudiated in various ways, discussed below. Michael Burry, the investor who predicted the 2008 financial meltdown (and profited from it by “shorting” the market) said in a comment on the U.S. federal government deficit: “Strictly looking at the monthly Treasury statement of receipts and outlays, . . . as an ‘investor,’ you see a company you might want to short.”1

It’s also a distributional, or to put it another way, a political, issue. OECD governments have borrowed vast sums from both their own citizens and from foreigners. Citizens who have accumulated savings, typically the better-off members of society, and the governments of countries with a large pool of savings, China prominent among them, have lent the money to pay for current government services. All future taxpayers will have to make the repayments. Both the domestic politics and the geopolitics are likely to be fraught, so large is the accumulation of debt.

The links between the world of high finance and the wider organization of society are not obvious. But from time to time, the intuition that there are in fact deep links comes to the fore. This usually happens in times of crisis. Even then, it is not apparent to everyone that something important is taking place. In a speech in New York’s Federal Hall on 14 September 2009, the anniversary of the Lehman Brothers bankruptcy, President Barack Obama said: “Unfortunately, there are some in the financial industry who are misreading this moment. Instead of learning the lessons of Lehman and the crisis from which we’re still recovering, they’re choosing to ignore those lessons. I’m convinced they do so not just at their own peril, but at our nation’s.”2 His speech was greeted with a distinct lack of enthusiasm by the financiers in the audience and got mainly critical reviews the business press. The banking world is extraordinarily blind to the implications of the crisis.

People who work in the world of finance seem not to understand that those of us outside their world will not accommodate their wish to return to business as usual. Across the Atlantic Ocean at the same time as President Obama’s speech, seventy-two London-based financial traders were taking their former employer, the investment bank Dresdner Kleinwort, to court over the bank’s failure to pay them 34 million in bonuses for 2008. In September 2008, Dresdner Kleinwort had been rescued in a 6 billion takeover by Commerzbank, 25 percent owned by German taxpayers. Other such lawsuits were reportedly in the pipeline. Meanwhile, the bankers have also fought a largely successful battle to prevent governments—major shareholders now—from limiting their ability to receive large bonuses. Their success reflects an extraordinary and unforgivable lapse of political nerve among elected officials to confront bankers’ greed. What, the rest of us ask, are these multimillion-dollar bonuses supposed to be rewarding?

Conversations with people working in the financial markets in the twelve months after Lehman Brothers “fell over” (to use the term for bankruptcy financial folk prefer) made it plain that Planet Banking is in a different universe to Earth. Bankers complain about being demonized, about the recession not being their fault, about the need to ensure regulation of the financial markets doesn’t hinder their ability to compete and make profits in future. They argue that bonuses are essential to attract the best talent and stay competitive, despite the evidence that bonuses incentivized excessive risk-taking rather than productive effort. Others are