Media Spotlight: The Money Machine
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By Philip Coggan
Many financial titles published over the last year have traded on the fact that the previously lofty worlds of business and finance have suddenly become newsworthy.
The message is that big finance matters, because the issues affecting global corporations inevitably trickle down to the little man and influences whether he is able to get a mortgage, a credit card or access to a savings account.
But what tends to happen with these books is that they end up rehashing the horrors of the financial crisis again and again like some kind of recurring nightmare.
Not so with Philip Coggan’s The Money Machine. First published in 1986 and now in its sixth edition, the revised 2009 edition manages simultaneously to tell the story of what happened in 2008 and 2009 while still keeping it fresh.
Everyone knows that Northern Rock was the instigator of its own downfall by expanding too quickly.
What may not be as widely known is that the last annual results to be posted by the now nationalised lender recorded a pre-tax profit of £627m, 27% higher than the previous year.
Coggan also notes that at the time Northern Rock was running an arrears rate of less than half the industry average. How the mighty have fallen.
The Money Machine manages to be a guide to finance, historical narrative and topical title all at once. It’s quite a feat. The book also includes a nine-page glossary at the end, one of the best attempts to define complex jargon that I have seen.
Of course, no book about finance is going to be a laugh a minute - at least, I’m yet to come across one. Coggan spells out the facts as they are and is brilliant at breaking down high level concepts to a more understandable, if not basic, level.
But as a result The Money Machine can be quite dry, not in terms of Coggan’s unravelling of the crisis, but in his explanations of the way things work.
There is one section devoted to what instruments are traded on the money markets and the players involved. The combination of dealers and brokers, treasury bills and certificates of deposit is enough to make your head spin.
Yet equally there are times when The Money Machine can surprise. Interesting trivia pops up in unexpected places, for instance, the irony that those who don the £ sign in opposition to Europe are actually wearing an Italian symbol.
In unpicking the financial crisis, Coggan is quick to highlight the significance of certain events, such as the US Federal Reserve’s role in rescuing investment bank Bear Stearns in March 2008.
Despite no depositors, no queues of angry savers stretching off into the horizon as was the case with Northern Rock, the US central bank saw fit to help it anyway.
That is how important complex investment banking is to the stability of the financial system.
The Money Machine is structured in a coherent way, with Coggan directing readers to relevant chapters depending on their knowledge and the subjects they are interested in.
All in all, The Money Machine is a clear, authoritative and practical book. I wouldn’t go so far as to say it’s a gripping, roller coaster of a read, but then again, this is finance that we’re talking about.
Book review by Natalie Holt
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