IS BROMLEY’S golden boy David Bowie to blame for the credit crunch?

Bankers have taken most of the rap for the world’s credit crisis but, according to economics journalist Evan Davis, the experimental rock star was a pioneer in financial matters as well as music.

Back in 1997, the former Bromley Technical High School pupil did something called “securitisation”.

He produced Bowie Bonds and whoever bought them got his royalties.

This meant he no longer had money coming in but had a lot up front.

BBC journalist Mr Davis says it was a good deal for everyone because investors were guaranteed an income and the banks began to catch on to the idea.

Rather than getting a slow steady stream of money from customers as they paid back their mortgages the banks decided to sell them on to get their hands on the money there and then.

The banks started copying Bowie on a massive scale.

Rather than borrowing from people and then lending the money out they started lending the money and selling on the loan.

But, writing in a national newspaper, Mr Davis says this is where the problems began.

Any bad risk from the loans became someone else’s problem because they were selling the loans.

This meant they did not worry who they were selling to and they also lent far too much.

And thirdly the banks bought some of the securities back in.

It all went wrong for American securities because the banks had lent to people who could not repay them.

No one wanted securities, their value plummeted and the banks, having bought a lot, lost a lot themselves.

David Bowie made this financial wheeling and dealing fashionable but when it went out of fashion the banks did not have any money coming in.

This meant they could not lend any more – leading to the credit crunch.

  • What do you think? Do you hold David Bowie responsible or do you still blame the bankers? Have your say below.