Gillian Tett on Complex Derivatives and the Fifth Stage of Capitalism
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What is the main topic discussed in this episode?
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Hello and welcome to another episode of the Oddlots Podcast. I'm Tracy Alloway.
And I'm Joe Weisenthal.
Joe.
Yes.
In the recent episode with Kaiser Quo, you dropped at the very end, because you said you were hoping that no one was listening, you dropped that you are coming round to complex financial products.
You know, uh I I did drop a little bomb there at the very end of the episode, 'cause it's something I've been thinking about more and more. And I'll just lay it out very quickly what I think about, which is that one of the most influential episodes we've done in a long time in my mind was episode we did with uh Ricardo Hausman, who we either recently talked to or about to talk to, depending on when this episode comes out, et cetera, about complexity is a good thing. That's a sign of what When wealthy economies are capable of producing complex products, that's usually a sign they get wealthier. That's mostly discussed in the manufacturing sense. And then lately I've been thinking, you know what? There are some wealthy countries that produce really complex stuff that aren't manufacturing.
The UK, the US, etc. Mostly, much of it is sort of complex financial products. Maybe we need a rethink and maybe we need to sort of uh take a fresh light about why the market is willing to pay the creators of complex financial products so much. And maybe Maybe they're not as bad as sort of some of us thought. Or maybe we maybe we should be more proud of our financial creations. Lean into them a little bit more. Justice for complex
financial products. Yeah,
because then there was this other thing too, like in like early two thousand tens where people are like, Oh, all the great minds were working on, you know, building derivatives when they should have been doing something else. And then they went and built like social media and like products to like hack our attention to sell ads. Was that so much better? Anyway, I don't know. Like maybe it's like time to rethink the positives of finance in the world. Great financial crisis. That was history. Let's remember the Anyway, that's been that's it's just been on my mind lately. All right. I didn't know you were gonna I didn't know you were gonna like turn say, like, okay, now you have to do a whole episode defending this position, just.
Well, I'm being nice. I brought you I like this. I brought you the perfect guest to discuss all of this. And I mean really the perfect guest. So this is actually someone I've wanted to get on the podcast for a very, very long time. I used to work with her at the Financial Times.
Who is Gillian Tett and why is she the perfect guest to discuss complex derivatives?
I I worked for her at the Financial Times for a while. We are gonna be speaking with Gillian Tet. She is, of course, a columnist for the FT and head of King's College at Cambridge. Gillian, Welcome to the show.
Well, it's great to be on the show. And I think Tracy, I often felt like I was working for you at the special time. You were so much smarter than the rest of us and you really blazoned a trail in many of these discussions. Well,
thank you so much for saying that. I hope my bosses at Bloomberg are listening. Yeah, and give them a bonus straight away. You of course basically wrote the book on derivatives, Fool's Gold, which came out at a very fortuitous time in 2009. So right after the 2008 financial crisis. Talk to us about the genesis of that book, because I think a couple years before when you started working on it, I don't think a lot of people were thinking, oh, we need to write an entire book on how we got these things called credit default swaps.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:00–3:04
2
Who is Gillian Tett and why is she the perfect guest to discuss complex derivatives?
3:04–9:44
3
How did Gillian’s cultural‑anthropology background shape her reporting on credit derivatives?
9:44–17:23
4
What was the original purpose of credit default swaps and how did they evolve before the 2008 crisis?
17:23–23:44
5
Why does Gillian argue that complex financial products aren’t inherently bad?
23:44–29:53
6
How have transparency reforms (DTCC reporting, central clearing) changed the derivatives market?
29:53–37:34
7
What is the ‘fifth stage of capitalism’ and how does it differ from the neoliberal era?
37:34–44:19
8
How might new tax policies like Section 899 reshape global demand for U.S. Treasury assets?
44:19–49:41
Speakers
7 identifiedMore from Odd Lots
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