If you took out a mortgage on a house with practically no equity, you took a risk. If you borrowed several times your monthly income on credit cards, you took a risk. If you deposited your savings with a little-known Icelandic bank offering incredible rates, you took a risk.
Such decisions also played a role in the financial crisis. And they were also irresponsible. But in part they were driven by most people’s lack of understanding of financial realities and basic economics. Such ignorance — in modern societies — is inexcusable.
Business journalists such as myself are not exempt. I remember sitting in a very grand boardroom on the top floor of Lehman’s very grand building in Canary Wharf in 2005, with my colleague Gillian Tett, who was handing over to me on Lex before becoming markets editor. Unlike Gillian, I allowed a slew of new vocabulary — slicing and dicing loans, mezzanine financing, subordinated debt, collateralised debt obligations — to wash over me. The increasing complexity and specialisation of the language used to describe financial instruments was one reason most of the press failed to spot the crisis around the corner. But it is not an excuse.
Related: “The data clearly indicate that being able to read is not a requirement for graduation at (Madison) East, especially if you are black or Hispanic”