Gillian Tett on Complex Derivatives and the Fifth Stage of Capitalism
Odd Lots
Bloomberg
4.5 • 2K Ratings
🗓️ 19 June 2025
⏱️ 48 minutes
🧾️ Download transcript
Summary
After the GFC, there was a lot of angst over the fact that so much effort and brainpower went into designing complex derivatives, and other financial instruments. Not only was this seen as wasteful, the complexity was deemed to be the heart of the crisis, and therefore bad. But all these years later, looking back, how bad is financial complexity really? What do things look like from the perspective of 2025. On this episode we're joined by Gillian Tett, a columnist at the Financial Times, and also the author of several books including Fool's Gold: The Inside Story of J.P. Morgan and How Wall St. Greed Corrupted Its Bold Dream and Created a Financial Catastrophe. We talked about her reporting on the evolution of financial derivatives, their legacy, what she is concerned about now, and why she sees the world entering into a new, post-neoliberal, fifth stage of capitalism.
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Transcript
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| 0:00.0 | This is an IHeart podcast. |
| 0:06.8 | Bloomberg Audio Studios, Podcasts, Radio News. |
| 0:25.8 | Hello and welcome to another episode of the Oddlots podcast. |
| 0:27.2 | I'm Tracy Alloway. |
| 0:28.5 | And I'm Joe Wisenthall. |
| 0:29.2 | Joe. |
| 0:30.0 | Yes. |
| 0:37.9 | In the recent episode with Kaiser Quo, you dropped at the very end because you said you were hoping that no one was listening. |
| 0:42.6 | You dropped that you are coming round to complex financial products. |
| 0:47.7 | You know, I did drop a little bomb there at the very end of the episode because it's something I've been thinking about more and more. |
| 0:49.2 | And I'll just lay it out very quickly what I think about, which is that one of the most |
| 0:54.1 | influential episodes |
| 0:54.9 | we've done in a long time in my mind was episode we did with Ricardo Hausman, who were either |
| 1:00.3 | recently talked to or about to talk to, depending on when this episode comes out, et cetera, |
| 1:04.5 | about complexity is a good thing. That's a sign of when wealthy economies are capable of |
| 1:09.9 | producing complex products. That's usually a sign they get wealthier. That's a sign of when wealthy economies are capable of producing complex products. |
| 1:11.8 | That's usually a sign they get wealthier. That's mostly discussed in the manufacturing sense. |
| 1:16.6 | And then lately I've been thinking, you know what? There are some wealthy countries that produce |
| 1:20.4 | really complex stuff that aren't manufacturing, the UK, the U.S., etc. |
| 1:25.2 | Mostly, much of it is sort of complex financial products. |
| 1:28.4 | Maybe we need a rethink and maybe we need to sort of take a fresh light about why the |
| 1:33.4 | market is willing to pay the creators of complex financial products so much. |
... |
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