Bowie Bonds

A slightly odd assertion here.

He\’s always been a trendsetter. But could David Bowie have caused the latest fad sweeping the nation – the credit crunch?

It may sound like a ridiculous question, but it\’s not as mad as it seems. Even when it comes to finances Bowie leads the way – and back in 1997 he did something called \’securitisation\’.

He produced some bits of paper – Bowie Bonds – and said: \’Whoever buys these gets my royalties.\’

It meant he no longer had the money coming in but instead had a lot up front. His investors were guaranteed a decent income. It was a good deal all round.

And the banks were catching on to the idea. They thought: \’We have billions out there in mortgages which are going to pay us back very slowly. Why don\’t we sell those and get the money now?\’

So the banks started doing what Bowie had done – in a big way.

Now the Bowie bonds were indeed an innovation. They were the first time a musician had securitised the income from his back catalogue in this manner. But far from the banks catching on to this and repeating it, Bowie was picking up an idea from the banks and adapting it to his circumstances.

As anyone who had ever bothered to read Liar\’s Poker by Michael Lewis would know. For he talks about the mortgage securitisation business being run by Lou Ranieri (think that\’s the right name). As, umm, anyone with any (even the most basic) knowledge of the US financial system would know, Freddie and Fannie had been doing ever since their inception.

What\’s worrying is that the man making this strange assertion about the Bowie bonds is, umm, the "economist" on the Today Show. Tells us something about the level of insight we\’re likely to get from that show, no?

2 thoughts on “Bowie Bonds”

  1. No it tells us that he is trying to promote a programme on the City in a way that will appeal to a the Daily Mail audience.

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