Saturday, October 24, 2009

The Power of Yes review (National Theatre, Lyttelton) - who's to blame for the credit crunch?

You would be forgiven if you, like me, have mistaken this for an evangelistic event - the title alone does sound misleading. However, The Power of Yes is anything but.

Myron Scholes presenting the Black Scholes formula in 1973(image source)

"This isn't a play, it's a story," the onscreen author (David Hare played by Anthony Calf) recounted at the start of the , well, play. And what a story it is. Hare delivered a tale of fear and greed that spanned nearly four decades of how the world's economy come to a standstill for a couple of days in 2008t. Through his real life interviews conducted with the big players that include Howard Davies of LSE, George Soros and countless others (bankers, industry leaders, financial institutions' employees) who prefer to remain anonymous.

It wouldn't be come as a surprise that most of us would like to blame the bankers when it comes to finger pointing in the most severe credit crunch witnessed by the world since 1930s. But are the people who seem to have walked off with millions and millions in bonuses to blame? Or are there other forces working behind the scene? This is what Hare set to find out in the story.

He was brought back to the origin in 1973 when the Nobel Prize winner Myron Scholes, together with Fischer Black, came up with the mathematical formula (Black Scholes formula) to eliminate credit risk. Long story short, this formula will allow creditors to correctly decide how much interest to charge for a particular loan, thereby 'eliminating' risk of the debtor defaulting. After the formula was introduced into mainstream banking, bankers no longer had to have a true 'relationship' with the customers to know whether a loan should be issued - they would just rely on the magic formula. Well, we know how that panned out.

The Power of Yes is not for those who prefer loud musicals or even dramatic gestures for there is none of those. What The Power of Yes presents how financial institutions become too large to fail (at one time, RBS is larger than the entire UK's GDP), Labour government's failure to rein in easy credit and mentality of competitive bankers, in a 1hr 45min story.

So are the bankers solely to blame? Well, I'll leave it to you to draw your own conclusion but Soros' retort to the free market advocate Greenspan, "… but not the same people (who benefited earlier) are punished…" pretty much sums up the whole story.

The Power of Yes
National Theatre, Lyttelton
South Bank SE1 9PX
Tel: 020 7452 3000

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Anonymous said...

Very nice and informative article, greeting from a romanian in London.

drcrab said...

interesting...! we're having a seminar on the Lehman Bros saga in a few weeks time - perhaps that might shed some light too..!

Kay Richardson said...

I watched this play whilst so drunk, I couldn't see. I didn't enjoy myself.

C K said...

@Romanian in London,
Hey there, thanks for dropping by.

Oh, that would be an interesting discussion. It's like the aftermath of Enron - everyone has got their own story to tell. :)

Haha, I have no idea how people can sit through a play with a pint in their hands. I can do without a throbbing headache.

Since the show has got no intervals, you must have gotten a bit tipsy right at the onset. lol.

::karinuslai:: said...

hahaha some plays need alcohol. i remember very deliberately taking a pint before a pantomime because i knew it would make the show even better ;) haven't done it with a real play yet though - perhaps i should soon!

C K said...

I am really lousy at alcohol. Just pass me a pint and I'll start babbling nonsense. The last thing I want is to join the performers on stage when that happens. lol.

The season of pantomime is coming again... hopefully will go catch some during the winter season.