EIBF: Niall Fergusson takes on the bankers

“Maybe I’ll attract a rabble-rousing protest of my own...” mused Niall Fergusson, when reminded of environmental protestors storming into Joseph Stiglitz’s recent Book Festival event. If there were to be any protests, they would likely have come from the audience. Judging by the number of Blackberries, pinstripe suits and questions about financial investments, Edinburgh’s banking industry was well represented in Fergusson’s crowd.

That didn’t stop the Glaswegian-born historian from laying in to the banking sector throughout his talk. He singled out the Royal Bank of Scotland for criticism, and made light of its huge advertising campaign to turn Scotland into “RBS-land.” Dropping his voice to a conspiratorial whisper, he told the crowd in the RBS Main Theatre tent: “You know they’ve even sponsored this event... let’s hope they don’t regret it.”

Fergusson’s TV series, The Ascent of Money, which traced the roots of the financial crisis, catapulted him to fame. He has the charisma and the knack for explaining the cryptic world of high-level finance evident in the show. The grim warnings of currency deflation and over-leveraged banks he gave the audience will not go unheeded.

His new book is of a topic unlikely to excite many publishers, but he defended its relevance well. A biography of obscure banker Sigmund Warburg, Fergusson hopes it will prove that financial history can be an interesting topic. Fergusson argued that Warburg, a German Jew who had to flee Nazi persecution, embodies the morality and conscientiousness that modern banking desperately needs.

The Q&A session was chaired by journalist Iain Macwhirter, who was delighted to hear that bankers were now less trusted than journalists. Fergusson was critical of US Fed chief Ben Bernanke, who he said should be “dropping money from helicopters” onto American cities to stave off the deflationary threat.

However he praised the new British government for taking decisive action to reduce the budget deficit. In a similarly controversial vein, he outlined his scepticism of influential thinkers Joseph Stiglitz and Paul Krugman, leading intellectual lights in the post-banking crisis world. Stiglitz and Kruggman are wrong to say that deregulation caused the banking crisis, he argues, since in the heavily regulated 1970s there were serious economic problems.

Fergusson might not have attracted the protests Stiglitz did, but his competing analysis of the global economic situation should not go unnoticed.