Shattered on the Rock? British Financial Stability from 1866 to 2007
Summary (2 min read)
Introduction
- Following the recent interdisciplinary interest in social class (Atkinson et al., 2012), this paper investigates how middle class culinary taste operates in a working class context in the UK.
- The authors adopt a ‘culturally sensitive’ approach which looks at how social class ‘operates symbolically and culturally through forms of stigmatisation and marking of personhood and value’(Savage et al., 2013: 222).
- This economy is often concerned with the tensions between middle class and working class identities where ‘class is produced in a complex dynamic between classes with each class being the other’s ‘Other’’ (Reay, 2005: 923; Skeggs, 2004).
Class, Cosmopolitanism and Place
- The three main categories of working, middle and upper class emerged as a result of ‘machine-based capitalism’ and following this people have traditionally been ‘classed’ based on the basis of their occupation and position in the labour market (Dorling 2014:6).
- Many social changes have occurred which render simplistic relationships - such as between office work and a middle class location – as problematic.
- Within reflexive modernity with its emphasis on individualisation, contemporary approaches to identitymaking often view the self as being part of a narrative (Giddens, 1991) - a work in progress rather than a fixed destination.
- Middle class groups have also been argued to share similar distastes for working class food considered filling, fatty, heavy, and representing a working class general ‘taste of necessity’ (Bourdieu 1984).
- The accumulation of aestheticized cultural experiences, often results in a skimming of the surface of localised cultures to pick up their ‘user friendly’ (Skeggs, 2004) elements, resulting in a ‘self-referential cosmopolitanism’ (Savage at al., 2005) wherein only the elements that are useful for an existing disposition are appropriated (Hannerz, 1990).
Research methods
- This paper emerges from a multi-methods interpretivist study exploring the domestic consumption of Italian food in 20 middle class households in Brodon, a city located in the north of England.
- Being an Italian recently moved to the area, the first author was intrigued by the differing interpretations of, and meanings attributed to, Italian food in this new context.
- Participants defined themselves as middle class in relation to their overall lifestyle including house ownership, level of education, travels, frequency of eating out and attending art exhibitions, museums, music concerts and festivals.
- All of the participants were connected with Brodonshire university, a campus university near Brodon.
- Tim seems to be expressing an ‘aesthetic self’ which ‘relies on the accrual of cultural capital in the right composition, of the right volume, with the right knowledge in the right way’.
I have a folder with many recipes that are from scratch. The folder has lots of sections, there is one for Christmas, recipes for cooking for Christmas, I have a meat section and vegetable
- Sections, dessert sections…I also have section based on ingredients, like one is for recipes with lemon, and one with recipes with pumpkin. […].
- Sometimes Italian food isn’t very distinctive…this (indicating the cookbook) is very intriguing because they propose something… quite distinctive (Tina) For Tina, Selfridges is a legitimate source of inspiration where her cosmopolitan culinary taste can be accommodated and expressed, while the local scarcity of legitimate sources constrains her expression of her culinary taste.
- In her narrative of passion for food, Tina also mentioned friends living abroad and travels, providing her another source of inspiration for ‘distinctive’ dishes which she proudly pronounced with the ‘right’ accent.
- In describing his legitimate food options, David maps out specific imagined geographies of class through food.
- One participant observed that ‘this area is not good for shops and restaurants’, implying that the local options available to obtain food are not seen as a useful resource for her project of middle class identity making and therefore it is nullified in her narratives.
Conclusion
- In a context of both change and continuity in relation to social class (Savage et al., 2013; Dorling, 2014), this paper has focused on one particular occupational group - university workers - to see how class is reproduced through their food consumption narratives.
- The authors think that the main difference between their findings and the existing literature on middle class creativity is due to the context of study.
- This disengagement is based purely on imaginings and largely second-hand iterations of the working class ‘them’ of the locality.
- Rather than being driven by an overt residential strategy the authors think that the disaffiliation amongst their participants is driven by the pursuit of distinction; they disengage with the local food culture because it is simply not ‘user friendly’, as previously mentioned.
- While local urban residents are rarely referred to directly in these narratives, local shops and restaurants appear to stand for a wider urban local food culture which in mild cases is depicted as lacking, in more extreme cases as indecent (Lawler, 2005).
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Citations
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Additional excerpts
...(Milne and Wood 2008; Congdon 2009)....
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...(Milne and Wood 2008)....
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Cites background from "Shattered on the Rock? British Fina..."
...In 2005 and 2006, about half of the bank’s wholesale borrowing was at a maturity of less than one year (Milne and Wood 2009)....
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...1 Although Milne and Wood (2009) suggest that, ex post, the quality of Northern Rock’s book was not in fact particularly good, in part because it included a high proportion of lending to first-time buyers and borrowers in the South of England....
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References
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Frequently Asked Questions (13)
Q2. What are the future works mentioned in the paper "Shattered on the rock? british financial stability from 1866 to 2007" ?
The authors then consider how these techniques may need to be changed or supplemented to prevent such problems in the future. However there are four features of its business model that do raise the possibility that its mortgage book might perform relatively poorly in the event of a major downturn in housing and mortgage markets. The board of Northern Rock had not totally ignored the possibility of this repricing but had persuaded themselves that such a repricing would not have a major impact on their own business model: ‘ …we expected that as markets became tighter and as pricing for risk changed that low-risk prime mortgages ( and were below half the industry average of arrears on their mortgage book ) such a low-risk book would remain easier to fund than sub-prime mortgages elsewhere… ’ There was then established a ‘ Tripartite Arrangement ’, comprising the Bank, the FSA, and the Treasury, the last inevitably involved because of the possibility of the commitment of public funds in some crisis.
Q3. What is the likelihood that ten percent or more of Northern Rock borrowers would be in negative?
In the event of a substantial decline in UK house prices, it is likely that ten percent or more of Northern Rock borrowers would be in ‘negative equity’ ie owe more than the market value of their property and losses might then mount.
Q4. How much of its funding came from wholesale borrowing?
The issue of asset backed securities, almost all through its ‘Granite’ securitisation vehicles, provided 40% of its end-2006 funding.
Q5. What is the main purpose of the Bank of England’s money market operations?
The Bank of England’s money market operations are primarily used to implement the decisions made by the Monetary Policy Committee regarding interest rates.
Q6. How much of the expansion of Northern Rock’s balance sheet was funded from retail deposits?
Retail deposits provided only around 12% of this expansion while capital and reserves were actually reduced in the course of 2006.
Q7. What was the main reason for the expansion of the Northern Rock balance sheet?
The expansion of the Northern Rock balance sheet, ie the increase in liabilities over the previous year, relied to an even greater extent on non-retail funding.
Q8. What was the main reason Northern Rock had to roll over its securitisation programme?
Northern Rock management should have been aware that because securitisation needed to be rolled over on a regular basis that any difficulty in accessing securitisation markets would have led to serious liquidity problems.
Q9. What is the value of mortgages transferred to the securitisation vehicle?
For 2002 and earlier value at time of issue is the value of mortgages transferred to the securitisation vehicle which, because of the usual practice of overcollateralization, exceeds the par value of the issued notes by around 2%.
Q10. What was the impact of the securitisation programme on the Northern Rock balance sheet?
Even more importantly to their subsequent problems, the size of the Northern Rock securitisation programme meant that a large amount of mortgage backed securities needed to be refinanced every year, requiring the issue of more mortgage backed securities.
Q11. What was the main point of Northern Rock’s balance sheet?
Northern Rock was thus pursuing a very unusual business model, with a building society’s traditional concentration on illiquid long term mortgage assets while at the same time relying on very non-traditional sources of securitised and wholesale funding.
Q12. What was the reason Northern Rock had to request liquidity support?
The resulting funding gap could not be filled by wholesale borrowing so Northern Rock was forced to request emergency liquidity support from the Bank of England by this date, in order to avoid default on its short-term wholesale borrowing.
Q13. Why did Northern Rock have to pay a Basel II waiver?
This was because the waiver and other asset realisations meant that Northern Rock had an ‘anticipated regulatory capital surplus over the next 3 to 4 years’.