In a UK Mirror story yesterday, BBC Economics Editor Evan Davies posed the question, “could David Bowie have caused the … credit crunch?” Let me answer that question with another question: Could Evan Davies have had his lunch money stolen from him in grade school by a bully wearing a David Bowie t-shirt?

Davies proposes that banks got the idea to sell mortgage backed securities from Bowie Bonds. For those needing a refresher, in 1997, David Bowie sold bonds which entitled their buyers to a share of the royalties Bowie would be earning on his back catalogue over a 10 year period. That allowed Bowie to immediately capitalize on those future profits.

Now, we who would devote our time to write about David Bowie on a regular basis will be the first to tell anyone willing to listen about how influential he has been on modern music, fashion, and gnomic humor. But the first hole that needs to be punched squarely into this flimsy argument is that Bowie Bonds were not David Bowie’s idea, but that of a banker named David Pullman. That’s why they are also known as Pullman Bonds. David Bowie may have been the first recording artist to take advantage of the idea, but others like James Brown and the Isley Brothers have followed suit.

The second hole, and get ready to drive the Patridge Family bus through this one, is that securitization was not a new idea in 1997. Securities were being bought and sold long before then. In fact, the government agency that ultimately became Fannie Mae was founded by Congress in 1938 to buy mortgages, group them and resell them as mortgage backed securities. What made Pullman Bonds innovative and unique was that they applied the concept of securitization to the sale of intellectual property rights for the first time. So I’m no “Economic Editor”, but I don’t think securitization was a fresh idea banks got from David Pullman, let alone David Bowie.

The third hole is the suggestion that the cause of the subprime mortgage crisis and subsequent credit crunch could be somehow attributed to single pop icon, rather than a fetid cornacopia of rotten economic systems which will be examined and debated about for years to come. Sure, I can understand the Mirror’s desire to¬† write a sensational, attention-grabbing headline how ever loosely based in reality it may be, but for someone who links to Wikipedia as much as Evan Davies does on his blog, Evanomics, is it too much to ask for the occassional fact check?

3 Responses to “David Bowie Ruined the Economy and Kicks Babies”

  1. Latetotheshow Says:

    I seem to recollect Mr. Bowie getting thoroughly mocked for the bond scheme at the time it rolled out (one journalist proclaiming it “the death of rock ‘n’ roll”). I’m surprised, frankly, that Jagger didn’t think of it since he’s the one with the economics degree.

    I personally blame the recession on YouTube and the credit crunch on fear: fear and greed being the two faces of investment. We’re in the fear cycle until the brokers can find something to get excited about, and banks are pulling back on credit now because they lent until it hurt them and now they’re overreacting. Watch a bunch of kids fighting over a bag of Skittles and you’ll learn everything you need to know about Wall Street. If Bowie thought it was a good idea, well, nobody’s ever said he wasn’t smart.

    Enough of this. More fun: NPR did a piece this morning on the new season of “Flight Of The Conchords” and played a bite of “Bowie In Space.” Made me smile, it did, on my way out the door.

  2. Webmistress Says:

    It seems that a couple of other sites besides ours have an ounce of sense. Rolling Stone and The Guardian said about the same thing that we did.

    Gah, still haven’t seen Bowie in Space yet! It recorded on our TiVo the other day, but about 5 hours after I canceled our HBO service. Deh.

  3. Latetotheshow Says:

    Oh, my…it’s viewable on YouTube. It may be the great national time-sink, but it’s sure fun. It is more fun in context…maybe the DVD is rentable.

    My sister sent me the Mirror article. It seems my obsessions have gotten around…she shares our disdain.