Q. Why did you decide to write This Bleeding City?

Alex Preston: I was trading credit derivatives on the vast floor of an investment bank when the markets began to plummet (earlier for me than for others: this was mid-2007). It felt like I was at the heart of something huge and historical, something that would define not only the bizarre microcosm I inhabited, but also the real world (which I glimpsed, sometimes, at weekends). I saw the former superheroes around me sitting ashen-faced, their trembling fingers poised over their keyboards, and I wanted to capture this, to open up to a broader world the hubris, the fear, the shattered pride.

I also found it strange that this world hadn’t been better represented in fiction. American Psycho and The Bonfire of the Vanities are wonderful novels, but they are written from the outside, and because of this they seem intent on preserving rather than exploding the myth of the investment banker as the manipulative, towering ego who bends all to his will. This is also the error of Sebastian Faulks in A Week in December. He gets the arcana of the hedge-fund world spot-on but Veals (his hedge-fund manager) is one-dimensional, a schoolboy’s imagining of the evil capitalist pig.

This is not an apologia for the City boys. But nor does it portray them as monsters. The book tries instead to show how we fell into these jobs by accident, how little anyone really understood, and how young we all were. The Masters of the Universe were off playing golf and shooting whilst we screwed up the world’s financial system.

In my team of twenty people managing $20bn, only one of us was over thirty (I was twenty-seven when the Crash hit). I hardly knew my bosses - although one of them recently shot himself, unable to deal with the scale of losses we had run up. Perhaps the Crash was our subconscious revenge, our way of bringing down the system that had ensnared us, that made us old before our time.

Q. Is it a love story set in the City? Or a novel about the City which happens to have a romantic sub-plot?

It is firstly a love story. The interplay between Charlie and Vero’s turbulent relationship and the wildly oscillating financial markets demonstrates the humanity of the stock exchange, the primal fears and passions which drive the great abstract machine of the City. A reader without any knowledge of the complexities of finance will be able to understand the novel; a City roller who knows all about finance but has long forgotten what it means to have strong emotional connections will find it more difficult to grasp.

Q. So how did an Oxford English graduate who studied under Tom Paulin end up trading credit derivatives?

I always wanted to be a writer. I pictured myself banking for a few years - perhaps until I was twenty-five - and then retiring to a farmhouse in the South of France to write my masterpiece. I have stayed longer than I initially intended but have been lucky to work with some bright people in jobs that avoided the humdrum and boorish elements of the market. I still look forward to going to work in the mornings. I do think it is critical that, rather than a disillusioned former trader, or a journalist/novelist trying to unpick the abstractions of the City, I have been able to write my novel whilst the financial world unravelled around me. I was at the heart of this meltdown, trading through it every day, trying desperately to stay alive as my friends were fired or quit.

Q. You work in the City yourself. To what extent is the novel autobiographical?

This is not a roman á clef. It is not an indictment of any specific organisation or institution. It is an indictment of the system, and an indictment of my generation for getting so caught up in the bull-market nonsense. I am Head of Trading at a leading investment bank. I am a writer. I am a dad. It seems that these three statements will shuffle and reshuffle themselves until one or other wins out: either I end up, like Charlie in the novel, lost to the real world, the eternal banker; or perhaps this is the first move in my escape, a Tom Hodgkinson-esque turning away from the cash and the glamour (which Charlie tries but fails to achieve). So rather than an autobiography, it is perhaps an attempt at a future biography, testing out alternate strands of my life-to-come.

Q. Charlie seems like a good person. Why would he want to work in such an aggressive environment?

Firstly, I think Silverbirch, the imaginary hedge-fund presented in This Bleeding City, seems like a rather interesting and stimulating place to work next to some of the funds I have visited. At least people talk, they go out for drinks, they have something like lives outside of the office. Many funds don’t allow talking above a whisper, hire two people for the same job and fire one of them after three weeks just to keep the other on his or her toes, offer to pay for extravagant maternity care in exchange for employees waiving maternity/paternity leave.

Charlie needs money. He is a relic of a past age - a middle-class boy whose parents earn a middle-class wage. He goes to university and, instead of the other students having parents who are teachers and civil servants and doctors, he meets the sons of carpet-millionaires, the daughters of commercial real estate tycoons. He wants to live their magazine-bright lives, wants to leave behind his honest but dreary youth in a dying seaside town.

Finance seems like an easy way for Charlie to get where he wants. He is deeply in love with Vero, and believes (rightly or not) that he needs to shower her with gifts, offer her a life untouched by worries about money, eclipse even the wealthiest of his rivals for her affection. It’s sad but so many of the really successful people from the City are there because of over-ambitious parents; are scholarship boys from public schools who never went on ski trips and wore moth-eaten jumpers; are the husbands of exigent wives.

Q. The ending of the novel is very bleak for Charlie. Why was it written so?

That’s one way of seeing it, and many readers would agree. Another way of thinking about it is that Charlie has traded the financial uncertainty and emotional complexity of his life with Vero and the children for a return to the unambiguous, institutionalised world of banking. He lives in a beautiful if rather anodyne apartment and is wildly successful.

I wonder whether the Tom Hodgkinson dream has been rather over-played, if the Idler really is happier than City Boy. At least City Boy lives according to very clear rules, his goals are obvious and achievable, and all the mess and the stress of human relationships can be softened with money.

Q. Have other works inspired you in the writing of this novel?

Two key works prompted me to pick up the pen:

Fitzgerald’s short story Return to Babylon sees the protagonist - also called Charlie Wales - return to Paris after the Great Crash of 1929 to revisit his haunts of the boom years. It’s a painful, tragic story, and a rare classic of financial fiction. I wanted to do something similar for our Crash - provide a response which is partly an elegy for the good times, and partly a demonstration of how the markets are merely an expression of the individual psyches of the traders, speculators and lunatics who created them.

Oliver James’ Affluenza struck me as hugely poignant as I read it in early 2007. So many of my friends were trapped in the hedonic cycle, swamped by their mortgages, obsessed by property and the status they thought it conferred. The trader who sat next to me at ABN owned four cars and three houses but he was deeply unhappy. The Crash seemed like a release for him. I think that, despite its rather tawdry self-help packaging, Affluenza is a serious document of a ridiculous chapter in human history.

Another influence is my grandfather, Samuel Hynes. He is emeritus professor of English at Princeton University and his great work on English literature of the 1930s, The Auden Generation, was published by Faber in 1972. Everything I write is, ultimately, for him.

Q. Do you think that a novel can better explain the financial situation than a work of non-fiction?

Finance is a deliberately complex world that even those who inhabit it don’t really understand. Thus the economists and journalists who rushed out books trying to ‘explain’ the Crash missed the point entirely. It simply doesn’t help to know what ABS, CDOs and SIVs are if we don’t know what was going on in the minds of the people who traded them. I wanted to show how greed drove these people, how quickly they grew cowed, how they reacted when their world fell apart.

We understand the world through stories, our lives are dictated by the myths we wrap around them. The story of Charlie Wales’ experience of being at the heart of the crisis will, I hope, explain far more than any acronym-stuffed textbook.

Q. What will you write next?

I’m working on my next novel which will be finished in early 2010.

Q. You also write song lyrics. How does that fit into your writing routine?

I don’t have a writing routine. I write in any free time I get - whether early in the morning or late at night after work dinners. If I’m stuck for ideas on the novel, I write songs. My brother and I go into the studio every few weeks to record them. My lyrics have featured in several top-ten hits and I have recently written for a number of major international stars.

Find out more about Alex and read his blog.

1. Patrick Mildmay Says:
   March 26th, 2010 at 12:39 pm

   http://www.carlyle.com/Team/item9820.html

   Alex Preston works for The Carlyle Group, the world’s second largest Private Equity firm, as the Head of Trading for cash and derivative products within Global Leveraged Finance. With the Houses of Parliament and London Eye as a backdrop, he sits alongside Oliver James (author of the bestselling Affluenza), about to read a passage from his new novel This Bleeding City.

   Private Equity were the guys before the bust, passing around Companies like hot potatoes, each time selling them on for a higher multiple of their earnings (PE Ratio) than they paid for them. No one wanted to be left actually owning the business as by the end, before the crash, they were paying too much for the business and with too much debt (“leverage”). When the profits disappeared after the crash the companies couldn’t generate enough income for Private Equity to pay the interest on the debt it had incurred to buy it in the first place, ending up being worth less than had been paid for them.

   My phone was ringing somewhere in a pocket.

   ‘Hello? Yes? What!’

   I had got the job. It was the CEO of Silverbirch, an institution I had heard about even at Edinburgh. Sharp and violent moneymakers who were paid bonuses that read like telephone numbers. The CEO said that he had liked my anarchic approach to the markets. Thought I would be a useful contrary voice on the team of analysts.

   Alex Preston trades securities (bits of paper) based on the debt Private Equity racked up buying these companies. Imagine his market is maybe 300 companies, each with €50million – €2bn worth of debt in its name. Like bonds, but this market calls them Loans. Why? Because they have certain properties: mainly they are secured lending, i.e if a company goes bust, they sell all the stuff and you get paid back first because your loan has security over the company. Bonds might get paid back next, but there will most likely be nothing left, maybe 10% of the face value of the bond (I.O.U note) if you’re lucky.

   Debt was both the shaky foundation of the previous period of global growth and the cause of its collapse. As we venture further into debt (not to mention being confronted by peak oil and global warming), it appears that while not yet recovered from the panic and horror of the last crisis we should be readying ourselves for the next.

   Preston’s novel is meant to exemplify this condition. A heart-wrenching tale about the damage wrought by unbridled desire, it has overtones of Deerhunter, charting the lives of starcrossed lovers excitedly emerging from student life in Edinburgh, bound for the city. Just as humankind is destined to have its heart broken, the financial world is geared up to be a boom and bust economy.

   …fluttering southward in our evening dress, champagne spilling from plastic cups as we landed.

   In the headlong rush towards experience, we blasted ourselves away from our youth, towards a future of wrinkled disappointment. But no one stopped to tell us that we should be sucking it all in, searing the images onto our memories, baking the emotions into our hearts. Because soon it would be all that we had.

   Thankfully for Preston, both his personal and professional life is fully intact. Instead of being spat out onto the cold streets holding the contents of his desk, he tells us that the result of the crash was that things became ‘deathly boring’ at work. The upshot was that it allowed him time to write this book. When a point about the womanizing traits of his main protagonist is raised, he is quick to emphasize that the novel is a work of fiction and fiction alone. We are meant to suspend our disbelief about his own status as an exemplar of city success, ourselves learning a lesson on how we will learn nothing from ‘dehumanizing bankers’ from the flowery words on the pages.

   It would be unfair to argue that a writer has to be intrinsically and autobiographically linked to his work – certainly not. It’s a great skill and sign of a greater author to be able to write about issues outside one’s frame of experience. But being presented with a novel specifically about a culture that results in crises such as these, in the knowledge that its author managed to become a key player, was a little hard to chew.

   Oliver James’ Affluenza thesis argues that whether rich or poor, aspirations for prosperity often end up relative to one’s circumstances. I’d like to believe that perhaps the reason he was so happy to join Preston in marketing the book was that entire project seems to be a fitting example of this phenomenon. It might even explain how Preston has somehow convinced himself – as somebody who continues to prosper from debt – we would want to listen to his musings on what will be left at the end.

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