John Lanchester's Capital: exclusive extract

Over its history, almost everything that could have happened in Pepys Road, in south London, had happened. Many, many people had fallen in love and out of love; a young girl had had her first kiss, an old man had exhaled his last breath, a solicitor on his way back from the Underground station after work had looked up at the sky, swept blue by the wind, and had a sudden sense of religious consolation, a feeling that this life cannot possibly be all, and that it is not possible for consciousness to end with the end of life; babies had died of diphtheria, and people had shot up heroin in bathrooms, and young mothers had cried with their overwhelming sense of fatigue and isolation, and people had planned to escape, and schemed for their big break, and vegged out in front of televisions, and set fire to their kitchens by forgetting to turn the chip pan off, and fallen off ladders, and experienced everything that can happen in the run of life, birth and death and love and hate and happiness and sadness and complex feeling and simple feeling and every shade of emotion in between. Now, however, history had sprung an astonishing plot twist on the residents of Pepys Road. For the first time in history, the people who lived in the street were, by global and maybe even by local standards, rich. The thing which made them rich was the very fact that they lived in Pepys Road. They were rich simply because of that, because all of the houses in Pepys Road, as if by magic, were now worth millions of pounds. This caused a strange reversal. For most of its history, the street was lived in by more or less the kind of people it was built for: the aspiring not-too-well-off. They were happy to live there, and living there was part of a busy and determined attempt to do better, to make a good life for themselves and their families. But the houses were the backdrop to their lives: they were an important part of life but they were a set where events took place, rather than the principal characters. Now, however, the houses had become so valuable to people who already lived in them, and so expensive for people who had recently moved into them, that they had become central actors in their own right. This happened at first slowly, gradually, as average prices crept up through the lower hundred thousands, and then, as people from the financial industry discovered the area, and house prices in general began to rise sharply, and people began to be paid huge bonuses, bonuses that were three or four times their notional annual pay, bonuses which were big multiples of the national average salary, and a general climate of hysteria affected everything to do with house prices – then, suddenly, prices began to go up so quickly that it was as if they had a will of their own. There was a sentence that rang down the decades, a very English sentence: “Did you hear what they got for the house down the road?” Once, the amazingly big figure under discussion involved sums which just crept into the ten thousands. Then they were in the multiples of ten thousand. Then they were in the low hundred thousands, and then in the high hundred thousands, and now they were in seven figures. It began to be all right for people to talk about house prices all the time; the topic came up in conversation within the first minutes of people speaking to each other. When people met they held off the subject of house prices with a conscious sense of restraint, and gave in to the desire to talk about them with relief. It was like Texas during the oil rush, except that instead of sticking a hole in the ground to make fossil fuel shoot up from it, all people had to do was sit there and imagine the cash value of their homes rattling upwards so fast that they couldn’t see the figures go around. Having a house in Pepys Road was like being in a casino in which you were guaranteed to be a winner. If you already lived there, you were rich. If you wanted to move there, you had to be rich. It was the first time in history this had ever been true. Britain had become a country of winners and losers, and all the people in the street, just by living there, had won. The proprietor of 51 Pepys Road, Roger Yount, sat at his desk at his bank, Pinker Lloyd, doing sums. He was trying to work out if his bonus for 2007 would come to a million pounds. At 40, Roger was a man to whom everything in life had come easily. He was six foot three, just short enough to feel no need to conceal his height by stooping – so that even his tallness appeared a form of ease, as if gravity had, when he was growing up, exerted less effect on him than on more ordinary people. The resulting complacency seemed so well-deserved, and came with so little need to emphasise his own good fortune relative to anyone else, that it appeared like a form of charm. It helped that Roger was good-looking, in an anonymous way, and had such good manners. He had been to a good school (Harrow) and a good university (Durham) and got a good job (in the City of London) and been perfect in his timing (just after the Big Bang, just before the City became infatuated by the mathematically gifted and/or barrow boys). He would have fitted seamlessly in the old City of London, where people came in late and left early and had a good lunch in between, and where everything depended on who you were and whom you knew and how well you blended in, and the greatest honour was to be one of us and to “play well with others”; but he fitted in very well in the new City too, where everything was supposedly meritocratic, where the ideology was to work hard, play hard, and take no prisoners; to be in the office from seven to seven, minimum, and where nobody cared what your accent was or where you came from as long as you showed you were up for it and made money for your employer. He was a popular boss, who never lost his temper and was good at letting people get on with things. That was an important skill. A skill worth a million quid in a good year, you would have thought… But it was not straightforward for Roger to calculate the size of his bonus. His employer, a smallish investment bank, did not make it straightforward, and there were many considerations at work to do with the size of the company’s profits overall, the portion of those profits made by his department, which traded in foreign currency markets, the relative performance of his department when compared with its competitors, and a number of other factors, many of them not at all transparent, and some of them based on subjective judgments of how well he had performed as a manager. There was an element of deliberate mystification about the process, which was in the hands of the compensation committee, sometimes known as the Politburo. What it boiled down to was, there was no way of being confident about what the size of your bonus was going to be. Sitting on Roger’s desk were three computer screens, one of them tracking departmental activity in real time, another being Roger’s own PC, given over to email and IM and videoconferencing and his diary, another tracking trades in the foreign exchange department over the year. According to that they were showing a profit of about £75,000,000 on a turnover of £625,000,000 so far, which, although he said it himself, wasn’t bad. Simple justice, looking at those numbers, would surely see him awarded a bonus of £1,000,000. But it had been a strange year in the markets ever since the collapse of Northern Rock a few months before. Basically, the Rock had destroyed itself with its own business model. Their credit had dried up, the Bank of England had been asleep, and the punters had panicked. Since then, credit had been more expensive, and people were twitchy. That was OK as far as Roger was concerned, because in the foreign exchange business, twitchy meant volatile, and volatile meant profitable. The FX world had seen a number of fairly self-evident one-way bets against high-interest currencies, the Argentinian peso for instance; some rival firms’ FX departments had made out like bandits. This was where the lack of transparency became a problem. The Politburo might be benchmarking him against some impossible standard of profitability based on some whizz-kid idiot, some boy racer who had pulled off a few crazy unhedged bets. There were certain numbers which couldn’t be beaten without taking what the bank told him to think of as unacceptable risks. The way it worked, however, was that the risks tended to seem less unacceptable when they were making you spectacular amounts of money. The other potential problem was that the bank might claim to be making less money overall this year, so that bonuses in general would be down on expectations – and indeed there were rumours that Pinker Lloyd was sitting on some big losses in its mortgage loan department. There had also been a well-publicised disappointment over their Swiss subsidiary, which had been outcompeted in a takeover fight and seen its stock price drop 30 per cent as a result. The Politburo might claim that “times are hard” and “the pain must be shared equally” and “we’re all giving a little blood this time” and (with a wink) “next year in Jerusalem”. What a gigantic pain in the arse that would be. Roger moved around in his swivel chair so that he was looking out the window towards Canary Wharf. The rain had cleared and the early-setting December sun was making the towers, normally so solid-looking and unethereal, seem momentarily aflame with clean gold light. It was half past three and he would be at work for another four hours minimum; these were the months during which he would both leave the house before the sun had risen and get home long after it had set. That was something Roger had long since stopped noticing or thinking about. In his experience, people who complained about City hours were either about to quit, or about to be sacked. He swivelled back the other way. He preferred to face inwards, towards “the pit” as everyone called it, in honour of the trading floors where people yelled and fought and waved papers – though the foreign exchange trading department couldn’t be less like that, as 40 people sat at screens, murmuring into headsets or at each other but in general hardly looking up from the flow of data. Roger was not personally ambitious; he mainly wanted life not to make too many demands on him. One of the reasons he had fallen for and married Arabella was that she had a gift for making life seem easy. That, to Roger, was an important talent. He wanted to do well and to be seen as doing well; and he did very much want his million-pound bonus. He wanted a million pounds because he had never earned it before and he felt it was his due and it was a proof of his masculine worth. But he also wanted it because he needed the money. The figure of £1,000,000 had started as a vague, semi-comic aspiration and had become an actual necessity, something he needed to pay the bills and set his finances on the square. His basic pay of £150,000 was nice as what Arabella called “frock money”, but it did not pay even for his two mortgages. The house in Pepys Road was double-fronted and had cost £2,500,000, which at the time had felt like the top of the market, even though prices had risen a great deal since then. They had converted the loft, dug out the basement, redone all the wiring and plumbing because there was no point in not doing it, knocked through the downstairs, added a conservatory, built out the side extension, redecorated from top to bottom (Joshua’s room had a cowboy theme, Conrad’s a spaceman motif, though he had started to express a preference for all things Viking, and Arabella was thinking about a redesign). They had added two bathrooms and changed the main bathroom into an en suite, then changed it into a wet room because they were all the rage, then changed it back into a normal (though very deluxe) bathroom because there was something vulgar about the wet room and also the humidity seeped into the bedroom and made Arabella feel chesty. Arabella had a dressing room and Roger had a study. The kitchen had been initially from Smallbone of Devizes but Arabella had gone off that and got a new German one with an amazing smoke extractor and a colossal American fridge. The nanny flat had been done up with a separate pair of rooms and kitchen, because in Arabella’s view it was important to have that feeling of cut-offness when she, whoever she was, had boyfriends over to stay; the nanny’s quarters had a smoke alarm so sensitive that it would go off in response to someone lighting a cigarette. But in the event they didn’t like having a live-in nanny, that sense of someone under their feet, and there was something naff and Seventies about the idea of having a lodger, so the flat was empty. The sitting room was underwired (Cat 5 cabling, obviously, as all through the house) and the Bang & Olufsen system could stream music all through the adult rooms of the house. The television was a 60in plasma. On the opposite wall was a Damien Hirst spot painting, bought by Arabella after a decent bonus season. Leaving out the furnishings but including architects’, surveyors’ and builders’ fees, the Younts’ work on their house had cost about £650,000. The Old Parsonage in Minchinhampton, Gloucestershire, had also not been cheap. It was a lovely building from 1780, though the outside impression of Georgian airiness and proportion was undermined by the fact that the rooms were smallish and the windows admitted less light than one might expect. Still. Their offer of £900,000 had been accepted and then gazumped for £975,000 so they had had to regazump and it had become theirs for a cool £1,000,000. Renovation and general tarting up had cost £250,000, some of it in lawyers’ fees fighting the utterly pointless minutiae of the listing restrictions (it was Grade II). The tiny subsidiary cottage at the end of the garden had come up for sale and they felt it was essential to buy that, given that as things stood it was a little too cosy when friends came to stay. The vendors, a surveyor and his boyfriend who were secondhomers themselves, knew they had the Younts over a barrel, and with prices surging everywhere had gouged £400,000 for the tiny cottage, which turned out to need another £100,000 of work for structural issues. Minchinhampton was lovely – you can’t beat the English countryside. Everyone agreed. But going there for your year’s major summer holiday was a little bit dowdy, Arabella felt. It was more of a weekend place. So they also went away for two weeks in the summer, taking a few friends and, on alternate years, inviting either Roger’s or Arabella’s parents for one week out of the two. The going rate for the sort of villa they had in mind seemed to be £10,000 a week. Any flights would be taken business class, since Roger thought that the whole point of having money, if it had to be summed up in a single point, which it couldn’t, but if you had to, the whole point of having a bit of money was not to have to fly scum class. They had on two separate occasions, on good bonus years, hired a private jet, which was an experience from which it was hard to go back to queuing for your luggage… Then they would go away again, sometimes at Christmas – though not this year, mercifully, Roger felt – but more often either in the middle of February or for the Easter holidays. The exact dates depended on the timing of Conrad’s break at Westminster Under School, who were ferocious about only taking breaks during approved times – a little too ferocious, Roger thought, about a five-year-old boy, but that was what you paid your £20,000 a year for. The other costs, when you began to think about them, added up too. Pilar the nanny was £20,000 a year out of net income – more like £35,000 gross once all the pissy employment taxes were allowed for. Sheila the weekend nanny was another £200 a time, adding up to about £9,000 (though they paid her in cash and they didn’t pay her for holidays, unless she came with them, which she often did; or they would get another nanny from an agency). Arabella’s BMW M3 “for the shops” had been £55,000 and the Lexus S400, the principal family car, which was used by the nanny on the school run and play dates, was £75,000. Roger also had a Mercedes E500 given him by the office, and on which he paid only the tax of about 10 grand per annum; though he hardly ever used it and made a point of preferring the Tube, which, leaving the house at 6.45am and returning at about 8pm, was bearable. Other things: £2,000 a month on clothes, about the same on house stuff (shared between the two homes, obviously), tax bill of about £250,000 from last year, a need to make a pension contribution “well into six figures”, as his accountant put it, £10,000 for their annual summer party, and then the general hard-to-believe expensiveness of everything in London, restaurants and shoes and parking fines and cinema tickets and gardeners and the feeling that every time you went anywhere or did anything money just started melting off you. Roger didn’t mind that, he was completely up for it, but it did mean that if he didn’t get his million-pound bonus this year he was at genuine risk of going broke. At number 51 Pepys Road, Mrs Arabella Yount, who had once read a book about how women were better than men at multitasking, was doing four different things at the same time: she was putting up some shelves in the tiny storeroom she liked to call her pantry; she was looking after her two lovely children, Joshua and Conrad; she was shopping for clothes over the internet; and she was making plans to give her husband a nasty fright. Two of those tasks Arabella had subcontracted to other people. The shelves were being put up by her Pole, Bogdan the builder, whom she had started using after a recommendation from a friend and had now adopted as her own. He worked twice as hard as a British worker, was twice as reliable, and cost half as much. Something similar could be said about Pilar, their Spanish nanny, who was looking after her two boys, Conrad and Joshua. Arabella had got Pilar through an agency. She had a qualification in childcare (in fact had a degree), a valid driving licence, could cook, didn’t mind doing her share of the housework, got on famously with Maria the cleaner, which was good because otherwise it could be a bit embarrassing on the two days they were both in the house, and, most importantly – it went without saying that it was by far the most important – was just heavenly with her two boys. There was only one problem with Pilar, which was that she was going to be leaving them to go back to Spain. That was scheduled to happen just before Christmas. Pilar had told Arabella weeks before, very decently giving a full three months’ notice. A new nanny would begin work in the new year, but the Younts would be without any childcare over the holidays. When she had realised that and begun to think about it, Arabella had the initial flickering of an idea. For some time now, almost everything about her husband had made Arabella cross. It had begun with the birth of Conrad, eased off a bit after he got to his second birthday, then got much worse when she was pregnant with Joshua, and worse still after he was born. Joshua was now three years old and Arabella was as cross with her husband as she had ever been. The shorthand term for what she felt was “competitive tiredness”. She felt she was so tired that she could not think or see straight; she felt that she began the day tired, thanks to the broken and shallow sleep she had been having now for, literally, years, and got more tired as the day wore on, and that there were times when she was running on, as she put it, “sheer adrenalin”; but that when her husband came home from work he had the temerity to act as if he was the one making all the effort, as if he was the one who had, by the time he got home, the right to sigh and put his feet up and talk about what a tiring day he had had! Blind! Oblivious! He didn’t have a clue! The idea Arabella had had was quite simply to vamoose and leave Roger to it for a few days, with no warning. He could learn about looking after the children and the house by doing it for a few days, solo. While he was doing it, Arabella would be at X. X was nowhere specific, not yet, and yet Arabella had very specific ideas about X. It was going to be a luxury hotel, somewhere not exhaustingly far from London, with a spa. Arabella was not contemplating running away for ever. She couldn’t possibly leave Conrad and Joshua. The point was to give her husband a nasty shock. Ideally, the shock of his life. He had no idea, no idea, of the burden actually involved in looking after the children and running the house. No idea. Well, this would. bloody well give him an idea. Arabella was going to go away, without warning, for three days and during that time she was going to be completely out of contact with home. Her husband would have no idea where she was – she could be in Reykjavik, or on Mars. Beside Arabella on the floor was a pile of perhaps 20 hotel brochures. In addition the web browser on her computer had six different screens open. The current most promising candidate was a hotel in the New Forest which offered a residential package starting at £4,000 for the two of them, though the nicer-looking package, which included a daily massage and pampering, was £5,300, not unreasonable, Arabella felt, for what it was. The idea of luxury, even the word “luxury”, was important to Arabella. Luxury meant something that was by definition overpriced, but was so nice, so lovely, in itself that you did not mind, in fact was so lovely that the expensiveness became part of the point, part of the distinction between the people who could not afford a thing and the select few who not only could, but also understood the desirability of paying so much for it. Arabella knew that there were thoughtlessly rich people who could afford everything; she didn’t see herself as one of them but instead as one of an elite who both knew what money meant and could afford the things they wanted; and the knowledge of what money meant gave the drama of high prices a special piquancy. The tricky thing could be friends: you needed friends who felt the same way. And who had the money to act on the feeling. Luckily, Saskia was one of them. She had been dumped by her shit of a husband 18 months before but had cleaned him out in the divorce so she was more than good for her share of it. For this sort of adventure she was perfect. Clicking around the website, Arabella thought this New Forest package looked by far the strongest candidate yet. They had availability. She picked up her mobile phone, flipped it open, and said “Saskia”. The phone rang four times. “Babes!” said Saskia, who was 37. “Darling!” said Arabella, who was also 37. “I think I’ve found somewhere down south. Shall I read you all the porn or just book?” “Darling, you know I trust you.” “Big kiss.” When Roger had something important on at work, he did something that he never told people about because it was so feminine-sounding: he made a huge deal of his washing and grooming in the morning. He showered and shaved as usual, shampooed and conditioned his hair; then he moisturised with a face mask which he left on for 10 minutes, trimmed any stray nose or ear hair, rubbed some oil into his legs and chest, took some vitamins, took some artichoke pills for his liver, did some stretches, went downstairs in his dressing gown and ate a bowl of microwaved porridge. Then he dressed in his best clothes: his softest, lushest Savile Row shirt and its matching tie, a pocket square, antique cufflinks Arabella had found on eBay, the suit he’d had made bespoke after a bonus, the handmade shoes and underneath it all, the slinkiest secret of them all, his special lucky silk underpants, brought back by Arabella from a shopping junket to Antwerp. The paradoxical effect of all this pampering was to make him feel fortified, defended, ready for trouble. It was thus armoured that, on Friday December 21, Roger went into the conference room at Pinker Lloyd ready to open the envelope that would tell him what he would be getting for his bonus. In the room was Max, the head of the compensation committee. Junior employees receiving their bonuses would tend to have more than one person in the room, in case they flipped out in a bad year, which meant that they had to have more than one person in the room in good years too, so that the number of people in the room didn’t become an immediate giveaway as to the size of the bonus. Heads of department got more credit than that. When Roger had been more junior, by this point he would already have known the tenor of the bonus meetings – what kind of mood music was being sent out about bonuses in general. So you would be braced for a downer or psyched about a good year. Now he had no warning. No point trying to pick up cues in body language from Max; he did deadpan for a living. His form of deadpan was smiley and let’s-be-friends. “Roger!” Max said, pointing at the seat opposite. “Max,” said Roger. “Petra well? Toby and Isabella?” “All good,” said Max. “Arabella? Conrad?” – and then there was a half-a-beat or quarter-of-a-beat pause while he stretched for the name; which meant that Roger had won this exchange. “Joshua?” “Fit as fleas,” said Roger. “You know what they’re like about Christmas. They go mad, can’t get enough presents, impossible demands. And of course the children are excited about it too.” Max reached into the leather folder in front of him and took out an envelope. Roger, who had been feeling cool and even-tempered in his silk knickers, felt his heart rate and blood pressure shoot up. A pound sign followed by a one with six zeros, one with six zeros, one with six zeros. Two with six zeros? No, that was greedy. One with six zeros. “Good year for the department,” said Max. Yesssssss! “The figures speak for themselves.” Yesssssss! “As you know, it isn’t always straightforward to, ah, parse the relevant figures from our competitors, so the comparison can’t be exact, but we are confident that your department’s performance is in the top quartile for the sector.” Roger knew that, or strongly suspected it, but it was still good to hear. “Your personal evaluations are strong. The compensation committee is of the view that your performance overall is strong.” Yesssssss! This wasn’t million-quid talk. This was two million, maybe more. Could he be heading for two and a half? A quarter of the way to 10 million pounds. He and Arabella might even have sex! “There is of course a context for all this,” Max went on. Now, for a smaller man than Roger, a man with less steady nerves, this might have been a warning note, an incitement to panic; maybe, even, an invitation to think about missed mortgage payments, promised but unbought diamond necklaces, the deferment of holiday plans; because to a lesser man than Roger, Max’s words might have sounded awfully like a “But”. Roger, however, was a veteran of Pinker Lloyd assessments. This was getting on for his 20th. He knew that, just as a judge delivering a summing-up likes to make both sides in court shit themselves before reaching his conclusion, a member of the compensation committee likes to have you thinking about bread and water before he gives you a villa in Poggibonsi with a line of cypresses down the drive, a small vineyard, and a heated swimming pool. Actually there was something to think about there. Minchinhampton was fine but, as previously noted, could be seen as dowdy, and it only took one wet summer to put you permanently off the whole holidays-in-England thing. A bonus of £2.5 million would, once he’d paid for all the things he had to pay for, salted some away in the pension and VCTs and all that, leave him with a fair few quid left over. It was said you could get somewhere pretty habitable on Ibiza for a million quid. Worth thinking about. Roger’s attention had only wavered for a moment, but when he got his focus back, Max was saying, “…and of course the context for this is not just the wider problems in the industry, the cloud no larger than a man’s hand and all that, and the repricing of insurance and swaps. That’s just the general weather. In addition, there has been the difficulty we have been having with our Swiss subsidiary.” And all of a sudden, just like that, Roger felt his bonus beginning to shrink. This was not mood music, this was an actual, genuine, no-bones-about-it “But”. “…goes beyond routine volatility into areas of genuine loss. Once the extent of our subsidiary vehicle’s exposure to the US market in insecure securitizations was fully known, in particular the fact that those losses are still not precisely assessed, though known as reaching into the ten figures in euros…” Max was telling him that the bank had lost a couple of hundred million euros this year. This was through their Swiss subsidiary’s exposure to subprimes. Well whoop de flipping doo. Roger stopped listening. He was getting it in the arse, and didn’t need to know the details. Max talked on for a bit more and then the moment came when he slid the envelope across the table. It was clear that his bonus was going to be minute, could even be as little as his annual pay of £150,000. In practical terms, that would be the same as being dragged out the back of the office and finished off with a bullet in the back of the neck. Roger opened the envelope. It was stuck down, and for a moment he felt a flash of irritation at the prats who ran the bank, the kind of people who didn’t know the convention about hand-delivered letters, that they were never stuck down, on the basis that it was an implied insult to third parties handling the letter; the convention was that among gentlemen you could rest assured that private correspondence would go unread. But these nouveau twats had no idea about anything like that. He took out the piece of paper. His bonus for the year was £30,000. He knew that there was no point saying anything; that it would do no good to cough and splutter and remonstrate. He had been the person on the other side of the desk and was fully informed of the futility of saying or doing anything in protest. And yet he found himself saying: “But… what… it isn’t… contribution, billions… fundamentally not fair… when I think of what I’ve done… basic pay… not a question of greed but of necessary…” What was the point? There was no point. Roger stopped talking. The white noise began to seem loud; then it went quiet; then it got louder again. Roger felt his stomach twitch, and then churn, and then he had a strange sensation in his oesophagus, accompanied by a gust of something that was like nausea. Then he realised that it was, in fact, nausea. He felt sick. Actually, he more than felt sick, he was going to be sick. Roger slowly rose to a crouching position and leant forward over the table. He nodded at Max. He turned and left the room. There might have been people in the corridor; he didn’t notice and didn’t care. The lavatory was 10 paces away. Roger just made it to a cubicle and then he threw up, three times, so hard that it made his stomach muscles ache. When Roger finished, he lowered the lid of the toilet and just stayed where he was, kneeling on the floor. Wasn’t this great? Wasn’t this perfect? It was funny to think of all the occasions in a man’s life, all the different contexts, when he was sick. It must add up to hundreds of pukings. Yes, thought Roger. I’ve been sick hundreds of times. There’s a whole thesaurus to describe it. Talking to the great white telephone. Parking a tiger on the pavement. Blowing chunks. But this was different from all the other times he’d thrown up, because on all those other occasions, once he’d been sick, he felt better. From The Telegraph