It's difficult not to reach for the nearest available cliché when answering that question – the heavy, summer night air on the boulevards, the discreet joy of ambling the squares and parks, the tiny eateries serving delicious food until early in the morning, the riot of colour and conversation that is the Left Bank, the urban street theatre where the passing crowds are actors and watching café society both audience and critic… And so on and so on.

Having lived there myself – I spent a seven-year chunk of my career as the personal investment editor of The International Herald Tribune – Paris means all that to me, and a great deal more. It means the place where we saw the first symptom of what could be the end of the old banking system, where there is a ambivalence towards privately owned businesses and where financial reality and fiction began to merge.

Let me explain.

I went back to Paris recently to chair a seminar for a credit card company that was getting cosy with its major clients. A day of strenuous schmoozing duly supervised, I sat out with a couple of industrial grandees on the pavement by a small café in the Marais district. We soon fell into the kind of mature post-prandial reflection whereby with just a few bold strokes of action, a policy initiative or two, and a couple of well received speeches and articles, the three of us could have righted all the wrongs of the modern financial and business world.

We discussed the paradox of French attitudes to private capital. On the one hand, the French have a reverential attitude to la vie privée. Private life, as represented by what goes on behind the drawn shutters of towns in La France Profonde over sleepy summer lunchtimes, is still sacrosanct.

The French public has consistently displayed disgust and revulsion as their president invited the press in to goggle at his newly married bliss. In business terms, this respect for the private way is reflected in the structure of French commerce, where private, family companies are celebrated.

But, paradoxically, the French have a problem with private equity, though the market is far more robust than it was.

Given "normal" credit market conditions it would be catching up with the UK and German markets fairly quickly. But the deal flow was very slow through the 1990s because of the perception that taking publicly quoted companies private was a form of corporate theft.

Even now, when any form of acquisition deal in Europe is seen as a minor miracle to be warmly applauded, the French remain reluctant to embrace the private equity model enthusiastically.

It was at this point I had a Eureka moment. During the day, I'd been asked whether it felt strange that a novel that I published earlier this year seemed to pre-figure the mighty crash in the financial markets. The answer, I realise, is that it's all to do with the French attitude to public and private ownership. Here, I need to digress a little. Let me tell you the tale and then I'll revert to why I've finally worked out why it predicted events with such uncanny accuracy.

Back in January, we had news of the Société Généralé fraud story. The news of $7 billion (Dh25.6bn) losses incurred by a sole, rogue trader had everyone rubbing their eyes in disbelief. Me, perhaps, especially: 10 days before Macmillan had just published Meltdown, which described exactly how such just a catastrophe could happen.

What was really unnerving was the way the real-world story ran in parallel with events in the novel. Meltdown prefigured the SocGen debacle in an almost literal way. Consider the narrative: a single, young, Paris-based trader loses billions.

The activity was hidden because of internal politics – connections with the IT and back-office departments and possibly outside collusion. Once the story broke in the book, the media latched on to the individual and he became a "rogue trader". The media blamed his activities for the extreme turbulence of the markets. Amid a rising tide of panic – exacerbated by hysterical reporting - the trader was sacked and then went missing.

This is an almost exact précis of what had been happening in the real world with SocGen and Jerome Kerviel, except that the derivatives play in the fictional version was in oil, not European stock indices. So how could the whole, sorry mess occur? The explanation lies in the human stories behind the markets. First of all, numbers become meaningless. After a while it becomes a game, a position to be traded until the book shows a profit, and the trader cannot let go – online poker for the global economy.

Concealment is another matter. Here, office politics kick in. If you know the systems and the people who run them, you can create a mosaic of partial information. And then there's the star system. Traders who make money become gods in their own little universe. Senior management doesn't question the golden goose or the cash-generative black box. They let the stars – and the lowly Kerviel was an aspiring star – set up their own departments. They want to believe in the stars. Management control and audits go out of the window.

Which brings me back to my Eureka moment. Meltdown started life some 12 years ago. I wrote the first version while living in Paris – because there was a rumour that a scandal of the Kerviel kind had already occurred. So I set to thinking how that could be, and imagined the circumstances. Kerviel got caught, and a market announcement had to be made this time round. But, I contend something similar happened to a French bank all those years ago – but as it wasn't quoted, the scandal got hushed up. So there we have it: that's la vié privée for you. That's something else that Paris means to me.


-- Martin Baker is a journalist, author and commentator on international business affairs