Friday, Jan 25, 2008
How investment banks gamble with your money
MoneyWeek: Rogue trading: a very stupid explanation of the crash
According to some sections of the press, we can all stop worrying about the state of the financial markets now. We've found the culprit: Societe Generale's rogue trader, Jerome Kerviel. Except it's not that simple at all - and rather than reassure investors, the story flags up yet another reason to worry.
Posted by mary @ 11:08 AM (295 views) Add Comment
3 Comments
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1. drewster said...
"fraud which goes unnoticed during the good times, rapidly becomes obvious when things start to turn bad"
- just as we saw with subprime lending and mortgage fraud
2. happyrenterz said...
Daily Mash reports that Kerviel lost the money after betting that the French were about to stop being rude, lazy, arrogant bastards.
3. shipbuilder said...
The reason why a root cause is hardly ever identified in any disaster (and hence why we repeat them) is because a convenient scapegoat is wheeled out to take the heat and we breath a sigh of relief and miss the bigger picture. It's standard political practice - 'look over there at that person (invariably someone of a very low standing within the overall system, or a sacrificial lamb at a high level) - they're the cause of all our issues, but don't worry, the system is OK.'
We've seen it with immigrants, those on benefits, single mothers, Gordon Brown, Northern Rock, a low level manager who didn't encrypt data and now Peter Hain and this fella at SG - all pushed into the spotlight while the fundamental faults remain in the shadows.
As a general rule, if everyone is braying about a single person or single group causing a larger issue, you can guarantee that attention is being shifted away from more systemic problems.
Sub-prime for example - apparently the reason for all our financial woes - or is it? Is the reason not that sub-prime was allowed to exist in the first place, or even that an atmosphere and culture of greed is so entrenched that it was considered acceptable practice?