Un-freaking-believable: a 31-year-old fraudster costs one of the world's top banks $7.1 billion, making it the largest bank fraud in world history.
For some reason, this story reminds me of something a journalist friend once told me. She had been a general assignment reporter early in her career, and was interested especially in Washington politics. But she went into business reporting, and was assigned to cover the world currency markets for a wire service. She told me this completely changed her outlook on the way the world works.
"Once you really understand how the currency markets work, it's like the scales fall off your eyes," she said (and I'm paraphrasing a conversation that took place more than 10 years ago). "You start to realize that what you thought was true really isn't. You think what the president says is what most matters on any given news day, but it's really not. So much of what really matters in the way ordinary people live their lives depends on decisions made by currency traders and financial speculators around the world. Nobody elects these people. Nobody pays a lot of attention to them. What they do strikes most people as incredibly boring. But it is way, way more consequential than you can possibly imagine."
I've never forgotten that. My friend, who is still working in financial journalism, spoke as if she'd had a secret revealed to her. Both of us were inclined toward politics and culture, and stayed away from business and economics as if it were a mystery religion. But she penetrated it, and it rocked her world.
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I'm curious -- anyone have suggestions of books, resources, etc. for a lay person like myself interested in getting a "world-rocking" education on the currency markets?
Although, a banal and mainstream education on currency markets would probably serve better than "world-rocking," now that I think about.
"Some senior City figures said the "positions" were so huge that dumping them on one day could have been enough to trigger Monday's stock market meltdown, the worst since 9/11." (Martin Luther King holiday)
Folks this is the kind of catechesis Cardinal Egan couldn't buy with a sackful of indulgences! No one paid any heed to Greenspan's "Irrational Exuberance" (aka Moralistic Therapeutic Deism) critique of the irrational dearth of light being generated by all that heat. So, how do capital markets explain "the problem of evil"? How do the Central Bankers reconcile the loss? Demand a sacrifice from us all, that's how. Cutting the earnings (interest) on any capital we have saved, while writing down ("forgiving") any negative equity all those prodigals may have wracked up. Now we know how the elder son felt in the parable, right?
This is a salutory lesson here is Cheap Grace - the "positions" (aka "bets") on the derivatives traded in the currency futures are worth no more (or no less) than the phsychic capital folks attach to them UNTIL real evil enters in, and everyone starts looking for the "real" capital they put their faith in.
So too atheistic secularism (communist or capitalist) since the Enlightenment - we've divorced our lives from the Eternal Life our Creator has endowed us with, we've created "derivatives" and trade in them instead. God's economy reckons with the "real" currency of Caritas, in his Divine Wisdom he permits evil to teach us the folly of our ways...
Any society that restricts the free flow of charity in the public square (Catholic Charities impeded by "ant-discrimination" statutes) or more fundamentally denies man's inate God-given ability to comprehend His natural law by imposing a State-hegemony-derived dictat of legal fiction (the tyranny of relativism) is living in the cloud cuckoo land Goethe's Faust imagines himself to have been raptured away to at life's end. Christopher Marlowe's Dr. Faustus was a lot closer to Augustine's original heretical antagonist - the Exonomy of Grace demands an eternal debtor's prison, Hell is real.
Double entry accounting makes a lot of sense - for every sin we owe a reckoning, and Christ's mercy will ransom all who ask for it, since his current account is infinite, offered at the altar at every Mass, but those who prefer to carry a tab at the local payday lender with their empty promises of prosperity around the corner, haven't reconciled their earthly treasures with their "positions" in Heaven, heck who needs double-entry book keeping anyhow? Islamic finance seems to work just as well, and the liquidity of sovereign investment funds is good enough to pay the bills right (what price human freedom, eh, an atheist Communist Yuan or Royal Arab riyal has the same purchasing power no?)
NO! its purchased at the price of your souls....
>>>Posted by: clare krishan | January 24, 2008 3:50 PM
Applause - a splendid rant indeed!
Yup. I have spent the last two years learning economics in grad school and reading the Financial Times and let me tell you, it has moved me in a leftwards direction. (Before that I was also mostly interested in politics and culture.) Take the example of when Lula was elected, markets pulled out capital like crazy, to stem the flow their central bank jacked up interest rates which means a lot of pain in the real economy.Although this subsided pretty quickly, it is shocking to look at the data, and think this all happened because some investment types were spooked that a center-leftist won an election.
Travel to Asia to learn how hated George Soros is by people. Many people in Asia dislike George Bush, but during 2004 when I told acquaintances how Soros was spending millions against Bush, they always had a look that said, "Maybe I've got this Bush guy wrong."
On the other hand, people give too much credit to actors in the market. At the end of the day, they have far less power than any government in the world. If they act unethically and abuse their power, it is far more likely the market will deliver their comeuppance than for governments to change. One can't make the perfect the enemy of the good.
Also, one cannot discuss the markets without considering the Federal Reserve. Oil prices might be high from some speculation, but they will also be too low due to speculation at other times. What is pushing the price higher is cheap money. Anytime you see a market consistently out of whack (such as our trade deficit with China, oil prices, home prices, stock prices in the 1990's and in the 1930's) it is not a free market. A more powerful entity is affecting long-term trends, and only a printing press can distort reality without ever paying the bill. A George Soros can act powerfully in a moment of time, but even he can't control events for any considerable length of time.
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