Community
I have been watching unfolding events in the banking world with a sense of incredulity and rising trepidation. It's like watching a train crash in slow motion.
It just seems like it is one debacle after another. First we had the sub-prime meltdown which hit us last summer. All that followed by the SocGen saga, which only served to stress that both banks and bankers have been blinded by the "greed' word.
Now comes word of a massive scandal in the US in the so-called "auction-rate securities market". To make matters worse it is not your local one-horse backwoods banks, but some of the really big players - Citi, Merrill Lynch, UBS ...., who are the actors in this unfolding tale of blatant lies and duplicity.
Allegations such as "profoundly deceptive sales practices", "destroying evidence" and similar have left me with a feeling of deep unease. I cannot but wonder what is wrong with the banking system.
So one can imagine my absolute shock and horror when I read only two weeks ago in the Europe edition of the Wall Street Journal (1 August) under the headline "If it trades, they will play", that these self-same world-class banks are offering "investments" in anything. Even prior limitations to dealing in commodities that were traded in the futures markets have gone. Deals are apparently spreading to jet fuel and even chickens - and what is so absolutely frightening is that neither a single gallon of kerosene nor a single broiler actually changes hands!
We are now it seems into pure gambling - the word "speculation" is too tame to use here. No doubt the executives and some staff of many banks will profit handsomely from this new deception and the propensity of the public to be duped yet again.
But then, John Maynard Keynes in his "General Theory" wrote, "the game of professional investment is intolerably boring and over-exacting to anyone who is entirely exempt from the gambling instinct".
Something is certainly rotten in the world of banking ...
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Nick Green Director at Purple Patch Broking Ltd
22 August
Oleg Stefanet Chief Risk Officer at payabl.
20 August
Venkatesh P Co-Founder and Director at Maveric Systems
19 August
Welcome to Finextra. We use cookies to help us to deliver our services. You may change your preferences at our Cookie Centre.
Please read our Privacy Policy.