Friday, January 30, 2009
My pal Nassim (thanks to the incomparable Dave Lull for the links) has been upsetting people. I like his remark, 'I hate traders' and his view that the only function of derivatives is to rip off clients. I sort of gathered this when various City types used to tell me they were essential to 'smooth' markets, a construction obviously designed simultaneously to soothe and baffle. Nassim also says the banks have to be nationalised, an idea that upsets Frank. Frank and many others mistrust the competence of governments, reasonably enough in view of the postwar history of nationalisation. But I think Nassim is saying this because he believes banking is an industry that has gone entirely rogue. It cannot be trusted to redeem itself. The best evidence for this was (is?) their continued use of risk models that, outside banking, have been discredited for at least 20 years. Further evidence in recent days has come from the bankers who have started actually talking. They so plainly still don't get the enormity of what they have done that an enforced cull of all bank boardrooms may well be the only option. They are, as I suspected they would, behaving like Hitler in his bunker. He blamed the German people for not being good enough; they're blaming the entire non-banking world and then tossing us the condescending admission that they did 'make a few mistakes'. We may have to move quickly with this cull - Dick Fuld flogged a house to his wife for $100 to protect his assets from the assorted law suits flying his way. God knows what the others are up to.
Posted by Bryan Appleyard at 7:51 am