What have we learnt so far from Jérôme Kerviel’s trial about the big questions? Do his superiors know more they pretend about the transactions he was doing? Another question we would like to know the answer: is entering fictive operations in the reporting system to hide his positions –as Kerviel says– a common manoeuvre in the traders’ world?
Is it because I had the opportunity to be a trader on futures markets that I don’t really care about the answers? I don’t know. What amazes me on the other hand is why, during the first two weeks of the trial, no one asked what I think is a crucial question, a question that I’d call “à la Lord Adair Turner”, from the name of the president of FSA (Financial Service Authority), British markets controller, who wondered, not long ago, if everything in the financial system was useful from a social point of view.
My question, which doesn’t seem to be of any interest to anyone but me, is the following: how useful were Kerviel’s transactions to his bank? Because, really, choosing the “long” position hoping the price will raise or the “short” one, hoping the price will go down and with “big” amounts of money, what’s the use?
Let’s take a simple example. Kerviel made a bet for Société Générale that could bring in –let’s be “moderate”– one million Euros. And let’s say, to put it simply, that BNP Paribas made the opposite bet. This time, Kerviel wins: Société Générale wins a million Euros and BNP Paribas loses a million Euros. Is it useful in anyways? The answer is yes because dividends and gains of the winner raise and decrease for the loser.
What about us? We don’t really care about that. Except… except if one of the two banks consistently wins while the other one consistently looses. In that case we, as tax payers, will have to save the bank which lost with our own money, bank that of course is “too big to fail”. In others words, what all little Kerviels of the world are doing, and the banks with them is just creating a systemic risk. So, in the end, is that “socially useful”?