Tag Archives: speculation

VUB, “Stewardship of Finance” Chair, twelfth lecture, 14th March 2013

Twelfth lecture of the « Stewardship of Finance » chair. It is the notion of risk and the different forms of risk sharing which allow the building of a reasoned catalogue of all types of financial instruments and analysing them in an ethical perspective.

Is it admissible that taxpayers were required not only to pay for all the losses due to defaulting borrowers but also for all the bets between financiers which turned sour (a larger amount by a factor of ten)?


Translated from the French by Tim Gupwell.

We learned on Tuesday that the fifth largest British bank, Standard Chartered, had promised the New York State regulator that it would pay a fine of 340 million Dollars for illegal transactions with Iran. The matter is not yet closed, as four other American regulatory bodies continue to pursue their enquiries on this subject.

There was a danger that the affair, dating back to last week, would get bogged down, and it had already started to poison relations between British and American financial authorities (to which I alluded in my article on the 12th August: The Goldman Sachs Affair: Corrupted Justice, or an Untouchable Financial Sector? )

What is the cause of this sudden urgency from Standard Chartered? Its image in the eyes of the public!

Similarly, on Tuesday, a Financial Times article informed us that a wide array of banks: the German Deutsche Bank, Commerzbank and the Austrian Volksbanken have stopped selling products to their clients which speculate on food commodities. Not – they chant in unison – because speculation has an impact on prices (“ALL research proves the contrary!”), but because the poorly informed perception of the public leads them to imagine all sorts of underhand goings-on, and this need to be taken into consideration.

Once again: an image problem.

What does all this prove? That ‘poorly-informed’ public opinion is starting to make waves and to have some effect.

I read all this yesterday during the brief pause for Assumption, and it made me want to get up early this morning and talk to you about it: after all, it is not every day that the financial world offers us some crumbs of comfort!!…and in particular that our unceasing efforts to contribute our penny’s worth of malicious gossip to “the badly informed public perception” is at least starting to bear some fruit

“No Matter What We Do, It Will Still Be The Same”

An English translation by Bernard Bouvet of my « QUOI QU’ON FASSE, CE SERA LA MÊME CHOSE ! » of March 11.


77% of you, my dear blog readers, not all of you, but a “comfortable majority” of you, happens to be French. Your country is now in full “election showbiz” mode, and the mainstream media, in the press, on the radio, on television, are full of it, news on why the moment is “crucial” and “how to vote”, are front and centre.

Still, you are perfectly conscious of the fact that whatever which way you vote, either for one of the two candidates facing each other in the second round, or someone else, as a protest vote favouring either the extreme-left or the extreme-right, or a blank vote, or even if you don’t bother voting, all that is of no importance since the result will be the same: either actively or passively, you will elect or help elect a candidate who will either immediately set out to carry out the program of any such “troika” (EU, IMF, ECB) forgetful of the meaning of “democracy” – if it ever understood it – or a candidate who will, after a perfunctory six month delay, carry out the exact same program, in “former president Miterrand’s fashion”, following a “valiant” last stand.

No doubt, that last stand will turn out to be “valiant”, but again, a fat lot of good it’ll do you.

One can sense the weariness, the discouragement pervading your comments on this blog since the election campaign started.

Throughout history, particularly in the 19th century, that kind of hopelessness had led to several social change attempts from within the system. For instance, it gave birth to an array of communal groups, rendered vulnerable from the very start, to some extent, by an exaggeratedly idyllic view of human nature, but mostly due to the hostility of an outside world, a world which had stood unchanged. How many a grandiose project of a cooperative, of a social workshop, of abolishing money, of an alternative currency, did not succumb to the assaults of those from the outside who had retained their, let’s call it… “business sense”? Virtue, as Saint-Just realised far too late, can only be exercised within a protective institutional framework, otherwise, it is purely and simply trampled under foot.

What to do? Those unanswered questions require resolving, if the goal for a preferred tomorrow is to achieve a decent, livable world. A world where, in retrospect and in contrast, we will realise what a nightmare the previous world had been that we contended ourselves with.

Indeed, those 19th-century associationists, collectivists, socialists, communists, anarchists, even enlightened liberals such as Saint-Simon and Auguste Comte, posed those unanswered questions, but still, they remained unresolved. The 20th century, for its part, has had its share of false solutions ending in atrocities.

In France, the Revolution of 1848 gave birth to numerous projects founded on generosity but soon failing, due to the instigators’ lack of a proper analysis of principles. Proudhon laments the “premature birth” of the Revolution. But aren’t all revolutions always, and by definition, born prematurely, otherwise they wouldn’t even have been considered as necessary. The excuse has been abused throughout human history, of having been caught unprepared in the face of an “unpredictable” collapse, even if predicted with some accuracy by a few.

Last Sunday, I launched a five-part series called: “The Remaining Unresolved Questions”. I have only been back home last night, following a series of speeches in Belgium and Holland, with no time yet to read your contributions to the debate, but I am readying myself to do so.

Anyway, those “Remaining Unresolved Questions” are already well-known. What I am expecting of you, is for a few (the rest of the troops fill follow suit in no time) to initiate an undertaking of resolving those questions. A precise list will take shape along the way, but in the meantime a few questions can be clearly formulated: “How do we smash the wealth-concentrating machinery?”. “How do we terminate speculation?“. “How should newly created wealth be redistributed?”. “How do we re-invent an economic system neither based on private property, nor on “growth”, both recognised as life destroying on our planet?”. “How do we eliminate work, without reducing to misery those who lived from it?”. Etc. Etc.

Time has come to define in new terms this insane world that – because of weariness and because of discouragement – we have contented ourselves with until now.

So, have a nice day, get set, ready, go! Use your pens, emails, phone calls, your arms, your legs… whatever works!

Kerviel’s trial in France: the question no one is asking…

An English translation of Kerviel: la question que personne ne pose posted on my French blog on June 21st. Many thanks to E-blogs for the translation.

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”?