{"id":225,"date":"2010-07-07T11:12:39","date_gmt":"2010-07-07T10:12:39","guid":{"rendered":"http:\/\/www.pauljorion.com\/blog_en\/?p=225"},"modified":"2010-07-07T11:12:39","modified_gmt":"2010-07-07T10:12:39","slug":"kerviel%e2%80%99s-trial-in-france-the-question-no-one-is-asking%e2%80%a6","status":"publish","type":"post","link":"https:\/\/www.pauljorion.com\/blog_en\/2010\/07\/07\/kerviel%e2%80%99s-trial-in-france-the-question-no-one-is-asking%e2%80%a6\/","title":{"rendered":"Kerviel\u2019s trial in France: the question no one is asking\u2026"},"content":{"rendered":"

An English translation of Kerviel: la question que personne ne pose<\/a> posted on my French blog on June 21st. Many thanks to E-blogs<\/a> for the translation. <\/p><\/blockquote>\n

What have we learnt so far from J\u00e9r\u00f4me Kerviel\u2019s 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 \u2013as Kerviel says\u2013 a common manoeuvre in the traders\u2019 world? <\/p>\n

Is it because I had the opportunity to be a trader on futures markets that I don\u2019t really care about the answers? I don\u2019t 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\u2019d call \u201c\u00e0 la Lord Adair Turner\u201d, 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. <\/p>\n

My question, which doesn\u2019t seem to be of any interest to anyone but me, is the following: how useful were Kerviel\u2019s transactions to his bank? Because, really, choosing the \u201clong\u201d position hoping the price will raise or the \u201cshort\u201d one, hoping the price will go down and with \u201cbig\u201d amounts of money, what\u2019s the use? <\/p>\n

Let\u2019s take a simple example. Kerviel made a bet for Soci\u00e9t\u00e9 G\u00e9n\u00e9rale that could bring in \u2013let\u2019s be \u201cmoderate\u201d\u2013 one million Euros. And let\u2019s say, to put it simply, that BNP Paribas made the opposite bet. This time, Kerviel wins: Soci\u00e9t\u00e9 G\u00e9n\u00e9rale 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. <\/p>\n

What about us? We don\u2019t really care about that. Except\u2026 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 \u201ctoo big to fail\u201d. 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 \u201csocially useful\u201d?<\/p>\n","protected":false},"excerpt":{"rendered":"

\n

An English translation of Kerviel: la question que personne ne pose<\/a> posted on my French blog on June 21st. Many thanks to E-blogs<\/a> for the translation. <\/p>\n<\/blockquote>\n

What have we learnt so far from J\u00e9r\u00f4me Kerviel\u2019s trial about the big questions? Do his superiors know more they pretend about the transactions he was […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","footnotes":""},"categories":[5],"tags":[23,24,26,25],"class_list":["post-225","post","type-post","status-publish","format-standard","hentry","category-economy","tag-adair-turner","tag-kerviel","tag-speculation","tag-trader"],"_links":{"self":[{"href":"https:\/\/www.pauljorion.com\/blog_en\/wp-json\/wp\/v2\/posts\/225","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pauljorion.com\/blog_en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pauljorion.com\/blog_en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pauljorion.com\/blog_en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pauljorion.com\/blog_en\/wp-json\/wp\/v2\/comments?post=225"}],"version-history":[{"count":4,"href":"https:\/\/www.pauljorion.com\/blog_en\/wp-json\/wp\/v2\/posts\/225\/revisions"}],"predecessor-version":[{"id":229,"href":"https:\/\/www.pauljorion.com\/blog_en\/wp-json\/wp\/v2\/posts\/225\/revisions\/229"}],"wp:attachment":[{"href":"https:\/\/www.pauljorion.com\/blog_en\/wp-json\/wp\/v2\/media?parent=225"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pauljorion.com\/blog_en\/wp-json\/wp\/v2\/categories?post=225"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pauljorion.com\/blog_en\/wp-json\/wp\/v2\/tags?post=225"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}