29 August 2009

money (that's what I want)

Well as any of you who have shown the fortitude to hang around here for any length of time will know, one of my longstanding, seemingly irrational obsessions has been the growth of the financial services sector. We needn't go into the braoder "service sector jobs aren't real jobs" debate (if you believe that, then let me inquire whether you cut your own hair or take your own appendix out?) but the financial services sector has grown immensely in recent years.

The fear I usually expressed was that the system of international finance had grown so large and complex that no-one knew where the money went (so to speak), let alone how the whole thing functioned. Many people knew a lot about their particular piece of the sausage machine, but neither knew nor cared about the rest provided the profits kept rolling in.

The justification was that ever more complex instruments, derivatives and the like, were needed to keep the cash flowing for major infrastructure and industry projects that were becoming too expensive for "traditional" finance sources. Such as governments borrowing the money and then tendering out the work.

This then led to the need for highly numerate but morally bankrupt individuals to keep the whole machine turning. Well, they actually didn't need to be morally bnakrupt but the culture that seemed to pervade the whole system was that it was all about money, and mainly for the participants, not the recipients (ie the client), if you follow me. Thusly, night followed day, if you cacth my drift.

Anyway I am gratified beyond reasonableness to see that in the UK, the dialogue has gone all sensible. Of course The City of London had continued its dominance of much of the world's financial system but in doing so had grown beyond any sense of proportion. That's why bankers' bonus jokes constitute about 95% of the story lines in the cartoon

Anyway, cop this lot:

Smith’s invisible hand has fumbled the ball.

Some City activity has been not just useless but positively harmful — for customers, shareholders and taxpayers. To pretend otherwise and act all hurt is plain daft.

“Perversely,” he said, “the largest individual returns seem to flow to those whose job is to ensure that microscopically small deviations from observable regularities in asset price relationships persist for only one millisecond instead of three. These talented and energetic young citizens could surely be doing something more useful.”
Here it is
in its entirety. So enjoy

Oh, and a commenter used the nom-de-plume Henry Thornton, but the sentiments expressed don't totally match the rhetoric that usually emanates from our
home grown Henry. (Disclosure: I don't read there any more, but I'm sure they wouldn't be so dismissive of Adam Smith. But they are probably similar unimpressed with levels of corporate regulatory oversight. But then who isn't, as Mandy Rice Davies could possibly have eventually been led to say?

Finally, you do get a better level of journalism on these subjects in the UK than here, even when the stakes were so much higher and their loss of pride so much more profound, what?

1 comment:

iODyne said...

while musing on The Flying Lizards distracted me from the text, you slipped in Miss Mandy Rice-Davies brilliantly.

The Beatles version was pretty damn good thanks to John Lennon's great rocknroll voice.

back on the financial world, there's The Silver Bears a Michael Thomas novel which became a Michael Caine movie - Mafia plays Swiss banks at their own game; and night has followed the day for B.Madoff - the fashion mag Tatler has just run pages on his London office, even suggesting the wife was the brains, and we already read 3 issues of Vanity Fair on him. Their cover has been so intense I suspect they lost money themselves.

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