Marketplace New York bureau chief Heidi Moore discusses the breaking story of a rogue trader making $2billion in unauthorized trades at Swiss Banking Giant UBS.
I just got back inside after grocery shopping. While in the car I was listening to Brian Lehrer discuss this story with Heidi Moore. I really wanted to scream at the radio when Moore described the trader's transactions as "bets" and making larger "bets" to cover prior losses. This is not the language of finance/investment/economics, this is the language of the casino so it is little wonder that his "bets" were going to fail because they were not actual investments.
What has happened to bankers and even investment advisors when everyone casually uses casino language to describe what should be the language of finance/investment/economics? This isn't wagering, this is about putting your cash to work, not the one-time big score and if you think it is then you don't belong in the stock/securities/financial markets, you belong in the casino.
I suppose that the managers of UBS should consider themselves lucky that they only lost Two-Billion and not the entire bank with managers and traders who think that they are at the gaming tables playing with the shareholders cash.
Nouriel Roubini, among others, is calling for a return of those parts of the Glass-Steagall act repealed in 99. As one of the few economists who foresaw the 08 crash, he deserves more attention than those, such as Greenspan, who were blindsided by it.
The Obama administration had its FDR moment for making real change when it took office, but failed to act, and Obama's political epitaph is going to read "it was the economy, stupid!"
The Swiss have a culture of deliberately not knowing until they're caught red-handed.
All transaction of this size should be only allowed with the actual tranfer of the physical money. A large tractor trailer full. It is too easy when it is only numbers on a screen. Then people will notice.
I had unlimited signing authority when I was in senior management of a financial institution but the only way I could have exercised it without anyone "noticing" would have required fraud, forgery, etc.
Didn't we just read about the dangers of too much Testosterone in business like this?
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