A former trader speaks about the 'mesmerising' trading floor and the sense of competition that pervaded everything
This monologue is part of a series in which people across the financial sector speak to Joris Luyendijk about their working lives....
"My advice to people dealing with the financial sector is: never buy anything that's complex. Because the more complexity the more opportunities there are to screw you over. I just can't get my mind around how banks can still call clients in the corporate world and say, look we've got this great idea that's going to make you a lot of money. I mean, what are they thinking? Nobody in the City [of London] can be trusted because they don't work for you, they work for themselves.
"I do wonder why there seem to be so many somewhat dishonest people in the bank, and why the most dishonest are often the ones to walk away with the most money. I suppose that on the way to the top there's negative selection and most normal decent people conclude: this is not worth it or I am not doing this for money."
"The system feeds on itself and I don't see anything changing."As Bill Black says, Gresham's dynamic at work. The bad drive out the good. And then get promoted up the corporate ladder.
"The system feeds on itself and I don't see anything changing."Why should it when it is government sanctioned?
If you have studied economics at the university level in the last 35 years, it is likely you were introduced to the concept of "asymmetrical information" and George Akerlof's famous 1970 article on markets for "lemons" (American slang for an automobile of terrible quality). The Nobel committee that awards the prize in economics singled out that article for special praise in deciding to make him a Nobel Laureate in 2001. The article discusses the implications of asymmetrical information in a number of contexts, but at least two of the contexts involved what criminologists call "control fraud" and a third involves the risk of fraud by borrowers.
Most of the examples Akerlof discussed involved fraud. The frauds he analyzes concern deceit about the quality of goods being sold or the borrowers' ability or willingness to repay a loan.
I have noted in many articles that the clan of economists has a primitive tribal taboo against saying the mystic "f" word out loud or even putting it in print, so Akerlof's article does not contain the word "fraud." His language, however, makes it clear that he is discussing fraud and how it can create what we now call a "Gresham's dynamic" in which bad ethics drives good ethics out of the market.
The theme of my article is to alert the reader to other variants of anti-purchaser control fraud in which the deception about the quality of the goods sold (or rented) affects safety, not simply the appropriate price of the bad quality goods. I use as my example the recent deaths of nearly 400, and over 1,000 injured, Bangladeshis when the building they were working in collapsed. I show that the same case is also an example of anti-employee control fraud.
The nature of the survivors' injuries is often horrific.The Huffington Post
