Wednesday, 4 February 2009

About Bankers

You are aware by now, after reading part I of these rants, how Silly Money can be generated against SUM0. It would never have surfaced without 100% contribution of banks, bankers and other financial entities. So today I shall talk about something that is even duller than money and economics... banks!

About banks...

Everybody knows banks and what they (should) do. Be aware though that only 20% of the world population has a bank account and fewer than that have a regular contact with such institutions. So the "everybody" is a bit biased towards the Western World. Banks are quite practical as they save our money. Saving our money does not mean the same as putting our money on savings, just keeping our money safe. That again saves space at home because we do not need a safe, lifting floor boards, or having a larger mattress with implications for our comfort sleep and back pain. Most banks will offer to keep our money safe for free. This looks promising... but there is a snag. Banks are full of... bankers.
I worked for one of the 4 biggest United Kingdom banks for four years (I was not a banker, please keep your stones!). I met a lot of bankers though, people in the high ranks of the corporation pyramid. All of them, without exception, share the same attributes. Bankers are extremely amoral, mostly ignorant, very naif, not streetwise. In my view a banker does not make any social or humanitarian commitments; a banker would have no problems giving $1 million to the WWF to help saving endangered species but would be very reluctant to become a member and make a commitment to pay $10 monthly "forever" for membership. It would never offer his know-how to that organization mostly because his know-how is of no importance for the organization. The same applies to previous academic knowledge and work experience. Most bankers that are in deciding posts in their banks, either ascended throughout the years from a cashier's position or landed there with (extra)ordinary qualifications. The MBA is the most common and it is irrelevant if it is a Harvard one or a Timbuktu one. There is no humanitarian, social, political and intellectual content in such degrees. You could hardly find bank's CEOs that have additional diplomas/degrees in subjects like Philosophy, History, Media... All (the one's that can) will show a plethora of acronyms after their names (PHD, MBA) but they will all be money related! And when you are placing your money safely in a bank you are not so safely letting bankers "deal" with it. Most bankers have been educated on a SUM0 environment (aged 50 plus) and have been totally outperformed and "outclassed" by younger workers that are making deals on the floors below, inventing new "products" and generating Silly Money every second. Bankers know nothing about it, cannot understand it. Workers with fresh MBAs have exactly the some (a)morals as their superiors. In those tall glassed buildings there is no one to tell "(Cough, cough), excuse me... I think what you are doing is wrong, it cannot be right, it does not look right, someone will have to pay for it later!"
I said above that I worked for a bank. I used to do payments investigations trying to recover money that my bank had mistakenly placed somewhere else. A couple of examples:
  • The case of CHF43 million (43 million Swiss Francs) that were transferred in error to a branch in Skikda, Algeria instead of Zurich, Switzerland (please don't laugh, don't ask!)
  • The case of USD140 million(140 million US Dollars) that were "lost" for 7 months in the bank's internal accounts. In spite of the intervention of top bankers no one was able to find that amount!!! until the investigation landed on my desk.
You should think that the bank would be more worried with 2. than 1. No! Wrong! On the day after 1. happened there was this frantic activity to recover the Swiss Francs as if they had been given away to Pablo Escobar (the international "baddie" at the time, replaced by Osama Bin Laden today). I contacted the Algerian branch involved and came across a very annoyed clerk. There was never the suggestion that the Algerian bank was going to "keep" the money. The guy was annoyed because he was now involved in a lot of red tape to be able to return the money. Can you imagine? He now had to write and seek permission from the Finance Ministry to execute the return, fill forms, write to the Head Office... It took 3 weeks only. Result! But every day I had messages from the top asking, why oh why oh why have we not received "our" Swiss Francs? A typical case of ignorance allied with arrogance and bullying as if they could have a say on local Algerian bank procedures and social interaction. After all the mistake was created by the bank in the first place and generated an incredible amount of extra work to a minor branch in a secondary Algerian town. On the contrary 2. $140 million?... in our New York branch? No problem we can live with(out) it for 7 months. I found it after 4 hours. It was in... Miami!
Banks should keep your money and would show a huge profit on a SUM0 environment every day, so you think. That is not the case. Banks hate closing the day with their accounts on profit as this means the money (mine, yours) is not being productive, is "dead", is not earning interest, is "unapplied". Banks' perception is that they should close their daily operations as near 0 as possible. Their ethos is to get rid of money as soon as possible. Then they are happy. How is this as a contradiction? We put our money in the banks for safety and the first thing they do is getting rid of it!
The second thought of the day is a contentious one and it has been discussed since "The Origin of Species" by Charles Darwin, published in 1859. I am applying this discussion to money.

Evolutionism vs. Creationism

Dick has a vegetable patch on his back garden. He raised some tomatoes, picked them, went to the market early in the morning and sold them for $10. He has a profit and the person who bought the tomatoes has a loss. SUM0 all over. On the way back he buys some bread and ham for $5 adds some of his extra tomatoes and makes 20 ham and tomato sandwiches. Before noon he goes to the local shop and sells his 20 sandwiches for $30. The shop prices the sandwiches at $2.2 each and sells 18 of them. Total money generated... $37.4. On the following day the shop lowers the price of the 3 remaining sandwiches to $1.1 each and sells 2 more. One goes to the bin. The final operation is $39.6. The shop as a profit of $9.6, Dick $35.
The above shows a creationist operation that is within SUM0 environment. The foundation of creationist economy is labour... it involves people's work, capabilities, intelligence, opportunity. If you check the Activity Sectors in the Financial Times or Wall Street Journal you see descriptions like Mining, Motors, Media, Telecoms, Retail, Beverages, Engineering, Tobacco, Travel... all these are ultimately creationist activities that rely on human work (either by using others or extracting from Mother Earth) to generate a profit. There is only one that falls out of creationism... Banking and Finance. This sector does mostly Evolutionism, rebranding money and presenting "products" created from their "hard work", publicising constantly that your money can GROW! This would not be too bad if Evolutionism would be SUM0 compliant! Unfortunately it isn't.
Countries who have a creationist economy do best and are "safer". China, Brazil, Germany, France, Saudi Arabia, Russia, Iran... Others that have a strong component of Banking and Finance and use strong evolutionist products are the ones that will suffer the most like the United States, United Kingdom, Japan, Dubai...
Recently the United Kingdom Prime Minister had one of the most bizarre comments. He said something like "We must support our financial institutions as our Financial Services sector accounts for 15% of our GDP!" This means that a lot of the United Kingdom GDP has been "made up" with Silly Money. The same applies for the United States. If you could take away the evolutionist component from these 2 nations GDP, they should have been in recession since the dotcom bubble burst more than 5 years ago. This recession is very old indeed.

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She's fit?

My apologies for this Julie... one day I may tell you the story.