Going Rogue?

Matt Taibbi talks to David Shushter about the latest banking scandal.

Swiss financial services company UBS has admitted that a “rogue” trader has run up a loss of $2 billion dollars in unauthorized risky trades. The 31 year old trader Kweku Adoboli who worked in the bank’s London exchange as director of the now ironically named Global Synthetic Equities Trading team, was arrested yesterday morning at his apartment.

It seems Adoboli has since retained the law firm of Kingsley Napley, which previously advised Nick Leeson, the hot shot derivatives broker whose fraudulent, unauthorized speculative trading caused the collapse of Barings Bank in the 90’s.

Taibbi takes issue with the characterization of a “rogue trader” as a reason for this latest crisis, arguing that it’s indicative of a systemic problem. According to Taibbi, “`rogue traders’ are treated like bad accidents… But rogue companies are protected at every level of the regulatory structure and continually empowered by deregulatory legislation giving them access to our bank accounts.”

The root of the problem, he explains in Rolling Stone, is that investment banker’s brains are not wired for dull commercial bank business of taking consumer deposits and making conservative investments.

In fact, investment bankers by nature have huge appetites for risk, and most of them take pride in being able to sleep at night even when their bets are going the wrong way. If you’re not a person who can doze through a two-hour foot massage while your client (which might be your own bank) is losing ten thousand dollars a minute on some exotic trade you’ve cooked up, then you won’t make it on today’s Wall Street.

At one time commercial banks and investment banks had to remain separate entities as mandated by the Glass-Steagall Act of 1933. Today, however, because of Gramm-Leach-Bliley Act of 1998 they can be combined. In Taibbi’s view, this marriage of investment banks and commercial banks has proven to be nothing short of disastrous.

“The influx of i-banking types into the once-boring worlds of commercial bank accounts, home mortgages, and consumer credit has helped turn every part of the financial universe into a casino,” he writes.

World Air Traffic

A very cool video showing the global air traffic patterns over the course of a day to the accompaniment of the classic pop tune “Fly Me to the Moon.”

Many thanks to Brad Dillman for highlighting this on Twitter.

p.s. For best effect, be sure to hit the full screen option.

Haiti: Satan’s Playground

In case you thought Pat Robertson’s remarks about Haiti were an aberration, here’s Dr. Wesley Stafford, president of Compassion International (“one of the world’s largest and fastest growing Christian child development organizations”) and host of the Christian radio program Speak Up With Compassion ®, talking recently to Mullah Dobson’s Focus on the Family advocacy group about the horrific devastation in Haiti…

To recap Dr. Stafford’s remarks for the record:

This is a nation that you can literally feel the evil in it. Haiti has been a disaster in almost every way long before this ever struck. And it is a nation, between you and me, I guess, that Satan has had absolutely free reign in that nation. And while the missionary effort and the church effort has been enormous, this is a nation that you can literally feel the evil in it.

Well, maybe he’s correct:

The Royal Caribbean Cruise Lines’ ship Independence of the Seas went ahead with its scheduled stop at a fenced-in private Haitian beach surrounded by armed guards, leaving its passengers to “cut loose” on the beach, just a few kilometers from one of the worst humanitarian disasters in the region’s history.

Sort of a perfect metaphor for the global economy.

Scalia on Globalization & the Law

Fora TV has picked out one of the most provocative extracts from Justice Antonin Scalia’s lecture to the American Academy in Berlin, here concerning the role of the judiciary vis-à-vis natural law, which is a highly contentious point, but just one of many raised in the somewhat lengthy talk.

Should you have the time, it’s worth listening to the whole thing, if for nothing else than the Q&A at the end which is predictably entertaining (which is where this clip came from). Whatever one thinks of Scalia’s legal opinions, he’s most certainly not dull or unfunny.

Working with the Grain

The unfortunately named Prof. Donald Nutbeam explains that while many oppose the global spread of companies like McDonald’s and Coca-Cola, their widespread logistics and distribution network could actually be leveraged to improve global health.

Complete video of the panel discussion at Fora TV

The “Post-Industrial” Economy

That actually seems to be quite an apt term, all considered, but should the emerging system perhaps be more accurately described as “neo-feudalism” or “debt peonage” as so-called renegade economist Michael Hudson suggests?

On a semi-related note, let me highly recommend a book that I’m thoroughly enjoying at the moment — Après l’empire by Emmanuel Todd. It’s marvelously illuminating.

Striking Against Globalization

This story has appeared on a few left-wing/progressive blogs, but funnily enough it hasn’t seemed to have hit the radar of the Bloggin’ Tories — which is rather odd given their penchant for rabid union-bashing and their fondness for the wonders of neo-liberalism, the virtues of “free market” economics (*cough*), and the super-terrific benefits of globalization — I mean, after all, who wouldn’t want their wages ratcheted down to a “sustainable” level so they’re more on par with workers performing similar tasks in China, Peru and other parts of the developing world?

Or perhaps even they aren’t so blinded by their dysfunctional ideology not to recognize the corporate management of Vale Inco for the greedy rotten douchebags they are in this particular case.

The Commanding Heights

Part One: The Battle of Ideas

Recently, I stumbled across a documentary series that had appeared on PBS about seven years ago called The Commanding Heights: The Battle for the World Economy. The film is based on a book by Daniel Yergin and Joseph Stanislaw, first published in 1998 as The Commanding Heights: The Battle Between Government and the Marketplace That Is Remaking the Modern World, which attempts to trace the rise of free markets during the last century, as well as the process of globalization.

The documentary’s website at PBS and Wikipedia entry both provide a wealth of information on the thesis of the book and film, so I won’t bother reinventing the wheel here in that regard. Save to say that it’s very supportive of free-market capitalism, taking the view that “globalization” is generally beneficial on balance in terms of narrowing economic gaps and fostering wider prosperity. Despite being what some might call “neo-liberal” in its stance, the authors of the book somewhat implausibly claimed that there’s no ideological support for capitalism, only the pragmatic fact that the system works better than any other. Much like Churchill’s famous quip about democracy, I guess. Even so, the film expresses some concerns about the possible end of the current era of globalization if inequality in economic growth remains high, and if Third World nations are not offered the proper opportunities and incentives to support capitalism.

I’ve watched this couple of times now and seemed to come away with different impressions each time. Maybe that’s a result of viewing it in a sort of disjointed way. Whether you agree with the largely pro-globalization premise of the authors/filmmakers, it’s very informative (although by no means comprehensive or definitive) as a backgrounder to the subject.

The Revolution Will Be Televised

According to some reports, upwards of 100,000 protesters are planning widespread disruption of next week’s G20 summit being held in London. Fears of violent clashes has forced Scotland Yard to cancel all police leave and London has been put on high alert.

The G20 is the largest gathering of world leaders in the UK for more than half a century and will cost British taxpayers more than £20 million to stage with much of the money being spent on an unprecedented security operation.

Anarchist Chris Knight, a 66-year-old professor known as “Mr. Mayhem” and leader of a group at the heart of the demonstrations is calling for guillotining bank executives and targeting London firms that fail to turn off their lights to commemorate “Earth Hour” with threats of break-ins and property damage.

Knight “strongly suggests bankers should stay away from the City next week. If you’re thinking of coming in, my advice is don’t. People are incandescent about your bonuses and the way you’ve destroyed their lives. We plan to lay siege to the financiers who have brought us into this recession and who continue to pursue policies that are destroying our planet”.

As for the police, “if they want violence, they’ll get it”, adds Knight, a former member of Labour’s extreme Left-wing Militant Tendency who now calls himself a revolutionary communist. “We intend to be peaceful but if they press their nuclear button, I’ll press mine. It’s called mutually assured destruction’. If Gordon Brown deploys his riot police, or sends in his agents provocateurs to start trouble as an excuse to attack us, all hell will break loose.”

Makes you wonder why the G20 leaders didn’t just have a videoconference.

“Freedom Tower” Nixed

Well, at least in name. The Port Authority of New York and New Jersey, which owns the site, says the signature 1,776-foot skyscraper replacing the towers destroyed on Sept. 11, 2001, will now be officially be known as “One World Trade Center” and the building will be marketed under that name. Port Authority Chairman Anthony Coscia says the building’s legal name is “the one that’s easiest for people to identify with.” Hmmm.

Perhaps adding to the deeply ironic symbolism involved here, the change came after board members voted to sign a 21-year lease deal with Vantone, a Chinese real estate giant closely affiliated with the PRC’s Communist government, which will become the first commercial tenant at Ground Zero.