Panorama: Reckless gambling

james armstrong james36armstrong at
Mon Dec 20 22:11:41 GMT 2010



I’m trying to make sense of the financial crash.

After watching Panorama to-night  to my own satisfaction I can see the big


The investment banks – the gambling off-shoots of B of
Scotland, Lloyds, Coutts, etc  employ
market analysts who are paid to  make


The analysts put in very long hours.  They work for the money market –banks.

Their ‘product’ which they focus on all day long, and
week-ends too,  talk about, and ‘invest’,
 is money.


Their job is to make their 
banks-  money.


The way they  carry on
business , from hour to  hour, is
analyzing and comparing different portfolios of money-making schemes and doing
deals in the market. .


They are incentivised to make the banks money by being given
a share of  each investment.  They make huge deals for their bank and when
it makes money they get a  share of the very
big money.   Bizarrely if they lose their
banks money, it does not hit their pocket. 


Here’s` where the madness kicks in.


The sums they deal with are astronomical. They have a unique
unit for counting their rewards, called  ‘P.M.’s’     They count their bonuses and salaries and
annual take in 'P.M.s'


A P.M. is equivalent to the Prime Minister’s salary of
£146,500 per annum.

They mentally note their rewards, and talk about it, as ‘two
or three P.M.’s ‘

Their world is then, Money. They no longer live in our
world  of ‘the economy’ which is based
on  buying and selling,  making and consuming ‘goods’ – the world  of ‘housekeeping’ which is what the Greek word
‘economy’ means.


At this point madness creeps in.  They admit  
themselves willing to stab colleagues in the back- to  ensure their own  money keeps flowing oin.    This euphoria fosters the delusion that they
and their world can carry  on for ever
making money.


Eventually reality creeps in.  The scale of their gambling (which they call
work) leads to enormous risks.   The
whole is summed up by Will Hutton as 

reckless gambling”

“We have still not addressed the central issue, so  this model is destined to repeat itself with
a massive bubble and crash every 25 years”   
W Hutton. 

So much from to-night’s Panorama programme.

I can just add my own take on a couple of points.

The  ‘money’ which the
analysts are concerned with and which they 
invest– is  not the same ‘real
money’ which I deposit or take out of the bank. 
 Thye have invented  a new kind of money. The City boys invent the 
'money' with which they gamble.  They make
bargains buying and selling ‘assets’ which some years ago became the tradeable
version of mortgages and debts -  think
of them as I.O.U.’s which the banks claimed they were owed and had a certain
value. (An uncertain value as it turned out)

But when the system collapsed in 2008 , the tax-payer used
‘real’` money  to pay the banks debts. 

Even then I don’t think it is really, real money, but just more
credit which the government borrowed by issuing Gilt edged securities-
government bonds on the Bond Market. 

However, the money the government used is one stage more
real than the bankers’ money  and has to
be earned and paid in taxes by workers in the real world.


Sanity resides however  in the real world.  Panorama  did a poll and found that 71 per cent of the
population don’t trust banks.        




















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