The US is sinking ... sinking ... sinking, page-82

Andy,

I haven't been following it that closely.

Some people in any industry do bad things, but most don't. My concern with the LIBOR and London Gold Fix issues is that in large complex trading books, the direction of transactions necessary for the sound management of the risk can easily be construed as attempts to push the market. Let an officious prosecutors loose in a swap book's trade records and they would have no trouble building a prima facie case against almost any bank, and I think that is what is happening. I am glade that I don't work in trading any more.


"I find it difficult to understand the very concept of a Rogue Trader such as Nick Leeson and Bruno Iksil (the London Whale) in such a well regulated industry."

This is an interesting topic. Under the Basel standards all banks have sophisticated systems for capturing trades, settling them, and measuring and controlling trading risk. These systems evolve and develop and are governed by varying levels of process discipline. The rogue traders are the bad eggs who identify the cracks and use them to hide unauthorised trades. If you had to navigate the detail of these systems and the astonishing detail in the configurations and data, you would be less surprised that such fraud is possible. It probably says something about the honesty of ordinary bankers, that there aren't more cases.


"Makes one wonder for such a traditional irrelevant barbarous relic Gold remains in great interest in the media!"

Sorry. But do you really treat the financial media seriously?