Editorial
Rogue Trading Is Not the Problem
UBS trader Kweku Adoboli supposedly lost £1.3bn and is now under arrest. People wonder how one individual can inflict such large losses on bank-run trading firms over and over again; the real question is why doesn't it happen more often?
In this article, I will try to provide a frame of reference and a more specific analysis of Adoboli's actions and how they could happen. Frame of reference first.
The underlying problem, of course, returns us to central banks and the farcical distortions that stem from the assumption of a money monopoly. Everything else stems from this. Without central banking monopoly money printing, the world's bank bubble would not exist. The literally hundreds of money center banks around the world – all busily distributing central bank printed paper money – would vanish. Poof.
A digression: According to the UK Daily Mail that has run a surprisingly informative series of articles on the Adoboli situation, there was speculation that he "may have been caught after the Swiss Central Bank unexpectedly devalued the franc last week, producing mammoth losses on one of his currency trades."
This is another issue. Large money center banks like UBS are the flotsam and jetsam riding on top of the central banking money wave. But add to money printing itself the ability of banks – central banks using governmental authority – to manipulate currencies as they like, and one soon creates a noxious brew.
UBS is nominally a Swiss private bank but actually it is an entirely Anglosphere institution. Its profit centers and business methodology are virtually indistinguishable with that of large banks on Wall Street, or those who call London's "City" home.
The billions that UBS is able to make are derived from the peculiar position of large banks at the intersection of central bank money flows and public distribution. As soon as one institution – a central bank – controls money printing, abuses will occur. The corruption is built in and locked in.
What is clever about the current system is that the corruption is positioned as salvation. Large money center banks are "necessary" to distribute central banking funds. But imagine if YOU were handed a franchise to distribute money. Imagine the graft such a privilege entails.
Of course, if things sour, as they do, inevitably, your friends at the central bank will print more money to ensure that your positions and larger businesses are not destabilized. In fact, one could speculate that such banks as UBS encourage "rogue trading" because essentially there is no penalty for the larger institution. Rogue trading never seems to emerge when banks MAKE money, only when banks lose it.
And when banks are losing money, the sky is suddenly seen to be falling. A famine may affect millions, but heaven help us if a big bank gives an indication of distress. Immediately, the world's entire economy is threatened with "contagion." Such banks cannot be allowed to go bust. Wow. A good job if you can get it.
The system is controlled from top-to-bottom. It begins with the privilege of money printing, which is supervised and controlled by only a few impossibly wealthy, elite banking families. Around these families cluster controlled corporations, religious personages, media moguls and military and political leaders – the enablers. They are drawn to this power structure like bees to honey.
We can see that money doesn't exist anymore – or not at the top, "elite" level. Central banks can print money at will, as they have divorced it from an underlying commodity, and this enables the top banking families to pursue their insane agenda of one world government.
They have all the money they need, as they can print it, and they have used the money to pervert civil society from the top down. In order to instigate world government, these families use dominant social themes – fear-based promotions – to induce the middle class to give up power and wealth to global institutions that supposedly have solutions to these non-existent problems.
Global warming, peak oil, over-population, pollution, political tensions, wars, fake crimes, general resource depletion, food and water scarcity – anything that seems to affect basic survival is seized upon by the Tavistock Institute and other elite think tanks and configured for maximum fear. The promotions are rolled out one after the other in endless waves.
In order to ensure that people don't notice that an entirely new sociopolitical paradigm has replaced the society of yesterday, the elites have to retain the outward show of civil society. The elements of yesterday's world are thus kept in place as the families recreate a simulacrum of civil society to take the place of the one that has been hollowed out.
The fundaments of society have been retained, though they are stripped of significance. Paper money used to be the receipts for gold and silver; they have been retained. Rulers of all sorts used to exercise real power; they have been retained. Countries used to battle one another over power and wealth; wars have been retained. Banks used to store gold and silver; they have been retained.
Of course, when it comes to banks and money, the charade is increasingly complex though the underlying reality is far simpler. Money is to be seen as something valuable even though it is not. Those who can print as much money as they want – and change the valuations of currencies as they choose – labor mightily to convince everyone else that their paper tickets are of the utmost value.
Every part of the system is comprehensively designed to impress upon people that their constantly depreciating assets have intrinsic value. There is no doubt that every part of the financial universe – from stocks to bonds to the value of money itself – is comprehensively manipulated.
But the charade continues, as it must. And Adoboli has now become another victim. He is a modern sacrifice to ensure once again that people are impressed with the idea that the electronic digits that the power elite has substituted for money are indeed valuable.
This is why one hears so little about the notional US$750 TRILLION that supposedly exists in the derivatives markets. The numbers keep going up, but they are so phenomenally huge that people cannot grasp them. They are an indirect, if not direct, result of the world's phony money system.
None of this – not the banks, not the trading, not the "financial products," not the casino mentality itself – would exist without the fundamental fraud of paper money divorced from an underlying asset. This cannot be admitted. Must not be admitted. Every scandal must be seen within the context of "regulation." The system itself is the problem, but the controlled mainstream media will reject that statement outright.
What is needed? More ineffective supervision; more laws; more useless punishment. The Daily Mail articles provide us with a good example of the tenacity of this meme. There is nothing that cannot be fixed by proper regulatory adjustments and punishment of the guilty. Eventually, these big banking institutions shall "learn" how to manage their affairs – if the government cracks down hard enough.
It's quite a job, however. Doesn't happen overnight. According to the UK Daily Mail, in fact, the new trading scandal provides graphic evidence that the world's leading investment banks "have learned nothing from Lehman Brothers's collapse three years ago." Sir John Vickers, the Daily Mail tells us, (whoever he is) recently proposed separating "casino" activities from the ordinary and more important business of taking deposits and making loans to consumers and businesses.
And new culprits have been identified, as well, with the proviso that the "government" must take action. While Adoboli may have been done in by Swiss currency manipulation, the Daily Mail also reports on speculation that many of his bad bets were placed in the area of exchange-traded funds. Here's some more from the article:
Originally, these funds allowed ordinary investors to buy 'bundles' of related stocks, from house builders to gold, with the fund controllers selecting which individual shares to buy. But a new, more opaque and more sinister form of ETF has evolved. With the so-called 'synthetic ETF', instead of buying real stocks in real companies, fund managers simply make bets on whether shares in a particular sector will rise or fall.
Such gambles can yield fabulous profits – or catastrophic losses. It is these 'synthetic' funds that are thought to have been central to the UBS scandal. And other banks are in serious danger of similar disaster. In the wake of the credit crunch investment in all forms of traded funds has ballooned by 40 per cent a year. By the end of 2010 some £760billion was invested in ETFs.
This boom caused the Bank of England to warn in June that 'potential financial stability issues arise from recent trends in exchange traded funds'. Unfortunately, the Bank's caution looks to have gone unheeded. As one senior regulator told me last night if you hold a 'synthetic' gold ETF 'who knows what is in it'.
The Daily Mail sheds light on how Adoboli might have managed his "unauthorized trading." In fact, he may have started back in 2008, hiding his losses and then trying to make the money back. By last month, he apparently had lost some $1.5 billion and "had sold positions that would cost a further $500million."
There were triumphs, apparently. He may have made up to US$20 million on a single trade, adding to his totals by a refusal to hedge. It carried on for three years. "He continued to take risks, gambling the money of UBS bank," one UBS official says severely.
The bottom line is this: today's world of "financialism" encourages excessive risk taking and extreme leverage. In fact, while the banks maintain an outward illusion of conservative practices, their internal policies are anything but. This is just another example of a trader being thrown under the bus in order to protect the bank's image. Adoboli will be victimized, yet he was no doubt doing exactly what he was enabled to do. The whole system is built on leverage. It is in fact a giant Ponzi scheme.
Ask yourself, dear reader, is it really the "money of the UBS bank" that Adoboli supposedly lost? Is it really money at all?
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Posted by turtle on 09/18/11 11:00 PM
Shorting derivatives (futures, swaps, chit derivatives... ) is not immoral and may be necessary if hedging a long physical position but exactly because one CAN short derivatives, means THERE IS NO NEED TO SHORT PHYSICAL except to drive down the physical price ie. manipulate the market ie. break the law. Shorting physical is therefore immoral because the intention of doing it is to commit a crime. It should be banned across all asset markets.
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Posted by Wrusssr on 09/17/11 11:00 PM
Good, clear, simple writing about a complex subject is the hardest writing of all to write. When read, it forces the reader to think. This article should be emailed to the globe, posted online with accurate translation links, and updated when appropriate.
Outdid yourself, Anthony. Extremely important piece.
Thank you.
Reply from The Daily Bell
Thanks.
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Posted by Agent Weebley on 09/17/11 07:04 PM
@ DB
Ah yes, "a money monopoly" . . . monopoly money. Thanks for the plug! (You too, Dave Jr)
"But imagine if YOU were handed a franchise to distribute money. Imagine the graft such a privilege entails."
The key to that particular premise is that honesty cannot be a policy? . . . or that everyone must have a price? . . . or that selfishness rules?
That be piles of chits, I say.
http://youtu.be/PWlefu81dZQ
Oh, and DB, we have decided . . you guys can keep the whole $70 donation with our Metaforian thanks.
Agent Weebley
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Posted by Robert Eastman on 09/17/11 05:35 PM
Anthony's article IS EXCELLENT!... and bionic mosquito's comments add even more clarity. The illumination/understanding is growing brighter everyday as I read DB including the feed back. Maybe someday I'll actually "get it!"
This morning I was reflecting on the "Rothschilds' Investing Philosophy"... "BUY When The Blood Is Running In The Streets!"
Could this be the reason why we have "never ending wars?"
(People become so overwhelmed with fear/war... they will eventually "give-up everything they 'hold dear'... for next to nothing" in exchange for some relief/peace/security {false sense of}! Is this how the PTB slowly but surely seize control of "all the world's wealth?" ("Keep The Blood Running In The Streets!" says the Power Elite.)
Reply from The Daily Bell
Thanks. And Bionic Mosquito is often clear, even on his own blog.
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Posted by FrankHenry on 09/17/11 04:12 PM
Interesting info... the Ten Commandments was right, "Thou shalt not seal"...
"Thou shalt not bear false witness"... "Thou shalt not covet goods"... etc.
Just another Enron scheme, but bigger.
Keep informing/educating your reades.
Thanks and Good Luck
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Posted by Dave Jr on 09/17/11 03:56 PM
Right, it wouldn't be a problem if the man with the gun wasn't telling me that if I trade, and if someone is offering chit, I have to accept chit.
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Posted by bionic mosquito on 09/17/11 01:40 PM
It is an ingenious system set up by this cartel - simple, yet ingenious.
Create "chits" from nothing (you might call them FRNs, Euros, Swissies, whatever). Create as many as there is demand. As the price is always subsidized, demand is boundless. And all done in a self-contained cartel that needs NO interaction from the outside world in order to gain more chits - well no interaction except a state willing to spend money (that's a tough find).
Those within the cartel can trade these chits with each other - in fact, the more they trade, the more chits are magically created.
Although there is benefit to those in the cartel to trade some of the chits with those outside of the cartel (by providing loans, etc.), this activity is superfluous - done just to maintain the scam that the cartel is helpful to the general economy.
Meanwhile, members of the cartel continue to trade chits with each other - the raw material is virtually free, it can be duplicated at almost zero cost, and the entire activity can happen within the self-contained cartel. Imagine the bonuses that can be paid in a manufacturing company if raw materials were free and could be replicated infinitely - and all sales were to those who could create all the chits they want in order to buy.
This is where the rest of us get scammed - countless chits are created, all within this self-contained cartel. There is no production of anything useful to humanity (I wouldn't know a CDS or an MBS if it came up to me and bought me a cup of coffee). Yet, those in the cartel can create and use an infinite amount of chits in order to command the resources produced by those who make real stuff.
Imagine all the "stuff" in the world on one side, and all the people with their chits on the other - however a small handful of those people are in the "self-contained chit-producing" club. Tough luck for those who have to actually produce something in order to get a chit.
Of course, it wouldn't matter much if the producers could easily opt out of the system by using other chits of their own free will. But then this is where the enforcement arm of the cartel comes in... .
Reply from The Daily Bell
Very good ...
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Posted by Dave Jr on 09/17/11 12:40 PM
I would like to temper this statement. If I were to rent something from another, I have no right to sell it.
Reply from The Daily Bell
Yes, you do - if it is an agreed-upon transaction within a free-market context.
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Posted by Dave Jr on 09/17/11 12:36 PM
It is not the adiction to money that is evil, it is the addiction to other peoples money. Volume is not an issue.
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Posted by free on 09/17/11 12:27 PM
"Ask yourself, dear reader, is it really the "money of the UBS bank" that Adoboli supposedly lost? Is it really money at all?"
Great question Tony.
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Posted by gvanear on 09/17/11 12:19 PM
Why Shorting is immoral.
If I steal something from another and sell it, putting the money in my pocket, I am stealing, regardless of my intention to replace the item at a later date.
The owner of the item is robbed of it's value.
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Posted by jjkorman1 on 09/17/11 11:48 AM
UBS
Idiot child was short the Swizzie, ouch.
Procrustes at Large
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Posted by Don on 09/17/11 11:46 AM
"is it really the "money of the UBS bank" that Adoboli supposedly lost?"
Trace Mayor coined the term "power currency illusions" to describe common circulating paper festooned with shamanic rune (ie FRN$). Perhaps "an illusion of a power currency illusion" captures the essence of that lost by Adoboli.
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Posted by kenn on 09/17/11 11:18 AM
So the cabal of snakes are crucifying one of their own. The demise of the one for the profit of the many? Is it not obnoxiously obvious? The bank is as pure as the first snow, it's the muculent individual who is the blame. sigh...
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Posted by John Danforth on 09/17/11 11:09 AM
Great article, Anthony!
Thank you for driving home the point that paper is not money, it is corruption. It is the Biggest Lie of the last century.
As people use paper instead of money, the entire real value of the economy is stolen right our from under them.
And thanks for mentioning the nominal value of 'derivatives' loose in the world. This is the Elephant Dropping On The Living Room Carpet. Nobody dares mention it, but it drives all activities now, EVERYTHING revolves around it. Those derivatives are worthless now. And that Quadrillion or so is the number that the printers have to create in order to prevent the 'owners' of them from losing any claims against real wealth that those derivatives supposedly represent.
Because paper money is a con job at its core, the money-printers can't just print up a Quadrillion dollar bill and make it all right, or the victims will figure out the con, and the game will be over. So all the pretense revolves around printing it slowly enough to 'boil the frog', stealing the value out of our lives just slowly enough to prevent us from discovering the true nature of the crime they perpetrate on us. If they just do it slowly enough, and go through the rituals and incantations according to the script, they can blame us for our plight, and pretend to be our saviors.
The absurdity of the whole thing is almost beyond belief. We are like a Cargo Cult, going through the motions and praying for the kinds of results we used to see, but totally oblivious to the underlying reality. Undaunted by the fact that more shipments never arrive, we are convinced that it is through some fault of our own, and if we only refine the rituals and demand more sacrifice, the ship will come in.
This article could easily be expanded into a book.
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Posted by terrang on 09/17/11 10:27 AM
Excellent article.
Except clear headed observations of the ongoing crime scene are powerless to stop the criminals. The banksters have the brute power on their side.
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Posted by Frank on 09/17/11 10:06 AM
Wow, such a good article concisely articulating so many important points. I especially liked:
"The system is controlled from top-to-bottom. It begins with the privilege of money printing, which is supervised and controlled by only a few impossibly wealthy, elite banking families. Around these families cluster controlled corporations, religious personages, media moguls and military and political leaders - the enablers. They are drawn to this power structure like bees to honey.
We can see that money doesn't exist anymore - or not at the top, "elite" level. Central banks can print money at will, as they have divorced it from an underlying commodity, and this enables the top banking families to pursue their insane agenda of one world government."
The average voter needs to be aware of all of this stuff going on behind the scenes & behind the headlines. I'm sure they are not aware. Unless a "critical mass" (10% ??) of aware electorate is hit soon, everything will spin out of control and the system will likely collapse, which is probably just what the Power Elite want anyways. They won't be the ones to suffer the consequences of a collapse & will use the ensuing chaos to their advantage.
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Posted by alexsemen on 09/17/11 09:37 AM
Y
Dear Anthony, an intelligent man is to be seen when he put intelligent questions. (Alex)
At the end of your speldid analysis of really facts yout put a splendid question !
That is your ansewr too, and of course my answer because I could'nt get any other possibility .
Therefore my question:
there is some possibility to escape the de Central Banks or to dismiss this unnatural artifacts of the pathologycal minds : The CB( central banks ) !!??
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Posted by Alan on 09/17/11 09:07 AM
Yes I agree that the system has been totally perverted with the "approval" of to so called "leaders" of society with the intent to ensure that the "poor" get poorer while the "rich" rob them of everything. Unfortunately doing them in has not worked all that well in the past because it is just another bunch of thugs who take over and eventually develop even better methods of fleecing the people who actually create wealth, real wealth not he mythical stuff used as wealth these days. If Adoboli had been successful in gambling with the bank's mythical money, he would have been applauded, given a massive bonus and possibly been promoted.
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Posted by DwightMann on 09/17/11 08:54 AM
They should make it a law that he spends all that money he has made, or face death(imprisonment). I read an article yesterday that said a lot about people with the addiction to money, and I just want to share it with you all. . .
Jewish World Review
A Cultural Insanity
By Rabbi Abraham J. Twerski, M.D.
What is insanity? A minority of one. If one person has an idea with which no one else agrees, he may be thought to be insane. If many people share the same idea, it is considered normal.
I have worked with addicts for over forty years. The characteristic of addiction is that it is a bottomless pit. There is never a limit to the amount of alcohol or drugs they crave.
King Solomon said, "A lover of money will never be satisfied with money" (Ecclesiastes 5:9). This is no different from any other addiction.
A man consulted a psychiatrist. "What is your problem?" the doctor asked.
"I don't have any problems," the man answered.
"Then why have you come to see me?" the doctor asked.
"Because my family said I should," the man answered.
"What does your family think is the problem?" the psychiatrist asked.
"They think there is something wrong because I like pancakes," the man said.
"That's absurd," the psychiatrist said. "There is nothing wrong with liking pancakes. I like pancakes myself."
The man's eyes lit up. "You really do? Then you should come to my house. I have crates full of pancakes in my attic."
We will readily agree that this person is crazy. If you make a few extra pancakes and put them in the freezer to have ready for breakfast, that is normal. Pancakes have value as something to be eaten. When they are stored in crates in the attic, that is crazy.
Money has value when it can be used to buy things one wants. But if one has so much money that he can never use it all to acquire things, yet amasses more and keeps on adding to it, why is that any different from amassing pancakes in the attic? It is just that society has made the judgment that hoarding pancakes is crazy, but hoarding money is not.
If a person were to spend $3000 every day, he would spend one million dollars in one year. If he has a billion dollars, he would have to live one thousand years to spend it all. Yet, which multibillionaire is not engaged in increasing his wealth? Logical thinking will tell you that this is insanity.
An apocryphal story attributed to both John D. Rockefeller and John Paul Getty has a reporter asking, "Sir, how much money is enough?"
The multimillionaire famously replies, "Just a little more."
We may not have the desired degree of faith and we may put away some money for a rainy day. That is not insane. But we should not allow society's values to make us into addicts or into pancake stockpilers.
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