By Lena Deros – The term “bankster” has become trendy recently due to the various financial problems governments and economies are facing. Problems arise and somehow get resolved, but only through financial ruses.
In the 1980s, I was working with one of the world top Investment Banks in Europe. At that time hedge funds, derivatives and all kind of paper products were traded through the capital markets and were the top theme for any sophisticated investor.
One of the most legendary traders in the bank at that time was recruiting the best minds in math and physics from the top schools in the UK to train them and create financial products (derivatives).
The profits that the boys were accumulating were out of proportion to what a normal business person or executive could earn in a normal business, especially as they were just coming out of the university.
Of course, they were all ecstatic. The simplified procedure was based on the real economy. They were creating products 3 or 4 levels over the real assets and these were bought and traded by hedge and pension funds. Since trading was done in big amounts, and on a daily basis, the profits were excellent, but the result when viewed from the perspective of the economy, was that strong minds were deprived from producing real services and products. Instead, profit was created through paper trading. This generated claims to real wealth without creating one potato.
This enhanced inflation and created bubbles. Of course, no banker, financial consultant, or investor wanted to use their logic at the time as they were all plunging into the flood of increased profits without thinking of the immediate future.
It took some years until the surprised sector began to see what it knew all-to-well to be wrong as it was going bankrupt. Everyone was looking for a scapegoat, and most of the solutions were, again, based on 2+2=5 logic. more>