I’m running this clip of Satyajit Das for several reasons. First, it gives a very good big picture view of the problems with the Eurozone rescue fund, and is germane given that those concerns are coming to the fore (witness our post earlier today). Second, more generally, it gives readers a chance to see him in action (since he is based in Sydney, he doesn’t get the play he deserves). He’s direct and able to cut to the heart of an issue quickly (and he is used to good advantage in Inside Job).
Third, this serves as an excuse to tell you to buy his book, Traders, Guns, and Money: Knowns and Unknowns in the Dazzling World of Derivatives, if you haven’t done so already. It’s a classic precisely because it accomplishes the difficult task of making a complex subject accessible to laypeople, in this case the netherworld of derivatives.
Traders, Guns and Money is not only very informative, it was one of the few books in the finance realm that is actually funny (Das might prefer it to be called witty). Das is an engaging storyteller, drawing on a combination of his own experiences (camouflaged a tad so as to protect the innocent) and some of the high profile derivatives disasters. His opening tale, of an Indonesian noodlemaker’s efforts to recover from its derivatives misadventures, has some scenes in it that are simply priceless.
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It’s good that the fallacies of the EU stability fund are finally being discussed, especially as Ireland appears to be closer to trying to tap it.
The struture never made any sense. A structured fund to fix a financial crisis caused by … structured lending! Not to mention the absolute silliness of everyone bailing each other out. Unicorns pooping skittles from a bright purple sky.
Oh, but there will be armageddon. A quadrillion of derivatives will go poof in broad daylight. No counter-party will be able to pay. The dominoes are lined up…ready to go…but perhaps the PTB have a move or two left in them?
I agree. He’s extremely articulate and talks in a no-nonsense way that is easy to understand.
I especially liked his phrase “reality gap.” It’s too bad that most of us have to live in the real world and can’t live in the make believe world of the current crop of bankers and world leaders.
We are all but *derivatives* to their musings, second order stuff, afterthoughts, trickle down liquids splat on Terra Firma, figments of endorphins warm after glow…
Skippy…Nuremberg trials with polygraphs for the lot…
Brazil in global ‘currency war’ alert.
Not everyone is going along with the great American power (es). Increasingly, because we lack credibility in the world and have no leaders worthy of the name, pressure will come from outside.
Too bad its the American people who will be paying for this. These little twits at the helm of US financial power are well prepared personally if they don’t mind living behind gates. And there’s always cosmetic surgery.
So refreshing to hear a no nonsense “spare us the BS” set of explanations on this crisis…which explains why CNBS USA edition does not seems to know Das even exist(?)
Das also emphasize a very important point underlined too by Simon Johnson in “The Quiet Coup”:gubmints will do whatever it takes to delay the recognition of a crisis, since it will inevitably means taking on the elites and chop their wealth/power.
Thing is, we all pay dearly for that.
I’m rewriting this -apologies
Brazil in global ‘currency war’ alert -FT
Not everyone is going along with the great American finance hoax (es). Because we lack credibility in the world and have no leaders worthy of the name, pressure will come from outside.
Too bad its the American people who will be paying for this. These little twits at the helm of US financial power are well prepared personally if they don’t mind living behind gates. And there’s always cosmetic surgery.
Beg borrow or steal to buy Das’s book. Only Das and Frank Partnoy told the truth about swaps and derivatives BEFORE the markets melted down.
Partnoy’s book is called FIASCO.
A very clear, compelling statement with the clear ring of truth.
For heaven’s sake, just look at Iceland. The ability of government to get away with such utter silliness really makes one despair that democracy can work.
Since he’s an Aussie, what sport does “hallelujah pass” refer to?
“hallelujah pass” should read “hail mary kick” me thinks, as an AFL (Australian football league) term. On that note it seems more *behinds* are scored than *goals* these days.
We prefer the term “hospital pass” down here! The GFC has been one gigantic hospital pass from Wall St to the ordinary citizen.
Dave that’s rugby, and I understand your inference all too well, in my past and my young that play today…lol.
Skippy…The GFC has been one gigantic hospital pass from Wall St to the ordinary citizen…well said sir!
No, it’s called a “Hail Mary” pass in U.S. football,- I’d always assumed because of the role in U.S. football lore of Notre Dame U. But it turns out that there is such a thing as “Australian rules football”, which is much more bizarre than Canadian rules football, which just involves an extra twelfth man. Still, it’s interesting to note that translation problems extend across different social rule structures and not just mere languages, (even if assumed to be common).
Canadian football is the Shia version, rather than the properly Sunni version.
Back in the day, years ago when I had a dead trees subscription the The Economist, I remember reading about Swaps and derivative like things and what stuck in my memory was their comment about them, swaps/derivatives, that they never have been “stress Tested”. Well I guess now they have and they failed.
First time I’ve seen a clip of Das, cheers for posting it YS and for the reasons you cite. I very much agree with his take that we’re at the stage of Japan in the early ’90s, in that we know there’s loads of bad debt but are delaying the necessary restructuring.
NPR’s Planet Money did an interview with Das last month, which like his book is about the culture of finance and also the issue of derivatives and financial speculation in general.
http://www.npr.org/blogs/money/2010/09/07/129708297/deep-read-traders-guns-money
BTW I’ll back the recommendation for Traders, Guns and Money. Worth reading more than once.