Philip Pilkington: Twitterifying Catastrophe

By Philip Pilkington, a writer and journalist based in Dublin, Ireland

As stock markets continue to fall and the eurocrisis rolls on an independent trader called Alessio Rastani appears on BBC live and gives a candid account of how he, as a trader, views the crisis.

He sees it, he says, as an opportunity to make an awful lot of money. He tells viewers that they too should seek out safe havens – such as US Treasury bills and dollar holdings – to weather the continuing storm.

Not long after the Twitterati are out in droves. Some are shocked at the amoralism of it all. Some have their heads buried so deep in the sand that they try to convince themselves that Rastani is just a prankster.

Which group is worse? One has to wonder. The former are fools, blind to the world in which we live and the considerable economic problems that haute finance has caused us in the past two decades. But the latter are arguably more loathsome; they’ve turned a very important statement on where we are today into another bit of fun to fill their time on Twitter.

Think about it. What Rastani is saying has major consequences. If this is how the current system works – i.e. that traders are betting on downturns and in doing so coming out rosy while everyone else suffers – then we have a serious problem on our hands.

Surely the media should perk their ears up and listen. Some do, but many don’t. Instead they curl up in a ball, ROFLing their way ever deeper into ignorance and speculating – baselessly – on whether this is a prank or not.

Rastani’s statement becomes nothing but fodder for baseless internet rumours and these rumours in turn become a veil behind which so many in the media hide.

Rastani is an honest man. Ruthless perhaps, but honest. He harbours no illusions about what is taking place in the world economy today and the consequences this will have for millions of working people. It is the media commentators that faff around, desperately distracting themselves from reality with the latest bit of Twitter gossip that are dishonest.

Indeed they lie, not only to each other, but to themselves.

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    1. Philip Pilkington

      The trend is undoubtedly down. And with more bad news in the pipeline it will probably continue to go down. Probably until it reaches it’s long-term historical average.

      Here’s the Shiller P/E ratio:

      Given the current economic environment the markets still looks overvalued to me.

  1. DidierF

    Impressive guy, able to tell everybody the truth. Horrible world, allowing such a guy, discovering that such a guy does exist, denying his reality.

    This man lives in a virtual world, was discovered by a media showing a picture of him. In that world, the credibility of an information is its truth. What is incredible doesn’t exist. In this world, a lie hammered time and again becomes a truth. Unpleasant things can be skipped.

    Progress was also discovering the world. Now, it’s over.

  2. Matt

    Just a heads-up, the guy isn’t really the best source of information:

    ‘He is a business owner, a 99pc shareholder in public speaking venture Santoro Projects. Its most recent accounts show cash in the bank of £985. After four years trading net assets are £10,048 – in the red.

    How a man who has never been authorised by the Financial Services Authority and has no discernible history working for a City institution ended up being interviewed by the BBC remains a mystery.’

    Doesn’t mean that what he said was false, or that it didn’t reflect how a lot of people actually do think. But I think this guy was just self-promoting for his public speaking.

    1. Yves Smith Post author

      If he is trading for his own account (I have no idea whether that is attractive or unattractive in the UK from a tax perspective) you’d have no idea how he did (and since he sounds like an American, he no doubt has a complicated tax situation). One of the guys profiled in the original famous book on top traders, “Market Wizards” never worked for any financial firm. The chapter on Mark Weinstein is right after the one on Jim Rogers. He was a real estate broker and then traded for his own account. I’ve met Mark, he managed my accounts briefly (he handles fewer than 10 people to avoid registering) A complete nut but a great trader (he would call me and engage in 2 hour monologues while watching 10 screens, he watches screens all day and puts on 4-10 trades a year). No record with a big firm, ever.

      Yes, he may not be a very good trader. But that story doesn’t prove it.

      1. kevin

        You’re right the Telegraph story in itself proves nothing, although it does show him backing away from any real claim to credibility. My gripe with this whole affair is that this guy got up in a massive public forum and made some very aggressive calls about where the market is going. He offered no reasoned argument as to how he arrived at this forecast. His only justification is that ‘big money’ wants it to happen, more or less. Also, ‘Goldman Sachs’ is not interested in the debt deal’ (presumably the one in Greece.)

        Yves, Richard, and everyone else – this guy has no idea what big money thinks and he has less an idea what GS might think. Salespeople on large trading floors don’t really know what these guys are thinking. Our ‘hero’, sitting in a small flat in south London, has no chance.

        To get in front of the public with so little reason and rationale behind him is irresponsible. The poor guy is a nobody and so much of the internet is using this nobody’s ill argued views to justify their own positions.

        1. Diego Méndez

          kevin, you don’t need to have a secret meeting with GS top executives to understand what they are thinking. It’s quite clear.

          You just need an internet connection in order to arrive at the trader’s conclusions. Anyone with a bit of understanding about how financial stuff works knows the three basic truths he told:

          1) you can profit from people’s suffering

          2) millions will lose their savings

          3) Goldman Sachs has more power than democratically elected governments

          1. kevin

            if you think you can understand GS by reading the internet you are delusion.

            Yes you can profit from suffering: I agree.

            Millions will lose their savings: not obvious to me. Where is his/your argument for this bold claim?

            GS more powerful, etc: I would really love to see your argument for this.

            After 16 years as a senior manager on one of London’s largest trading floors, I have a ‘basic’ understanding of financial markets. Yet i do not see the ‘truths’ you claim are so obvious.

            Your words and those of Philip and Alessio are littered with logical fallacies.

          2. JasonRines

            Ding, ding, ding we have a winner. You net out beautifully Diego. Demonizing the speculators is what happens when a government has a hard time deflecting blame to a racial minority group.

            Now when you think of finance, you have a face and profile of a hard, cold predator but obviously Phillip and Diego know better! Good job.

    2. Diego Méndez

      Matt, you don’t need to be a genius to notice he’s saying the truth, all the truth, and nothing but the truth.

      The truth bankers and high-profile managers are denying to the people, namely: you can profit from people’s suffering, millions will lose their savings, and Goldman Sachs has more power than democratically elected governments.

      The trader didn’t provide any additional information, but he produced an excellent summary of the world we’re living in.

  3. Tribe of Dora

    Media denial is a strategic necessity for the functioning of the corporate state. The public are force fed a diet of chauvanist pablum and vulgar, ‘free enterprise’ propaganda.

    Meanwhile the ponzi system implodes, and the volatility provides lucrative opportunities for traders on both sides of the game. And it’s all conducted in the sure and certain knowledge that the public treasury can be comprehensively looted should the fun and games bring down the pillars of the temple.

    Unfortunately it’s simply the nature of markets. Participants are obliged to ignore the ‘externalities.’ But the ‘externalites’ now dwarf the markets: systemic failure, contagion, climate change, and eventually the survival of the species itself.

      1. F. Beard

        Too bad seeing through the game does not itself win the game. aet

        No but a clear picture of the problem allows it to be solved with a minimum of effort and suffering.

  4. YankeeFrank

    The way I see what it, regardless of what his “credentials” are, there was some real truth in his little speech, as Philip notes. But the part I have trouble with is that “goldman sachs rules the world” tripe. Of course it doesn’t take a genius to see that something bad (or three) is likely coming down the pike. And goldman could certainly profit from a crash if they are well configured and get some luck with the timing, and they would have no qualms about making it happen if they could, and they certainly don’t care who starves, dies, or whatever. But the sense he tries to give of their omniscience is bogus. Goldman was belly-up broke and deep in the hole just three years ago. Not very omniscient. I mean it was cool the way their government friends funneled them so much taxpayer money. Its just not that all-seeing is all. In fact, if it was a mere 15 years before when 2008 happened saint lloyd of god street would’ve been doing the bill black perp walk special. Once again, not very omniscient. Nah, this twerp on BBC said some obvious shit anyone on NC could’ve told you, and then made one of those narcissistic “cool-by-association” dick-sucks to lloyd shooting-blanksfein.

  5. Taryn H.

    I don’t know – it did have that “burn, baby, burn” Enron feel to me. I realize he’s like everyone else in high finance, but it’s still horrifying when you see actually see it (even if you know it’s there).

    1. aet

      The best companies are (and perhaps have always been) privately-held companies – no stock being traded, no accounts published for the public, and entirely financed from retained earnings/profits.

      Stock markets are for losers.

  6. LeeAnne

    This commentary is so funny. Traders trade and writers write.

    This is the way traders talk to each other routinely but with some choice language. They understand each other and understand this is one guy’s opinion; he could be wrong, he could be right. He could be right today, and wrong tomorrow, Parse it any way you like; he makes a living at it.

    This kind of talk isn’t appropriate for the public who are not expected to be ‘sophisticated’ investors.

    Why should they be? The non finance public are supposed to be skilled in other jobs, leaving about 7% of the economy to professionally manage money with advertising under constraint; like appearances of this sort, and the Kramer and Kudlow dog and pony show, glamour shots of men in Wall Street, Dow averages on the front page of daily tabloids. Its all added up to the biggest mess imaginable for investors and the credibility of the US brand in general.

    Seeing Europeans blast Geithner warms my heart. We’re gonna have to get push back from outside the country what with the police state firmly in place here where reform can’t happen within these FIRE industries; the institutions regulating them have been so thoroughly destroyed by the right.

    SEC regulations against advertising worked. If you wanted to seek out professional help you could find it even with a modest sum of money to invest; it was always a matter of skill and luck. You didn’t have government manipulating markets, it was against the law, nor did you have Wall Street traders running the government. they had their place, and it certainly was not in management of any kind. Their skills are the skills of a poker player.

    So, this talk is just part of the total disintegration of securities law in this country.

    In the decent world that existed before the criminals of finance rose to the top through leverage in the 100s and gambling with other people’s money took over and destroyed regulations protecting the (presumably naive) public; advertising of this sort that has been going on for decades now was unheard of.

    The same is true for advertising pharmaceuticals, doctors, hospitals and lawyers. Because professional services and health care are not goods and commodities; or shouldn’t be.

  7. Middle Seaman

    After the big guys (Stiglitz, Krugman and others) had their say, people like Pilkington write fancy entries in various place. We are supposed to be in awe (and of course shock).

    But then you find the following pearl in the post: “Which group is worse? One has to wonder. The former are fools, blind to the world in which we live and the considerable economic problems that haute finance has caused us in the past two decades.” The housing bubble started in earnest in the 2000s, the 1990s were years of huge technological innovations: Internet, PC in many homes, online shopping, Amazon, Google, etc. True the rapid fire left marks, e.g. letting banks loose, that lingered, but that is about it for the 90s. We had enough time since then to correct mistakes.

    No, it’s not two decades, it’s mainly the three terms of W Bush, the 3rd knows as Obama, that are the problem.

  8. Diogenes

    Philip: Of course you’re right.

    Rastani is the contemporary equivalent of the kid in the old story about the emperor’s new clothes. Unfortunately, as we have already seen, his small voice will soon be drowned out by those who do not wish to offend our contemporary “emperor”.

    So long as the politicians and the media continue to fawn over the folks that brought us the financial crisis (these are, of course, the same folks whom our political leaders have charged with fixing it), we will never recognize that the deeper and more systemic problem is the pervasive mythology that unfettered free market capitalism provides the best and only true foundation for a fair and just society.

  9. LeeAnne

    I think you left out Clinton. Robert Rubin was Clinton’s guy and the guy hired by Sandy Weill to put Glass Steagal to rest.

    And, don’t forget when “… President Bill Clinton signed off on the North American Free Trade Agreement and the General Agreement on Trade & Tariffs in 1993, otherwise known as NAFTA/GATT, he quite literally slashed the economic throat of the United States. We’ve been hemorrhaging jobs to foreign nations like Communist China ever since.” And I might add, training to the point where the US will have to hire them to get anything done here to manage American workers. And won’t that be fine? Talk about traitors.

    Clinton and Rubin seemed like heroes. It was hard to understand globalism until it was firmly in place in law, and the harm was done. Its more accurate to say that we were being led to believe we didn’t or couldn’t understand it; international trade having been in place from the beginning of recorded history; and what with other people’s prosperity under Clinton as millions were being fired, the language changed to downsized, and deficit spending under control. Who knew how Machiavellian those two were.

  10. John F. Opie

    The man is obviously a sociopath: there are more than a few functioning sociopaths in the financial services industry. If anything, Yves’ book describes who they are, what they did and why they did it. They did it because they could, didn’t care about the damage – if anything, they actively invested to take advantage of the damage – and willfully created chaos and perdition.

    While I don’t know anything about his personal life (necessary for a proper diagnosis), if he quacks like a sociopath, he’s a sociopath for me…

  11. kingbadger

    Deep down Rastani sounds like a Prechterite stopped clock. His twitter goes on about Elliott Waves and whatnot, so I hardly see him as a voice of reason. Eventually Prechter and other deflationistas may turn out to be correct purely by repeating the same thing over and over, decade after decade. Inflationistas are the same. They talk their book over and over no matter how wrong they are, so they’re only correct by luck. Peter Schiff’s obsession with mega inflation is the other side of the coin to Prechter’s obsession with mega deflation. Stopped clocks are getting pretty dull to me.

  12. Fiver

    But nobody asks why the BBC would have this particular variety of slug on in the first place. Why was THIS view given such huge exposure at this particular point in time, right in the midst of several key European decisions?

    Why is BBC telling the world to sell Europe and buy Anglo-America while feigning “shock”? Has nobody else noted how the UK’s calculated, fawning fealty to the US has played out for the last 30 years?

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