Master of the Universe (2013) Movie Script
Let's assume I want to be a part of it.
How should I act and
what can I expect?
Collect the necessary 'pats on
the back' without a murmur.
You get them by doing
'one-nighters' and 'two-nighters'.
A 'one-nighter' means spending
the night in the office.
A 'two-nighter' is two nights in the
office or working straight through.
If you do this often enough ...
eventually someone will
entrust you with larger tasks.
But only if you don't arouse
the slightest doubt.
Or even hint...
that things could be done differently.
No political statements.
And:
Absolute loyalty to the organisation.
Basically you have to be
willing to give up your life.
How does a 'two-nighter' work?
Well, the boss comes to
you and says: "Listen up.
Something just came in.
The day after tomorrow,
we have to present a
concept to company X, Y, Z:
How they can finance the buyback
of 10% of their shares ...
and an estimate of how this
will affect the market, etc.
Sorry.
I know it's your birthday and you
wanted to go out with your girlfriend,
but I can't think of anyone
else I can pass this on to."
This one's in the bag.
Then he sits down and makes
a PowerPoint presentation.
At 2:00 a.m. he falls
asleep at his desk.
At 5:00 a.m. the cleaning
lady wakes him up.
Then he gets back to work.
Don't question whether it makes
sense to buy back those shares.
Basically it's like being in the army.
I've been talking to our lawyer.
There shouldn't be any problems
as long as we don't mention names
or disclose any business secrets.
We may not infringe on any
personal or privacy rights.
I'd suggest you confer
with your lawyer as well,
also regarding the work contracts,
to make sure we're on the safe side.
That building over there
with the round tower on top ...
If you try to picture it ...
You see the white pane on top...
Try to imagine...
that's where the Citibank logo was.
That was the Citibank headquarters.
Then Merrill Lynch moved in.
On 20 floors. Later on, Bloomberg.
Now it's the Bank of
Communication from China.
I think that's about it.
Here we have...
You can see the leap the
Commerzbank has made.
The building with the green roof ...
was the original building of the
Commerzbank in Frankfurt.
Then the first tower came.
The dark brown one between the
Japan Tower and the Taunus Tower.
Right behind it soars...
the latest building of
the Commerzbank.
They added an antenna to make
it higher than the Deutsche Bank.
Looks like this was supposed
to be the trading floor.
Those are the server racks.
If this was meant to
be a trading floor,
then it's a really small one.
The ideal trading floor
doesn't have any walls,
and preferably no such posts.
It's rather like a soccer field:
open without any boundaries.
In the past, you relied more
on verbal communication.
You had to call out to each other.
That's why it was important.
People stood up and
gestured across the room
to clarify things.
Today you have small chat rooms.
You don't have to shout anymore.
The trading floors of the major banks,
I think the biggest one
is UBS in Greenwich.
It has about 1000 workstations.
1000 people on one floor.
I don't know how many fit
in here. Maybe 100, 150.
If even that.
It's sort of a sacred place:
You pass through the security gate,
and go to your desk
and push a button,
and it goes 'bzzzz'.
Then ...
your neighbour arrives and
says, "Good morning".
He pushes his button
and it goes 'bzzzz'.
Eventually everyone's there,
and the whole thing picks up speed.
Around 9 or 10 a.m.
it starts getting loud.
It's like the command centre
of Starship Enterprise.
This sounds crazy, but
somehow you feel...
It's the ingredient
that makes you feel like the
Master of the Universe.
You sit there in a really
comfortable chair.
There are 6 or 8
screens all around you,
with funny things flickering on them.
You have 2 keyboards and a
telephone and a mouse or two.
You can just...
It's not for everybody, but I
found it quite fascinating.
That was 1986.
Thatcher and Reagan.
They basically unleashed the
first wave of privatisation.
Here in Germany,
we'd had a cosy capital market zoo.
Up to then.
Everything was regulated.
Then foreign banks were
licensed in Germany.
And these people
from America came.
We thought they could walk on water.
They wore strange braces
and broad-striped shirts.
They explained to
us how things work.
It was fascinating.
You were sent to seminars.
They showed you how 'swaps' work,
how 'options' work and
'financial innovations'.
'Financial innovations'
were all the rage.
We hung on their every word.
We held them for godlike
creatures who'd been sent to us.
Then all those instruments were
approved in Germany, too.
Which, I'd like to
emphasize, was not bad.
It was ...
a very anachronistic system.
A closed system with
designated regional entities.
It was unsuitable for moving the
economy into the 21st century.
The real economy and the financial
economy were put on par. Technically.
Then the financial economy was a
step ahead of the real economy.
That's the situation we're in right now.
Is deregulation to blame? No.
Was it a prerequisite? Yes.
Back then...
It was a Bavarian bank.
I spent weeks driving
through the countryside.
As far as the Czech border.
I can't remember where all I went.
We gave lectures to
expand our product range.
Our audiences weren't exactly
thrilled by my presence.
You might be able to imagine
why given the regional context.
"We've always done it this way, huh."
They don't want to
deal with new things.
I used to tell people:
"You're far from Frankfurt.
You're far from London.
This doesn't mean no one's going to
come see you, but it might take longer."
I wasn't even 30 at the time.
This was a way to make
a name for yourself,
because it was very
specialized knowledge.
There were only 10 or 15 people
at the bank who knew this stuff.
If you were one of them,
then age was no issue.
You were considered the expert ...
no matter how old or stupid you were.
No, it was ...
a chance for quick fame
within the bank.
Did you succeed?
That's for others to judge.
I couldn't say.
- At an early stage you were...
I was promoted very quickly.
And I made more and more
money really fast. Naturally.
Were others faster? Yes.
Were a lot of others slower? Yes.
We were a whole cohort
of people my age.
We sailed right through those banks.
Many of the older co-workers
had a lot of skills,
but they weren't keen on
working with computers.
Whereas we sat there
for nights on end,
trying to program some
Excel spreadsheets.
Calculation models for financial
tools ... things like that.
It was an industry.
Like Bill Gates and
his fucking garage.
Five years earlier or later,
and the man would have
become an accountant.
But he was in this bloody
garage at the right time.
We happened to be there when
computers were brought in.
And we were interested
in computers ...
and ...
English books about financial theory.
It was like a gigantic sandbox,
where you played with your moulds.
We couldn't mess up anything.
Nowadays a lot can go wrong in
the sandbox, but not back then.
It was awesome. We always
came up with something new.
Some weird products. I
once invented oil bonds.
You earned heating
oil instead of interest.
The oil price was...
I'll just give you any old number: $30.
I wrote a whole paper about it.
How they needed to be constructed,
how to do the hedge, etc.
Then my boss said to me:
"Forget about crap like that!
First there has to be a war in Iraq.
Then the oil price has to skyrocket
before anyone will buy that stuff."
I think that was 4 days before
Hussein invaded Kuwait.
I found that quite amusing.
I'll give you a simple
example of interest bets.
Lots were sold to municipalities
and mid-sized companies.
It's a bet on interest rate changes
between the Swiss Franc and the Yen.
And ...
it's a position a German
municipality has nothing to do with.
No one bets on anything obvious,
because you probably wouldn't
find anyone to bet against.
But sometimes...
the models banks use ...
reveal very unusual situations.
It's called a 'Black Swan'.
What is the probability that
a black swan will swim by ...
at this very moment? Extremely low.
The first step is to
identify the situation.
Some other things are necessary
before you can sell such a product.
You could never sell a
construction like this ...
to a company like
Volkswagen or BMW.
Because they have the
same models as the banks.
If they entered these parameters,
they'd be on the same
side as the bank.
That would be like us betting
that the sun will rise tomorrow.
We wouldn't because
we both agree it will.
You can only sell a
product to a client ...
who doesn't have the
same opportunities.
The second point,
and this is a significant constraint:
These products make
sense for certain clients.
There are clients around the world,
who have items in their
balance sheets ...
that pose a risk. And I can neutralise
this risk with this construction.
It's like buying fire
insurance for your home.
The interesting question is:
Do I take out a fire insurance
policy for my own house ...
or for my neighbour's house?
The point is:
The product only makes sense
if it offers me an offsetting item.
Otherwise it's speculation.
Are the clients aware
of what they're buying?
No. That's the whole scandal.
I don't want that to
be recorded, please.
Seriously, right?!
Back to the previous topic.
I reject this simplified notion ...
that criminal elements are at work ...
figuring out ways to
outwit other people.
We're not talking about
Albanian shell game players.
We're talking about products.
They make sense.
But if applied incorrectly,
they may cause a disaster.
I'll rave about all this some more,
and try to clarify how
these mechanisms work.
A treasurer has closed a deal.
One week later there's a
treasurers congress in Dortmund.
He says:
"You're really stupid.
Do you know how to clear your
municipal balance of deficits?
Swiss Franc against Yen. I did it.
I'm up by 3 million."
That's how it was in the beginning.
Mayor: "Great!"
Then all the other guys on
the table feel like dimwits.
At the same time there's
a bankers convention,
where derivatives traders are
swapping ideas for new products.
One says:
"I made a killer deal
with this one town.
Huge. Earned 800,000. One trade."
The bankers sit there
feeling like dimwits, too.
Do I have to explain
what's going to happen?
The more banks offer this product,
the more treasurers buy it.
Lemmings. But that's only human.
It's not treachery or deception.
There may have been
cases involving deception.
Those clients are often invited by
the bank to speak to other clients.
Everything is closely interwoven.
Again ...
would there be charges today
if the municipalities had
pocketed 30 million instead?
I doubt it.
My ten years with the
second bank were fantastic.
We had a clear adversary,
a competitor bank,
and it served its purpose.
It was unspoken, but
clear to everybody:
We want ...
to do business others have
been doing up to now.
And we want to do it better.
For example, imagine there
was a long struggle
to close a deal with Dow
Chemical in the USA
to place a ?500 million
bond on their behalf.
And there's lots of competition.
Nobody knows who's won.
Then you get a call:
You have to prepare
everything in secret.
You have to select certain
hedging strategies,
and inform your traders that this
bond will soon be on the market.
Then you sit there
and press a button.
And this deal hits the news
headlines worldwide.
Just imagine how angry
your competitors would be.
Their bosses demand:
"Why didn't we get the deal?"
Then you get the feeling
with the touch of a button,
you've changed world history.
Then you get an offer
from another bank:
You'll triple your salary and
be four times more important.
You can bring your whole family
and we'll rent you a house.
It was incredible.
Then you go to your boss and say:
I like it here just fine but I'm leaving.
Then they put you
through the wringer.
He starts explaining everything
they have in store for you.
Suddenly where you thought
nothing was developing,
whole new worlds open up.
Then the other offer is
no longer so attractive.
Once I was in one of the
company director's office.
I knew him really well
and cried my eyes out.
I said: Help me. I have no
idea how to get out of this.
I don't know what to do.
I've already accepted.
I'd feel really awkward if I back out.
And I'd feel even worse
if I told you I'm leaving.
Do you know what he did?
He called the other bank.
He said: "Listen, guys:
That's it. Leave the man alone."
Then he told me to drive home,
pick up my wife and
go away for the night.
Because the telephone
wouldn't stop ringing all night.
I thought he was nuts.
But it rang every three
minutes all night long.
It was the head hunter worried
about losing his commission.
He gets a big one for
big earners like me.
Kerviel gambled away
almost 5 billion Euros.
He juggled with up to 50 billion.
Allegedly because his
bank wanted him to do so.
"The seniors treated
me like a prostitute
who's supposed to
make huge profits.
I had to raise more money
for the bank every day."
Jrme Kerviel's story didn't
convince the judges in Paris.
Accordingly, his prison
sentence is long.
His lawyer is baffled.
"The bank has been spared
although it formed Kerviel.
In a virtual system of financial
products beyond all measure,
everything's fine as long as
the traders are making profits.
But if they start making
losses, the bank sues them."
The bank is very
pleased with the verdict.
Socit Gnrale is satisfied
that it has been awarded ...
damages for its financial losses.
Kerviel has to pay
back 4.9 billion Euros.
Based on his current
salary as an IT-consultant,
he would have to work about
178,000 years to repay his fine.
To answer the question of
why it's always individuals:
It also has to do with the system.
I think most people overrate
the trader's role in
the banking system.
He's not a senior manager.
He's like a chief mechanic
in a Daimler production line.
Of course, junior and senior
traders have different limits.
I can't think of any other profession
where one can do such harm.
Think of it as an
upside down pyramid.
Those who can cause serious
damage are at the bottom.
I hope this comes across okay.
There's the general impression
that those people ...
are managing directors
or have big titles.
No. A trader is well paid ...
but he doesn't have
any responsibility.
except for his limited area of work.
They're not managers.
They're laying hens, to put it bluntly.
It's completely normal for a
trading desk at a bank
whether they're trading shares,
derivatives or fixed-rate securities
a trading desk with 3 or 4
people and an assistant,
has the same sales and profits of a
mid-sized company with 100 employees.
Try to imagine the pressure
these people are under.
I don't share this analogy.
He talks about being
treated like a prostitute.
He had to make more and
more money every year.
That was my experience,
too. It's always about...
They don't care what a
certain market has to offer.
Whether there have been
changes that will temporarily ...
or structurally lead to a
loss of profit. Not at all.
"10% more each year. I
don't care how you do it."
"I don't care how you do it."
I've heard such sayings.
I read this number in a book:
Twenty years ago the holding period
of shares was 4 years on average.
Today it's 22 seconds.
When you think about it, a share
is an interest in a company.
What's the point of keeping
an interest for 22 seconds?
Nobody can explain this to me.
You always try to get closer to
the stock market computers.
Because they... it's less
than the blink of an eye.
We're talking radioactive decay
times between these distances.
Because it's the difference between
closing a successful deal and ...
being the one who gets
the information later.
You probably can't even
measure these times.
But being 500 meters closer to the
stock market computer centre than
the other makes a difference.
Think of it like this:
Automated computer systems
place buy and sell orders
to gauge a reaction.
Then they quickly
remove these orders.
It's not about trading with assets.
But about finding out how the
market has positioned itself.
Are there more buyers
or sellers? Or worse:
Is someone trying to steer the
market in a certain direction?
Trade volumes are incredibly large.
It's easy to make a lot of money
on tiny price movements.
Let's say you start
with only ?100,000.
You need a price change
of 1% to make ?1000.
If you have billions at your disposal,
you need only 0.0001 or
0.00001% to make a good profit.
There's a disparity of weapons. You
can see it in these computer systems.
Siemens or Volkswagen are
both smarter than a bank.
Then it comes down to mid-sized
companies, local governments,
and private clients.
There's an old saying on the stock
market: Private investors always lose.
Sure, sometimes they
win. But it's like roulette.
A roulette player always remembers
the ?8000 he won yesterday.
But he forgets the 5 x
?2000 he lost a week ago.
That's human nature.
Consistently ...
making money on the stock
market without risk is really tough.
The time of modest
share prices is over.
Everyone is going public.
Last year marked
another new record:
194 companies made their
debut on the stock market.
Mostly businesses from the Internet,
media and computer branches.
Their market rate increased
by more than 500%.
Mobilkom head Gerhard
Schmidt is beaming.
His company had a successful
launch on the 'Neuer Markt'.
Investors made a real bargain ...
The 'Neuer Markt' is THE
high-growth segment in Germany.
An interesting segment for
investors willing to take a risk.
Michael, today we want
to discuss a topic:
Women usually wear it on their
ring finger or around their necks.
We men have it in our cars.
Platinum.
Very nice.
The platinum price
had a turbulent year.
It was a real rollercoaster ride.
What do analysts expect
for the next 12 months?
Conservative estimates are ...
$1,700 in 2013 and $1,800 in 2014.
There may be more
positive estimates,
but those are the general estimates.
A moderate increase in price.
That's still a bit away
from the current rate.
So you'd recommend
a leveraged product.
Which products have you selected?
This time we've got a
WAVE Unlimited Call.
At the moment it's around
$1500 per ounce.
So we've still got some room.
The benefit of this product
is its unlimited term.
The investor has some time
for the investment to evolve.
Exactly. It's for more
upbeat investors.
We also have WAVE Unlimited Puts
for downbeat investors as well.
For more go to xmarkets.de.
Thank you very much, Michael.
Have a nice weekend.
I don't have a
cosmopolitan background.
I travelled to Munich
with my suitcase.
By train. I can still remember it.
I didn't know anyone there.
All I knew is I started
work the next day.
I spoke a bit of English.
Like for domestic use.
It was my only foreign language.
I went down the hallways. I
heard Spanish from one room,
French from the next and a language
I didn't know from the third.
I kept walking around thinking:
I want to be a part of this.
I started reading books.
Books about wine,
cigars, clothing, shoes.
At some point you get the idea,
and you find a business
partner to talk to about it.
My father's a heating engineer.
My very first day on the job
I earned more money ...
than he did at the end of his career.
From the very first day.
Then I called from
Tokyo or New York.
I called my mother. She couldn't
believe I was really there.
You come into the
office in the morning,
and basically know what lies ahead.
You're taken care of. You don't
have to do anything else.
You drive directly into the
underground parking lot.
You climb a few stairs
to your workplace.
You don't really need to worry
about the outside world.
Your children attend
the same kindergarten.
You vacation in the same places.
You go skiing in Gstadt or to
the Seychelles or Mauritius.
It's a closed system that leads
you further away from reality.
I don't need the outside
world anymore.
For the most part.
That's why I don't worry about
what I do at work.
If the deals I finalise or
the actions I take ...
have any kind of effect
on the outside world.
This disconnection
from social processes
is basically institutionalized.
There's no way you can talk
about your job during dinner.
If somebody had told me:
"We're going on holiday with
TUI. It's 200 Euros cheaper."
I couldn't be bothered
with such things.
When you make ?100,000
per month, you don't care.
You have no more common
interests with your friends.
Unless you force yourself
to talk about other things.
But a certain part of
your life gets left out ...
or it doesn't interest anyone else.
Then you start wondering if ...
it would be better to give up
some of the things you're fond of
for something insecure
but maybe better.
A normal person would say:
If this is what my job's doing to me,
I need a new job,
but not a new family.
But with this job I thought:
The job's okay.
But I need a new relationship that
fits it, or whatever you want to call it.
My wife and I had this big discussion
after our first child was born.
She wanted me to go
on paternity leave.
My employer back then,
in the early-90's, would
have permitted this.
I always said, "No way."
My wife said,
"You just don't want to."
There was just no way.
It's a little like I said before.
You know in advance
with this profession,
if you choose it,
then you know what you're
getting yourself into.
And there's no room
for paternity leave.
Maybe some people do it.
But I couldn't.
I'd have felt like I
wasn't living up to ...
my own standards for
my professional life.
Regardless of whether it
was possible to do this.
It's like...
It's like a virus that gets you.
At the time we're talking about,
I was very heavily infected.
You said: "I made the decision."
Was there ever a 'we'?
In terms of my family? Yes.
Once.
But it was less a 'we' and
more my wife saying:
"If you do that I'm not
coming with you."
What was that about?
A similar situation:
A foreign job in a place my
wife didn't want to go to.
When I think about ...
the golden days I've
just been idealising.
Maybe they weren't so ideal.
We tend to glorify the past.
I suffered sometimes, too.
But let's leave it at that.
It's also that ...
the more important you become,
the more your family becomes
integrated into this social context.
Every major bank hosts a
family celebration, for example.
Where children and ...
spouses and everything
that can walk
get together during
the holiday season.
If you walk down the street
behind the Deutsche Bank,
there's a day-care centre for
Deutsche Bank children only.
They're already being shaped
as soon as they can walk.
That was a bit cruel.
But it's very tight-knit.
Then there are the events
with clients as well.
I was at an opera festival
in London with my wife.
It wasn't a reward for me or my wife.
It was an organised 'get-together'
with clients and their wives.
Speaking of absence...
This was a big issue at peak times.
You have to figure about
280 workdays per annum.
I wasn't home for half of
them. Maybe even more.
We had the appropriate
domestic staff.
So my wife didn't get stuck
with all the housework.
Still it was...
I wouldn't quite say my
children were strangers to me.
There's always the question of the
time you spend with your children.
It's not so much the
quantity that counts ...
but the amount of quality
time you have together.
Spending 6 hours with a small
child who keeps jabbering:
What's the point?
It depends on how you do it.
This takes us back to the topic:
Were you a good
father or a bad father?
I can't be the judge. You'll
have to ask others.
I can only talk about
what I observed and felt.
But I can't speak for others.
That wouldn't be fair.
The other things you're alluding to ...
I have no evidence or
anecdotes about them.
Really.
Never mind. That's enough.
That's all I have to
say about it. Finito.
The severe financial and currency
crisis in Southeast Asia ...
takes centre stage at the
summit of Asian states.
The Hong Kong stock exchange
suffered its heaviest fall in history.
Asian stock exchanges
toppled like dominoes.
Take Bangkok: Here
hotels and office buildings
have been popping up
over the last 10 years.
But the building boom was
financed with borrowed money.
Most of it from the US and Japan.
Now the lenders want
their money back.
They've lost their faith in the
booming Southeast Asian region.
Within only a few days the price
for rice has risen by 50%.
Cooking oil increased
by more than 100%.
The money collapse has led to bankruptcies
and increased unemployment.
In a country where 40% of the
population is already unemployed.
The IWF reacted with a massive
intervention into Indonesian affairs.
Director Michel Camdessus
said the task is now...
... to restore confidence in the
currency and the economy.
The government demonstrates it
recognises the country's problems.
And it's prepared to take
the necessary measures.
Even though they may
be difficult and painful.
We didn't think about
these things back then.
Countries can
like in Germany
raise money by issuing
bonds, treasury notes, etc.
Or they can borrow money abroad.
Under certain circumstances on
the 'Euromarket' back then...
it was cheaper to
borrow money abroad
than to raise it domestically.
So they turned to this option.
Countries were considered
... like Portugal or Sweden.
Nobody would have ever
doubted their financial standing.
This was long before the
introduction of the Euro.
Countries could provide unlimited
amounts of their currencies.
Because they could print as
much as they wanted to.
We also had constitutional crises and
national bankruptcies in the 90's.
South Korea and Argentina.
But ...
there was no global meltdown.
No maelstroms leading the rest
of the world into the abyss.
Because globalisation and
interlacing weren't as tight as today.
In the 90s, everything didn't
seem interdependent.
It was more manageable.
You had 4 gears. If you did this
here, then this happened there.
It was easy to understand
what would happen.
Today there are 7500 gears.
You don't know what will
happen if you turn one.
It was a completely different
situation back then.
When I remember how many lawyers
I had to deal with in the 90's...
... and how many lawyers I
needed for my last transactions,
it's like the factor 10.
The point is that the significance
of potential losses ...
and pending costs from
lawsuits is constantly rising.
I believe:
If you keep increasing
the expected returns ...
then the whole business
automatically starts shifting ...
not into illegality but in that direction.
You see how far you can go.
Then you add a little clause
here to make that happen, etc.
And:
If you do a lot of business,
and the business models
shift in an illegal direction,
then some businesses
will fall off the cliff.
People tend to have a fairly
naive understanding of all this.
I'll construct a case that
happened here in Germany.
A bank plunges into a liquidity crisis
and is taken over by another bank.
Most people have this notion that ...
these people walk into the bank
and liquidate that old business.
It's not that simple.
It's like you're opening a cupboard.
There are 5000 files inside.
Each file contains 1000 pages.
I need to find a particular transaction.
Maybe it's in the 3rd
file on the top left.
I definitely want to unwind it.
And now's a good time to do it.
But I don't know if the 2nd
file at the bottom left says,
I may not process this transaction
between January and March or such.
All these contracts may
refer to one another.
Picture a permutation: possibilities
that exist mathematically.
They increase exponentially.
I have two options:
I can hire a lawyer or law firm
to read all these contracts.
3-4 years later, after they've
waded through 5 million pages,
and I've paid a few million in fees,
I get a legal opinion saying:
"It's probably like this, but
we assume no liability."
Or I can read it myself even
though I may lack the expertise.
Or I can make a
decision in uncertainty.
That's what's happening.
This isn't ...
You often read about stupid banks,
the damn business or
how stupid can you be?
That's what you see in
the press in other words.
But it's...
It's impossible to provide
certainty with deals like this.
Impossible.
I have to make a
decision in uncertainty.
Then look at the consequences,
and try to straighten out things
if something goes wrong.
I venture to claim that no one ...
understands the accounting
of the Deutsche Bank.
There's an auditing company that's
familiar with the accounting system.
But no single person can understand
how those numbers are generated.
It's too complex.
That's why ...
It's like I'm demanding
transparency about something...
I can't demand transparency about.
It's like the question about the
existence of the God particle.
I don't know if it exists.
Nor do I know how ...
every last branch of
this industry works.
Nobody does.
Banks have a Plan B for everything.
If an atomic bomb struck Frankfurt,
everyone would know what to do:
Where to go, when it's
okay to go home, etc.
But there's no Plan B
for this financial crisis.
In the business report from
UBS you find an item ...
on the subject of accrual
contingent liabilities.
It says here:
UBS makes provisions
for proceedings ...
when upon legal consultation the
executive board concludes ...
that such payment is
probably obligatory ...
and the exact amount
can be reliably estimated.
For every probable case
here there are explanations.
There's a procedure
for municipal bonds.
There's the Lehman
Principal Protection Notes.
Securities issued by Lehman.
UBS sold them wrongfully,
and is apparently
facing a lawsuit now.
Next we have lawsuits related to the
sell-off of residential mortgages.
These are the 'junk mortgages'
in the US that were sold.
Then come the
disclosure requirements.
There's Bernard Maddoff.
A convicted investment
swindler UBS worked with.
'Transactions with the City of Milan
and public sector entities in Italy.'
These are municipal swaps,
interest bets by municipalities.
Then the HSH bank in
Hamburg and Hannover.
They're suing UBS for selling them
something they never should have bought.
The Kommunale
Wasserwerke Leipzig GmbH.
Puerto Rico.
There's a whole chapter about Libor,
which was recently concluded ...
through a considerable
payment from UBS.
How much was it?
$1.5 billion. Something like that.
It's interesting how such things are
never restricted to one organisation.
I'd be surprised if there were
a scandal concerning ...
a product that doesn't affect
another company as well.
That would be really strange.
The industry is way
too interconnected.
I remember one particular product.
I won't go into detail because it's
irrelevant and too complicated.
But my employer at the time made
a big fuss about this new product.
We agreed with some experts that
this product didn't make any sense.
It was extremely risky,
yielded a very small profit
and was very costly to produce:
All the things you don't need.
Eventually we were the last
to jump on the bandwagon.
Only because one of the big
bosses had read in the newspaper
that everyone else was doing
it. So, why weren't we?
We gave in to a mood
of collective panic.
And rushed out a product instead
of just leaving it to the others.
We believe ...
and we understand this
better than everyone else:
This can't work.
Now we're seeing the
results of this development.
This product was created in 2004.
Now, 4-6 years later, it's exploding.
These are the two really bad banks.
The Gesellschaft fr Wertmanagement
and the Erste Abwicklungsanstalt.
Hypo Real Estate and WestLB.
Here the Restructuring
Unit of the Commerzbank.
That's on balance. Euro Hypo
still exists as a normal bank.
It's not necessarily a 'bad' bank.
The HSH Nordbank is
a regional state bank.
Apparently it has a
balance of ?58 billion ...
marked as non-performing
loans or transaction loans.
The interesting question is
where the loss is incurred.
You can add together the
Commerzbank and the Euro Hypo.
Government involvement: 25%.
Hypo Real Estate: 100% .
Erste Abwicklungsanstalt:
100%. HSH: 100%.
The only ones who
might have to pay ...
are the 75% of the remaining
Commerzbank shareholders.
And the government.
Along with the taxpayers.
How would I explain this to my kids?
It's like picking a rotten
apple from the fruit basket.
The rotten apple is still there.
You can see if part of
it can be salvaged,
or if it's completely rotten.
I understand why it
has to be like this.
But these decision-making
processes happen so fast.
Debates about ?100-200 million
for culture go on for years.
But 100 or 200 billion for a bank rescue
is coughed up over a weekend.
It's possible. It's quite fascinating.
The pressure is mounting
on Angela Merkel.
Greece needs even more money.
If this summit fails to produce a
solid plan to combat the debt crisis,
the entire euro zone rating
will be downgraded.
Threatens rating giant
Standard & Poors.
Never before has the
finance industry so blatantly
held a gun to politicians' heads.
The important thing in Greece ...
was to prevent Greece from
going bankrupt at all costs.
That's what it was about.
There are two kinds of Greek bonds:
International or English law
bonds and Greek law bonds.
The difference is under Greek
law the state can declare:
You won't get ?10,000 for
?10,000, but only ?4,000.
That's what happened.
Under English law you need to
have a meeting of creditors.
They decide whether this
settlement is acceptable or not.
So if I, as a hedge fund, buy 75
Million of 100 Million bonds ...
then I'll have a qualified
majority for the vote.
Then I can tell the Greeks:
"Either you give us the money ...
or we'll blow the whole thing up.
Then technically you'll be bankrupt."
That's how they operate.
They try to cause you as
much trouble as they can.
They use every possible means
to enforce their legal right.
Until eventually you say:
"All this hassle over 20 million?"
Then you pay and they win.
Greek bonds were a business model.
There were targeted buyouts
under International Law.
There's a list of all the
Greek bonds out:
500, 700, 1000 or whatever.
You can search a database
and find out which are ...
under English law and which under
Greek. You ditch the Greek ones.
Then you have 50, 70 or
100 under English law.
Then you ask: How much money
do I have and what's the rate?
Let's say they're quoted at 30%
instead of 100%.
And you want to buy 75 million
of a total of 100 million.
You need 75% of the voting rights.
You possess 75% of 30 million.
You buy 28 million for the voting
rights for a 100 million bond.
That's your profit.
You pay 28 million and force
the state to pay out 100 million.
It's worth it.
That's how you do it. It was
a common business model.
Several companies
were doing it that way.
So much money is
now in circulation ...
that you can tackle
whole countries with it.
You start with the smallest Greece.
You wait to see how the EU reacts.
You create a certain...
How should I put it...
You crack the ice a bit.
Then you take on the
next biggest: Portugal.
And the ice cracks some more.
Some people have an interest
in the collapse of the Euro.
There's an enormous
profit potential there.
Surely some people have a political
interest in the Euro collapse.
That's how you'd do it.
I can't think of a good
example right now.
You look for the
weakest point, crack it,
and then break it from inside out.
I was just in Spain.
Things are really dismal there.
Really dismal.
People are really desperate.
Supermarket selections are declining.
Some things just don't work anymore.
When you order a certain amount
of construction material
tiles, bricks or whatever
they no longer get delivered.
Because no lorry will go from
A to B for a little box of tiles.
And nothing else gets ordered.
This might sound strange ...
but the whole social
infrastructure is slowly crumbling.
There's no more buying power
so no one's trading anymore.
When there's no more trade,
transportation declines.
It's like dominoes falling.
If you go there regularly like I do...
then you notice each time ...
how the country is crumbling.
People are trying to build up some
kind of subsistence existence.
Instead of flowers they're now
growing potatoes in their gardens.
It's really noticeable.
With countries, you have to find...
the origin of the debt problem.
The real estate crisis plunged
Spain into the abyss...
and was multiplied and
reinforced by the banks.
It's a debt crisis in the private sector.
Not in the national budget.
It's a similar situation
in the Netherlands.
But no one likes to talk about it.
Just imagine:
I think 120% of Holland's
Gross National Product...
is real estate debt.
Only Property. Private debt.
No one cares about
the national debt.
Because private debt
goes far beyond...
what's considered
reasonable for national debt.
If suddenly 30% of the Dutch can
no longer pay their mortgages...
I think it's highly unlikely
the bailiff would evict them.
They'll have to find a solution.
Like they're starting to
cancel evictions in Spain.
And trying to keep things
from getting out of hand.
Or you'll force people onto welfare.
And who wants that?
What can we expect next?
France.
France.
They have a severe
economic problem.
The essential structural
reforms are not being tackled.
I'm not an enemy of taxes.
But they're adopting
a fierce fiscal policy.
I think France is going
to become a problem.
Then what?
- Then it'll be over and done with.
Game over.
That's why they're desperately
trying to prop up Spain or Italy.
It's a chain reaction: Greece,
Portugal, Spain, Italy.
It's always the next in
size. Then France...
If France gets into such a situation,
no one will be able
to bear the burden.
Forget it.
They'll have to come up
with something else.
It's going to blow up
in our face one day.
Either financially or socio-politically.
There's no way this is going
to have a happy end.
Eventually I was laid off.
I've reached an age where
the people around me ...
are being phased out.
Nobody's working till retirement age.
Usually companies offer
a generous settlement.
No bonuses, but you get your
salary for another 5 years.
You're lowering the average age.
53, 54, 55. That's it.
It happens continuously.
People get a better job and leave.
Or get sacked for messing up.
It's another matter
when it come in waves.
When they tell you, usually
at the end of the year:
"We're cutting 4000 jobs.
800 here and there."
So you can figure out
which area is concerned.
It's a bit like a front
campaign in World War I:
Let's see who's still in the trenches.
Some people quickly slip off.
Suddenly they're sitting where
you can't see them anymore.
Over in the corner somewhere.
It's pretty silly.
But you can't help thinking:
"When's it my turn?"
There's more ... fear.
It used to be different.
People were sacked and
new ones were hired.
But this kind of...
war-like experience...
didn't exist back then.
Nowadays it's a management tool...
to put pressure on people.
I had a Colombian
boss once who said:
I kick out 10% of my
employees each year.
Then you know you've
got 10 years tops.
Do you mind talking about this?
No. I just don't know why...
you're always trying to
get more out of me.
I'm telling you as much as I can.
There are no more
details to talk about.
I told you, it hurts. Obviously.
And this process is what it is.
So a family is created that drags
you in and captivates you.
But the way you're discharged
from this family doesn't ...
match the family spirit that was initally
presented as a mirror or option.
Yes, that's right.
- So this family never really existed.
No.
You believed in a family that ended
up chucking you out the backdoor.
Yes, but...
It's like being a mercenary versus
dying for one's fatherland.
There's something for everybody.
I need to feel loved by
an institution, if possible.
And ... feel valued.
Then it's even worse when the
rug is pulled out from under you.
The mercenary feels no pain.
He doesn't give a damn.
It's a fairly normal cycle.
First there's euphoria.
Then the wave washes you
away and you swim and swim.
And sooner or later
you have a hangover.
Then I moved heaven and
earth to get a new job ...
that was similar to or
better than the old one.
In retrospect I have to say:
That was one crucial step too many.
I felt like I'd lost all my dignity.
It didn't have to be like that.
It takes a really long time...
to take a critical view
of the whole matter.
With most people, even
those who've lost their job,
their top priority is:
How do I get the same job
again as fast as possible?
They don't ask themselves:
Is there some life plan I've
always dreamt about?
And now I can try it out?
Instead...
they continue along
the same old path.
This is a problem in an industry
that's dramatically shrinking
like the banking industry.
I think a lot of mentally
affected people ...
will fall by the wayside.
Because they're...
incapable of leading their own lives
outside this system.
Yes.
Why does no one
trust banks anymore?
Some banks say it's
because of the crises.
Others say it's the stock markets.
We did something a
bit unusual for us.
We looked for the reasons
in ourselves and asked:
Does Germany need another bank
that does the same old thing?
Or do we need a bank that puts an
end to speculation on basic foods?
That finances renewable
energy for the future.
That lends money to small
and mid-sized companies.
That doesn't reward consultants for
selling as many contracts as possible.
But only when their
clients are satisfied.
There's a long road ahead of us.
But it also begins with the first step.
I don't think anything's
happening within this system.
Everyone's staring at politicians
and regulators and saying:
"Tell us what to do!" Actually they know
exactly what's expected of them.
But they're not doing it.
Instead they run ads that
state: "We understand".
Or print some gigantic
corporate identity brochures ...
and corporate
responsibility brochures.
You can observe this, too. I've
been involved in philanthropy.
Corporate social responsibility
is an important part of it:
i.e., the donations and social
activities undertaken by companies.
This may knock some people's
socks off who know better, but:
The bigger the shit, the thicker the
corporate social responsibility brochures.
Yes.
It's good that measures
are being taken.
I think what's being done...
within the political decision-making
framework is sensible.
But I'm convinced they
won't achieve their goal.
They won't achieve their goal.
Laws are passed in 6 months.
?150 billion to save a bank
is passed in 6 months.
But what people think...
reflects the social situation.
It will take decades to change.
No politician can pull that off.
Just look at the semantics
used today: 'The markets'.
There's no such thing
as 'the markets'.
We act like they're some godlike
power descending upon us.
'The Bank' or 'The Company'
decided.
No. People make decisions.
And if you tell them
to stop, they'll stop.
You just have to do it the right way.
If the boss of a large investment bank
sent out an email tomorrow saying:
"Every trader who still has shorts
in Spain, Portugal or elsewhere,
who is speculating against these
countries, will be sacked."
It would end immediately.
Other parties would
have to join in as well.
But if the will were there, it
would be like pulling the plug.
So why doesn't this happen?
Because no one ever
takes the first step.
Do we need a fresh
start? Yes, for sure.
But then...
Either an external shock:
i.e., political interventions
or another crisis.
Or a radical freak
who can convince us of
a new business model...
that works.
Wasn't the recent shock big enough?
No.
No.
Only simpletons believe the
market is capable of learning.
We had that topic: Can banks learn?
It's collective versus individual
learning, but the answer is no.
No. Markets don't learn yet.
Investors don't learn either.
They jump into the same abyss...
that they jumped into or were
shoved into 2 years ago.
Now they're gladly jumping into it.
There are lots of examples
dating back to the 30's.
That's...
No.
I don't believe in it.
Was the shock big enough?
Sure, it was a big shock.
Let's get on with it.
Rainer Voss quit his
job at his last bank,
and is now a man of
independent means.
The building was abandoned
after the merger of two banks.
It has been empty for 6 years.
Director
Director of Photography
Editors
Music
Sound Recordist
Sound Mix
Commissioning Editors
Producers
Rick Minnich
How should I act and
what can I expect?
Collect the necessary 'pats on
the back' without a murmur.
You get them by doing
'one-nighters' and 'two-nighters'.
A 'one-nighter' means spending
the night in the office.
A 'two-nighter' is two nights in the
office or working straight through.
If you do this often enough ...
eventually someone will
entrust you with larger tasks.
But only if you don't arouse
the slightest doubt.
Or even hint...
that things could be done differently.
No political statements.
And:
Absolute loyalty to the organisation.
Basically you have to be
willing to give up your life.
How does a 'two-nighter' work?
Well, the boss comes to
you and says: "Listen up.
Something just came in.
The day after tomorrow,
we have to present a
concept to company X, Y, Z:
How they can finance the buyback
of 10% of their shares ...
and an estimate of how this
will affect the market, etc.
Sorry.
I know it's your birthday and you
wanted to go out with your girlfriend,
but I can't think of anyone
else I can pass this on to."
This one's in the bag.
Then he sits down and makes
a PowerPoint presentation.
At 2:00 a.m. he falls
asleep at his desk.
At 5:00 a.m. the cleaning
lady wakes him up.
Then he gets back to work.
Don't question whether it makes
sense to buy back those shares.
Basically it's like being in the army.
I've been talking to our lawyer.
There shouldn't be any problems
as long as we don't mention names
or disclose any business secrets.
We may not infringe on any
personal or privacy rights.
I'd suggest you confer
with your lawyer as well,
also regarding the work contracts,
to make sure we're on the safe side.
That building over there
with the round tower on top ...
If you try to picture it ...
You see the white pane on top...
Try to imagine...
that's where the Citibank logo was.
That was the Citibank headquarters.
Then Merrill Lynch moved in.
On 20 floors. Later on, Bloomberg.
Now it's the Bank of
Communication from China.
I think that's about it.
Here we have...
You can see the leap the
Commerzbank has made.
The building with the green roof ...
was the original building of the
Commerzbank in Frankfurt.
Then the first tower came.
The dark brown one between the
Japan Tower and the Taunus Tower.
Right behind it soars...
the latest building of
the Commerzbank.
They added an antenna to make
it higher than the Deutsche Bank.
Looks like this was supposed
to be the trading floor.
Those are the server racks.
If this was meant to
be a trading floor,
then it's a really small one.
The ideal trading floor
doesn't have any walls,
and preferably no such posts.
It's rather like a soccer field:
open without any boundaries.
In the past, you relied more
on verbal communication.
You had to call out to each other.
That's why it was important.
People stood up and
gestured across the room
to clarify things.
Today you have small chat rooms.
You don't have to shout anymore.
The trading floors of the major banks,
I think the biggest one
is UBS in Greenwich.
It has about 1000 workstations.
1000 people on one floor.
I don't know how many fit
in here. Maybe 100, 150.
If even that.
It's sort of a sacred place:
You pass through the security gate,
and go to your desk
and push a button,
and it goes 'bzzzz'.
Then ...
your neighbour arrives and
says, "Good morning".
He pushes his button
and it goes 'bzzzz'.
Eventually everyone's there,
and the whole thing picks up speed.
Around 9 or 10 a.m.
it starts getting loud.
It's like the command centre
of Starship Enterprise.
This sounds crazy, but
somehow you feel...
It's the ingredient
that makes you feel like the
Master of the Universe.
You sit there in a really
comfortable chair.
There are 6 or 8
screens all around you,
with funny things flickering on them.
You have 2 keyboards and a
telephone and a mouse or two.
You can just...
It's not for everybody, but I
found it quite fascinating.
That was 1986.
Thatcher and Reagan.
They basically unleashed the
first wave of privatisation.
Here in Germany,
we'd had a cosy capital market zoo.
Up to then.
Everything was regulated.
Then foreign banks were
licensed in Germany.
And these people
from America came.
We thought they could walk on water.
They wore strange braces
and broad-striped shirts.
They explained to
us how things work.
It was fascinating.
You were sent to seminars.
They showed you how 'swaps' work,
how 'options' work and
'financial innovations'.
'Financial innovations'
were all the rage.
We hung on their every word.
We held them for godlike
creatures who'd been sent to us.
Then all those instruments were
approved in Germany, too.
Which, I'd like to
emphasize, was not bad.
It was ...
a very anachronistic system.
A closed system with
designated regional entities.
It was unsuitable for moving the
economy into the 21st century.
The real economy and the financial
economy were put on par. Technically.
Then the financial economy was a
step ahead of the real economy.
That's the situation we're in right now.
Is deregulation to blame? No.
Was it a prerequisite? Yes.
Back then...
It was a Bavarian bank.
I spent weeks driving
through the countryside.
As far as the Czech border.
I can't remember where all I went.
We gave lectures to
expand our product range.
Our audiences weren't exactly
thrilled by my presence.
You might be able to imagine
why given the regional context.
"We've always done it this way, huh."
They don't want to
deal with new things.
I used to tell people:
"You're far from Frankfurt.
You're far from London.
This doesn't mean no one's going to
come see you, but it might take longer."
I wasn't even 30 at the time.
This was a way to make
a name for yourself,
because it was very
specialized knowledge.
There were only 10 or 15 people
at the bank who knew this stuff.
If you were one of them,
then age was no issue.
You were considered the expert ...
no matter how old or stupid you were.
No, it was ...
a chance for quick fame
within the bank.
Did you succeed?
That's for others to judge.
I couldn't say.
- At an early stage you were...
I was promoted very quickly.
And I made more and more
money really fast. Naturally.
Were others faster? Yes.
Were a lot of others slower? Yes.
We were a whole cohort
of people my age.
We sailed right through those banks.
Many of the older co-workers
had a lot of skills,
but they weren't keen on
working with computers.
Whereas we sat there
for nights on end,
trying to program some
Excel spreadsheets.
Calculation models for financial
tools ... things like that.
It was an industry.
Like Bill Gates and
his fucking garage.
Five years earlier or later,
and the man would have
become an accountant.
But he was in this bloody
garage at the right time.
We happened to be there when
computers were brought in.
And we were interested
in computers ...
and ...
English books about financial theory.
It was like a gigantic sandbox,
where you played with your moulds.
We couldn't mess up anything.
Nowadays a lot can go wrong in
the sandbox, but not back then.
It was awesome. We always
came up with something new.
Some weird products. I
once invented oil bonds.
You earned heating
oil instead of interest.
The oil price was...
I'll just give you any old number: $30.
I wrote a whole paper about it.
How they needed to be constructed,
how to do the hedge, etc.
Then my boss said to me:
"Forget about crap like that!
First there has to be a war in Iraq.
Then the oil price has to skyrocket
before anyone will buy that stuff."
I think that was 4 days before
Hussein invaded Kuwait.
I found that quite amusing.
I'll give you a simple
example of interest bets.
Lots were sold to municipalities
and mid-sized companies.
It's a bet on interest rate changes
between the Swiss Franc and the Yen.
And ...
it's a position a German
municipality has nothing to do with.
No one bets on anything obvious,
because you probably wouldn't
find anyone to bet against.
But sometimes...
the models banks use ...
reveal very unusual situations.
It's called a 'Black Swan'.
What is the probability that
a black swan will swim by ...
at this very moment? Extremely low.
The first step is to
identify the situation.
Some other things are necessary
before you can sell such a product.
You could never sell a
construction like this ...
to a company like
Volkswagen or BMW.
Because they have the
same models as the banks.
If they entered these parameters,
they'd be on the same
side as the bank.
That would be like us betting
that the sun will rise tomorrow.
We wouldn't because
we both agree it will.
You can only sell a
product to a client ...
who doesn't have the
same opportunities.
The second point,
and this is a significant constraint:
These products make
sense for certain clients.
There are clients around the world,
who have items in their
balance sheets ...
that pose a risk. And I can neutralise
this risk with this construction.
It's like buying fire
insurance for your home.
The interesting question is:
Do I take out a fire insurance
policy for my own house ...
or for my neighbour's house?
The point is:
The product only makes sense
if it offers me an offsetting item.
Otherwise it's speculation.
Are the clients aware
of what they're buying?
No. That's the whole scandal.
I don't want that to
be recorded, please.
Seriously, right?!
Back to the previous topic.
I reject this simplified notion ...
that criminal elements are at work ...
figuring out ways to
outwit other people.
We're not talking about
Albanian shell game players.
We're talking about products.
They make sense.
But if applied incorrectly,
they may cause a disaster.
I'll rave about all this some more,
and try to clarify how
these mechanisms work.
A treasurer has closed a deal.
One week later there's a
treasurers congress in Dortmund.
He says:
"You're really stupid.
Do you know how to clear your
municipal balance of deficits?
Swiss Franc against Yen. I did it.
I'm up by 3 million."
That's how it was in the beginning.
Mayor: "Great!"
Then all the other guys on
the table feel like dimwits.
At the same time there's
a bankers convention,
where derivatives traders are
swapping ideas for new products.
One says:
"I made a killer deal
with this one town.
Huge. Earned 800,000. One trade."
The bankers sit there
feeling like dimwits, too.
Do I have to explain
what's going to happen?
The more banks offer this product,
the more treasurers buy it.
Lemmings. But that's only human.
It's not treachery or deception.
There may have been
cases involving deception.
Those clients are often invited by
the bank to speak to other clients.
Everything is closely interwoven.
Again ...
would there be charges today
if the municipalities had
pocketed 30 million instead?
I doubt it.
My ten years with the
second bank were fantastic.
We had a clear adversary,
a competitor bank,
and it served its purpose.
It was unspoken, but
clear to everybody:
We want ...
to do business others have
been doing up to now.
And we want to do it better.
For example, imagine there
was a long struggle
to close a deal with Dow
Chemical in the USA
to place a ?500 million
bond on their behalf.
And there's lots of competition.
Nobody knows who's won.
Then you get a call:
You have to prepare
everything in secret.
You have to select certain
hedging strategies,
and inform your traders that this
bond will soon be on the market.
Then you sit there
and press a button.
And this deal hits the news
headlines worldwide.
Just imagine how angry
your competitors would be.
Their bosses demand:
"Why didn't we get the deal?"
Then you get the feeling
with the touch of a button,
you've changed world history.
Then you get an offer
from another bank:
You'll triple your salary and
be four times more important.
You can bring your whole family
and we'll rent you a house.
It was incredible.
Then you go to your boss and say:
I like it here just fine but I'm leaving.
Then they put you
through the wringer.
He starts explaining everything
they have in store for you.
Suddenly where you thought
nothing was developing,
whole new worlds open up.
Then the other offer is
no longer so attractive.
Once I was in one of the
company director's office.
I knew him really well
and cried my eyes out.
I said: Help me. I have no
idea how to get out of this.
I don't know what to do.
I've already accepted.
I'd feel really awkward if I back out.
And I'd feel even worse
if I told you I'm leaving.
Do you know what he did?
He called the other bank.
He said: "Listen, guys:
That's it. Leave the man alone."
Then he told me to drive home,
pick up my wife and
go away for the night.
Because the telephone
wouldn't stop ringing all night.
I thought he was nuts.
But it rang every three
minutes all night long.
It was the head hunter worried
about losing his commission.
He gets a big one for
big earners like me.
Kerviel gambled away
almost 5 billion Euros.
He juggled with up to 50 billion.
Allegedly because his
bank wanted him to do so.
"The seniors treated
me like a prostitute
who's supposed to
make huge profits.
I had to raise more money
for the bank every day."
Jrme Kerviel's story didn't
convince the judges in Paris.
Accordingly, his prison
sentence is long.
His lawyer is baffled.
"The bank has been spared
although it formed Kerviel.
In a virtual system of financial
products beyond all measure,
everything's fine as long as
the traders are making profits.
But if they start making
losses, the bank sues them."
The bank is very
pleased with the verdict.
Socit Gnrale is satisfied
that it has been awarded ...
damages for its financial losses.
Kerviel has to pay
back 4.9 billion Euros.
Based on his current
salary as an IT-consultant,
he would have to work about
178,000 years to repay his fine.
To answer the question of
why it's always individuals:
It also has to do with the system.
I think most people overrate
the trader's role in
the banking system.
He's not a senior manager.
He's like a chief mechanic
in a Daimler production line.
Of course, junior and senior
traders have different limits.
I can't think of any other profession
where one can do such harm.
Think of it as an
upside down pyramid.
Those who can cause serious
damage are at the bottom.
I hope this comes across okay.
There's the general impression
that those people ...
are managing directors
or have big titles.
No. A trader is well paid ...
but he doesn't have
any responsibility.
except for his limited area of work.
They're not managers.
They're laying hens, to put it bluntly.
It's completely normal for a
trading desk at a bank
whether they're trading shares,
derivatives or fixed-rate securities
a trading desk with 3 or 4
people and an assistant,
has the same sales and profits of a
mid-sized company with 100 employees.
Try to imagine the pressure
these people are under.
I don't share this analogy.
He talks about being
treated like a prostitute.
He had to make more and
more money every year.
That was my experience,
too. It's always about...
They don't care what a
certain market has to offer.
Whether there have been
changes that will temporarily ...
or structurally lead to a
loss of profit. Not at all.
"10% more each year. I
don't care how you do it."
"I don't care how you do it."
I've heard such sayings.
I read this number in a book:
Twenty years ago the holding period
of shares was 4 years on average.
Today it's 22 seconds.
When you think about it, a share
is an interest in a company.
What's the point of keeping
an interest for 22 seconds?
Nobody can explain this to me.
You always try to get closer to
the stock market computers.
Because they... it's less
than the blink of an eye.
We're talking radioactive decay
times between these distances.
Because it's the difference between
closing a successful deal and ...
being the one who gets
the information later.
You probably can't even
measure these times.
But being 500 meters closer to the
stock market computer centre than
the other makes a difference.
Think of it like this:
Automated computer systems
place buy and sell orders
to gauge a reaction.
Then they quickly
remove these orders.
It's not about trading with assets.
But about finding out how the
market has positioned itself.
Are there more buyers
or sellers? Or worse:
Is someone trying to steer the
market in a certain direction?
Trade volumes are incredibly large.
It's easy to make a lot of money
on tiny price movements.
Let's say you start
with only ?100,000.
You need a price change
of 1% to make ?1000.
If you have billions at your disposal,
you need only 0.0001 or
0.00001% to make a good profit.
There's a disparity of weapons. You
can see it in these computer systems.
Siemens or Volkswagen are
both smarter than a bank.
Then it comes down to mid-sized
companies, local governments,
and private clients.
There's an old saying on the stock
market: Private investors always lose.
Sure, sometimes they
win. But it's like roulette.
A roulette player always remembers
the ?8000 he won yesterday.
But he forgets the 5 x
?2000 he lost a week ago.
That's human nature.
Consistently ...
making money on the stock
market without risk is really tough.
The time of modest
share prices is over.
Everyone is going public.
Last year marked
another new record:
194 companies made their
debut on the stock market.
Mostly businesses from the Internet,
media and computer branches.
Their market rate increased
by more than 500%.
Mobilkom head Gerhard
Schmidt is beaming.
His company had a successful
launch on the 'Neuer Markt'.
Investors made a real bargain ...
The 'Neuer Markt' is THE
high-growth segment in Germany.
An interesting segment for
investors willing to take a risk.
Michael, today we want
to discuss a topic:
Women usually wear it on their
ring finger or around their necks.
We men have it in our cars.
Platinum.
Very nice.
The platinum price
had a turbulent year.
It was a real rollercoaster ride.
What do analysts expect
for the next 12 months?
Conservative estimates are ...
$1,700 in 2013 and $1,800 in 2014.
There may be more
positive estimates,
but those are the general estimates.
A moderate increase in price.
That's still a bit away
from the current rate.
So you'd recommend
a leveraged product.
Which products have you selected?
This time we've got a
WAVE Unlimited Call.
At the moment it's around
$1500 per ounce.
So we've still got some room.
The benefit of this product
is its unlimited term.
The investor has some time
for the investment to evolve.
Exactly. It's for more
upbeat investors.
We also have WAVE Unlimited Puts
for downbeat investors as well.
For more go to xmarkets.de.
Thank you very much, Michael.
Have a nice weekend.
I don't have a
cosmopolitan background.
I travelled to Munich
with my suitcase.
By train. I can still remember it.
I didn't know anyone there.
All I knew is I started
work the next day.
I spoke a bit of English.
Like for domestic use.
It was my only foreign language.
I went down the hallways. I
heard Spanish from one room,
French from the next and a language
I didn't know from the third.
I kept walking around thinking:
I want to be a part of this.
I started reading books.
Books about wine,
cigars, clothing, shoes.
At some point you get the idea,
and you find a business
partner to talk to about it.
My father's a heating engineer.
My very first day on the job
I earned more money ...
than he did at the end of his career.
From the very first day.
Then I called from
Tokyo or New York.
I called my mother. She couldn't
believe I was really there.
You come into the
office in the morning,
and basically know what lies ahead.
You're taken care of. You don't
have to do anything else.
You drive directly into the
underground parking lot.
You climb a few stairs
to your workplace.
You don't really need to worry
about the outside world.
Your children attend
the same kindergarten.
You vacation in the same places.
You go skiing in Gstadt or to
the Seychelles or Mauritius.
It's a closed system that leads
you further away from reality.
I don't need the outside
world anymore.
For the most part.
That's why I don't worry about
what I do at work.
If the deals I finalise or
the actions I take ...
have any kind of effect
on the outside world.
This disconnection
from social processes
is basically institutionalized.
There's no way you can talk
about your job during dinner.
If somebody had told me:
"We're going on holiday with
TUI. It's 200 Euros cheaper."
I couldn't be bothered
with such things.
When you make ?100,000
per month, you don't care.
You have no more common
interests with your friends.
Unless you force yourself
to talk about other things.
But a certain part of
your life gets left out ...
or it doesn't interest anyone else.
Then you start wondering if ...
it would be better to give up
some of the things you're fond of
for something insecure
but maybe better.
A normal person would say:
If this is what my job's doing to me,
I need a new job,
but not a new family.
But with this job I thought:
The job's okay.
But I need a new relationship that
fits it, or whatever you want to call it.
My wife and I had this big discussion
after our first child was born.
She wanted me to go
on paternity leave.
My employer back then,
in the early-90's, would
have permitted this.
I always said, "No way."
My wife said,
"You just don't want to."
There was just no way.
It's a little like I said before.
You know in advance
with this profession,
if you choose it,
then you know what you're
getting yourself into.
And there's no room
for paternity leave.
Maybe some people do it.
But I couldn't.
I'd have felt like I
wasn't living up to ...
my own standards for
my professional life.
Regardless of whether it
was possible to do this.
It's like...
It's like a virus that gets you.
At the time we're talking about,
I was very heavily infected.
You said: "I made the decision."
Was there ever a 'we'?
In terms of my family? Yes.
Once.
But it was less a 'we' and
more my wife saying:
"If you do that I'm not
coming with you."
What was that about?
A similar situation:
A foreign job in a place my
wife didn't want to go to.
When I think about ...
the golden days I've
just been idealising.
Maybe they weren't so ideal.
We tend to glorify the past.
I suffered sometimes, too.
But let's leave it at that.
It's also that ...
the more important you become,
the more your family becomes
integrated into this social context.
Every major bank hosts a
family celebration, for example.
Where children and ...
spouses and everything
that can walk
get together during
the holiday season.
If you walk down the street
behind the Deutsche Bank,
there's a day-care centre for
Deutsche Bank children only.
They're already being shaped
as soon as they can walk.
That was a bit cruel.
But it's very tight-knit.
Then there are the events
with clients as well.
I was at an opera festival
in London with my wife.
It wasn't a reward for me or my wife.
It was an organised 'get-together'
with clients and their wives.
Speaking of absence...
This was a big issue at peak times.
You have to figure about
280 workdays per annum.
I wasn't home for half of
them. Maybe even more.
We had the appropriate
domestic staff.
So my wife didn't get stuck
with all the housework.
Still it was...
I wouldn't quite say my
children were strangers to me.
There's always the question of the
time you spend with your children.
It's not so much the
quantity that counts ...
but the amount of quality
time you have together.
Spending 6 hours with a small
child who keeps jabbering:
What's the point?
It depends on how you do it.
This takes us back to the topic:
Were you a good
father or a bad father?
I can't be the judge. You'll
have to ask others.
I can only talk about
what I observed and felt.
But I can't speak for others.
That wouldn't be fair.
The other things you're alluding to ...
I have no evidence or
anecdotes about them.
Really.
Never mind. That's enough.
That's all I have to
say about it. Finito.
The severe financial and currency
crisis in Southeast Asia ...
takes centre stage at the
summit of Asian states.
The Hong Kong stock exchange
suffered its heaviest fall in history.
Asian stock exchanges
toppled like dominoes.
Take Bangkok: Here
hotels and office buildings
have been popping up
over the last 10 years.
But the building boom was
financed with borrowed money.
Most of it from the US and Japan.
Now the lenders want
their money back.
They've lost their faith in the
booming Southeast Asian region.
Within only a few days the price
for rice has risen by 50%.
Cooking oil increased
by more than 100%.
The money collapse has led to bankruptcies
and increased unemployment.
In a country where 40% of the
population is already unemployed.
The IWF reacted with a massive
intervention into Indonesian affairs.
Director Michel Camdessus
said the task is now...
... to restore confidence in the
currency and the economy.
The government demonstrates it
recognises the country's problems.
And it's prepared to take
the necessary measures.
Even though they may
be difficult and painful.
We didn't think about
these things back then.
Countries can
like in Germany
raise money by issuing
bonds, treasury notes, etc.
Or they can borrow money abroad.
Under certain circumstances on
the 'Euromarket' back then...
it was cheaper to
borrow money abroad
than to raise it domestically.
So they turned to this option.
Countries were considered
... like Portugal or Sweden.
Nobody would have ever
doubted their financial standing.
This was long before the
introduction of the Euro.
Countries could provide unlimited
amounts of their currencies.
Because they could print as
much as they wanted to.
We also had constitutional crises and
national bankruptcies in the 90's.
South Korea and Argentina.
But ...
there was no global meltdown.
No maelstroms leading the rest
of the world into the abyss.
Because globalisation and
interlacing weren't as tight as today.
In the 90s, everything didn't
seem interdependent.
It was more manageable.
You had 4 gears. If you did this
here, then this happened there.
It was easy to understand
what would happen.
Today there are 7500 gears.
You don't know what will
happen if you turn one.
It was a completely different
situation back then.
When I remember how many lawyers
I had to deal with in the 90's...
... and how many lawyers I
needed for my last transactions,
it's like the factor 10.
The point is that the significance
of potential losses ...
and pending costs from
lawsuits is constantly rising.
I believe:
If you keep increasing
the expected returns ...
then the whole business
automatically starts shifting ...
not into illegality but in that direction.
You see how far you can go.
Then you add a little clause
here to make that happen, etc.
And:
If you do a lot of business,
and the business models
shift in an illegal direction,
then some businesses
will fall off the cliff.
People tend to have a fairly
naive understanding of all this.
I'll construct a case that
happened here in Germany.
A bank plunges into a liquidity crisis
and is taken over by another bank.
Most people have this notion that ...
these people walk into the bank
and liquidate that old business.
It's not that simple.
It's like you're opening a cupboard.
There are 5000 files inside.
Each file contains 1000 pages.
I need to find a particular transaction.
Maybe it's in the 3rd
file on the top left.
I definitely want to unwind it.
And now's a good time to do it.
But I don't know if the 2nd
file at the bottom left says,
I may not process this transaction
between January and March or such.
All these contracts may
refer to one another.
Picture a permutation: possibilities
that exist mathematically.
They increase exponentially.
I have two options:
I can hire a lawyer or law firm
to read all these contracts.
3-4 years later, after they've
waded through 5 million pages,
and I've paid a few million in fees,
I get a legal opinion saying:
"It's probably like this, but
we assume no liability."
Or I can read it myself even
though I may lack the expertise.
Or I can make a
decision in uncertainty.
That's what's happening.
This isn't ...
You often read about stupid banks,
the damn business or
how stupid can you be?
That's what you see in
the press in other words.
But it's...
It's impossible to provide
certainty with deals like this.
Impossible.
I have to make a
decision in uncertainty.
Then look at the consequences,
and try to straighten out things
if something goes wrong.
I venture to claim that no one ...
understands the accounting
of the Deutsche Bank.
There's an auditing company that's
familiar with the accounting system.
But no single person can understand
how those numbers are generated.
It's too complex.
That's why ...
It's like I'm demanding
transparency about something...
I can't demand transparency about.
It's like the question about the
existence of the God particle.
I don't know if it exists.
Nor do I know how ...
every last branch of
this industry works.
Nobody does.
Banks have a Plan B for everything.
If an atomic bomb struck Frankfurt,
everyone would know what to do:
Where to go, when it's
okay to go home, etc.
But there's no Plan B
for this financial crisis.
In the business report from
UBS you find an item ...
on the subject of accrual
contingent liabilities.
It says here:
UBS makes provisions
for proceedings ...
when upon legal consultation the
executive board concludes ...
that such payment is
probably obligatory ...
and the exact amount
can be reliably estimated.
For every probable case
here there are explanations.
There's a procedure
for municipal bonds.
There's the Lehman
Principal Protection Notes.
Securities issued by Lehman.
UBS sold them wrongfully,
and is apparently
facing a lawsuit now.
Next we have lawsuits related to the
sell-off of residential mortgages.
These are the 'junk mortgages'
in the US that were sold.
Then come the
disclosure requirements.
There's Bernard Maddoff.
A convicted investment
swindler UBS worked with.
'Transactions with the City of Milan
and public sector entities in Italy.'
These are municipal swaps,
interest bets by municipalities.
Then the HSH bank in
Hamburg and Hannover.
They're suing UBS for selling them
something they never should have bought.
The Kommunale
Wasserwerke Leipzig GmbH.
Puerto Rico.
There's a whole chapter about Libor,
which was recently concluded ...
through a considerable
payment from UBS.
How much was it?
$1.5 billion. Something like that.
It's interesting how such things are
never restricted to one organisation.
I'd be surprised if there were
a scandal concerning ...
a product that doesn't affect
another company as well.
That would be really strange.
The industry is way
too interconnected.
I remember one particular product.
I won't go into detail because it's
irrelevant and too complicated.
But my employer at the time made
a big fuss about this new product.
We agreed with some experts that
this product didn't make any sense.
It was extremely risky,
yielded a very small profit
and was very costly to produce:
All the things you don't need.
Eventually we were the last
to jump on the bandwagon.
Only because one of the big
bosses had read in the newspaper
that everyone else was doing
it. So, why weren't we?
We gave in to a mood
of collective panic.
And rushed out a product instead
of just leaving it to the others.
We believe ...
and we understand this
better than everyone else:
This can't work.
Now we're seeing the
results of this development.
This product was created in 2004.
Now, 4-6 years later, it's exploding.
These are the two really bad banks.
The Gesellschaft fr Wertmanagement
and the Erste Abwicklungsanstalt.
Hypo Real Estate and WestLB.
Here the Restructuring
Unit of the Commerzbank.
That's on balance. Euro Hypo
still exists as a normal bank.
It's not necessarily a 'bad' bank.
The HSH Nordbank is
a regional state bank.
Apparently it has a
balance of ?58 billion ...
marked as non-performing
loans or transaction loans.
The interesting question is
where the loss is incurred.
You can add together the
Commerzbank and the Euro Hypo.
Government involvement: 25%.
Hypo Real Estate: 100% .
Erste Abwicklungsanstalt:
100%. HSH: 100%.
The only ones who
might have to pay ...
are the 75% of the remaining
Commerzbank shareholders.
And the government.
Along with the taxpayers.
How would I explain this to my kids?
It's like picking a rotten
apple from the fruit basket.
The rotten apple is still there.
You can see if part of
it can be salvaged,
or if it's completely rotten.
I understand why it
has to be like this.
But these decision-making
processes happen so fast.
Debates about ?100-200 million
for culture go on for years.
But 100 or 200 billion for a bank rescue
is coughed up over a weekend.
It's possible. It's quite fascinating.
The pressure is mounting
on Angela Merkel.
Greece needs even more money.
If this summit fails to produce a
solid plan to combat the debt crisis,
the entire euro zone rating
will be downgraded.
Threatens rating giant
Standard & Poors.
Never before has the
finance industry so blatantly
held a gun to politicians' heads.
The important thing in Greece ...
was to prevent Greece from
going bankrupt at all costs.
That's what it was about.
There are two kinds of Greek bonds:
International or English law
bonds and Greek law bonds.
The difference is under Greek
law the state can declare:
You won't get ?10,000 for
?10,000, but only ?4,000.
That's what happened.
Under English law you need to
have a meeting of creditors.
They decide whether this
settlement is acceptable or not.
So if I, as a hedge fund, buy 75
Million of 100 Million bonds ...
then I'll have a qualified
majority for the vote.
Then I can tell the Greeks:
"Either you give us the money ...
or we'll blow the whole thing up.
Then technically you'll be bankrupt."
That's how they operate.
They try to cause you as
much trouble as they can.
They use every possible means
to enforce their legal right.
Until eventually you say:
"All this hassle over 20 million?"
Then you pay and they win.
Greek bonds were a business model.
There were targeted buyouts
under International Law.
There's a list of all the
Greek bonds out:
500, 700, 1000 or whatever.
You can search a database
and find out which are ...
under English law and which under
Greek. You ditch the Greek ones.
Then you have 50, 70 or
100 under English law.
Then you ask: How much money
do I have and what's the rate?
Let's say they're quoted at 30%
instead of 100%.
And you want to buy 75 million
of a total of 100 million.
You need 75% of the voting rights.
You possess 75% of 30 million.
You buy 28 million for the voting
rights for a 100 million bond.
That's your profit.
You pay 28 million and force
the state to pay out 100 million.
It's worth it.
That's how you do it. It was
a common business model.
Several companies
were doing it that way.
So much money is
now in circulation ...
that you can tackle
whole countries with it.
You start with the smallest Greece.
You wait to see how the EU reacts.
You create a certain...
How should I put it...
You crack the ice a bit.
Then you take on the
next biggest: Portugal.
And the ice cracks some more.
Some people have an interest
in the collapse of the Euro.
There's an enormous
profit potential there.
Surely some people have a political
interest in the Euro collapse.
That's how you'd do it.
I can't think of a good
example right now.
You look for the
weakest point, crack it,
and then break it from inside out.
I was just in Spain.
Things are really dismal there.
Really dismal.
People are really desperate.
Supermarket selections are declining.
Some things just don't work anymore.
When you order a certain amount
of construction material
tiles, bricks or whatever
they no longer get delivered.
Because no lorry will go from
A to B for a little box of tiles.
And nothing else gets ordered.
This might sound strange ...
but the whole social
infrastructure is slowly crumbling.
There's no more buying power
so no one's trading anymore.
When there's no more trade,
transportation declines.
It's like dominoes falling.
If you go there regularly like I do...
then you notice each time ...
how the country is crumbling.
People are trying to build up some
kind of subsistence existence.
Instead of flowers they're now
growing potatoes in their gardens.
It's really noticeable.
With countries, you have to find...
the origin of the debt problem.
The real estate crisis plunged
Spain into the abyss...
and was multiplied and
reinforced by the banks.
It's a debt crisis in the private sector.
Not in the national budget.
It's a similar situation
in the Netherlands.
But no one likes to talk about it.
Just imagine:
I think 120% of Holland's
Gross National Product...
is real estate debt.
Only Property. Private debt.
No one cares about
the national debt.
Because private debt
goes far beyond...
what's considered
reasonable for national debt.
If suddenly 30% of the Dutch can
no longer pay their mortgages...
I think it's highly unlikely
the bailiff would evict them.
They'll have to find a solution.
Like they're starting to
cancel evictions in Spain.
And trying to keep things
from getting out of hand.
Or you'll force people onto welfare.
And who wants that?
What can we expect next?
France.
France.
They have a severe
economic problem.
The essential structural
reforms are not being tackled.
I'm not an enemy of taxes.
But they're adopting
a fierce fiscal policy.
I think France is going
to become a problem.
Then what?
- Then it'll be over and done with.
Game over.
That's why they're desperately
trying to prop up Spain or Italy.
It's a chain reaction: Greece,
Portugal, Spain, Italy.
It's always the next in
size. Then France...
If France gets into such a situation,
no one will be able
to bear the burden.
Forget it.
They'll have to come up
with something else.
It's going to blow up
in our face one day.
Either financially or socio-politically.
There's no way this is going
to have a happy end.
Eventually I was laid off.
I've reached an age where
the people around me ...
are being phased out.
Nobody's working till retirement age.
Usually companies offer
a generous settlement.
No bonuses, but you get your
salary for another 5 years.
You're lowering the average age.
53, 54, 55. That's it.
It happens continuously.
People get a better job and leave.
Or get sacked for messing up.
It's another matter
when it come in waves.
When they tell you, usually
at the end of the year:
"We're cutting 4000 jobs.
800 here and there."
So you can figure out
which area is concerned.
It's a bit like a front
campaign in World War I:
Let's see who's still in the trenches.
Some people quickly slip off.
Suddenly they're sitting where
you can't see them anymore.
Over in the corner somewhere.
It's pretty silly.
But you can't help thinking:
"When's it my turn?"
There's more ... fear.
It used to be different.
People were sacked and
new ones were hired.
But this kind of...
war-like experience...
didn't exist back then.
Nowadays it's a management tool...
to put pressure on people.
I had a Colombian
boss once who said:
I kick out 10% of my
employees each year.
Then you know you've
got 10 years tops.
Do you mind talking about this?
No. I just don't know why...
you're always trying to
get more out of me.
I'm telling you as much as I can.
There are no more
details to talk about.
I told you, it hurts. Obviously.
And this process is what it is.
So a family is created that drags
you in and captivates you.
But the way you're discharged
from this family doesn't ...
match the family spirit that was initally
presented as a mirror or option.
Yes, that's right.
- So this family never really existed.
No.
You believed in a family that ended
up chucking you out the backdoor.
Yes, but...
It's like being a mercenary versus
dying for one's fatherland.
There's something for everybody.
I need to feel loved by
an institution, if possible.
And ... feel valued.
Then it's even worse when the
rug is pulled out from under you.
The mercenary feels no pain.
He doesn't give a damn.
It's a fairly normal cycle.
First there's euphoria.
Then the wave washes you
away and you swim and swim.
And sooner or later
you have a hangover.
Then I moved heaven and
earth to get a new job ...
that was similar to or
better than the old one.
In retrospect I have to say:
That was one crucial step too many.
I felt like I'd lost all my dignity.
It didn't have to be like that.
It takes a really long time...
to take a critical view
of the whole matter.
With most people, even
those who've lost their job,
their top priority is:
How do I get the same job
again as fast as possible?
They don't ask themselves:
Is there some life plan I've
always dreamt about?
And now I can try it out?
Instead...
they continue along
the same old path.
This is a problem in an industry
that's dramatically shrinking
like the banking industry.
I think a lot of mentally
affected people ...
will fall by the wayside.
Because they're...
incapable of leading their own lives
outside this system.
Yes.
Why does no one
trust banks anymore?
Some banks say it's
because of the crises.
Others say it's the stock markets.
We did something a
bit unusual for us.
We looked for the reasons
in ourselves and asked:
Does Germany need another bank
that does the same old thing?
Or do we need a bank that puts an
end to speculation on basic foods?
That finances renewable
energy for the future.
That lends money to small
and mid-sized companies.
That doesn't reward consultants for
selling as many contracts as possible.
But only when their
clients are satisfied.
There's a long road ahead of us.
But it also begins with the first step.
I don't think anything's
happening within this system.
Everyone's staring at politicians
and regulators and saying:
"Tell us what to do!" Actually they know
exactly what's expected of them.
But they're not doing it.
Instead they run ads that
state: "We understand".
Or print some gigantic
corporate identity brochures ...
and corporate
responsibility brochures.
You can observe this, too. I've
been involved in philanthropy.
Corporate social responsibility
is an important part of it:
i.e., the donations and social
activities undertaken by companies.
This may knock some people's
socks off who know better, but:
The bigger the shit, the thicker the
corporate social responsibility brochures.
Yes.
It's good that measures
are being taken.
I think what's being done...
within the political decision-making
framework is sensible.
But I'm convinced they
won't achieve their goal.
They won't achieve their goal.
Laws are passed in 6 months.
?150 billion to save a bank
is passed in 6 months.
But what people think...
reflects the social situation.
It will take decades to change.
No politician can pull that off.
Just look at the semantics
used today: 'The markets'.
There's no such thing
as 'the markets'.
We act like they're some godlike
power descending upon us.
'The Bank' or 'The Company'
decided.
No. People make decisions.
And if you tell them
to stop, they'll stop.
You just have to do it the right way.
If the boss of a large investment bank
sent out an email tomorrow saying:
"Every trader who still has shorts
in Spain, Portugal or elsewhere,
who is speculating against these
countries, will be sacked."
It would end immediately.
Other parties would
have to join in as well.
But if the will were there, it
would be like pulling the plug.
So why doesn't this happen?
Because no one ever
takes the first step.
Do we need a fresh
start? Yes, for sure.
But then...
Either an external shock:
i.e., political interventions
or another crisis.
Or a radical freak
who can convince us of
a new business model...
that works.
Wasn't the recent shock big enough?
No.
No.
Only simpletons believe the
market is capable of learning.
We had that topic: Can banks learn?
It's collective versus individual
learning, but the answer is no.
No. Markets don't learn yet.
Investors don't learn either.
They jump into the same abyss...
that they jumped into or were
shoved into 2 years ago.
Now they're gladly jumping into it.
There are lots of examples
dating back to the 30's.
That's...
No.
I don't believe in it.
Was the shock big enough?
Sure, it was a big shock.
Let's get on with it.
Rainer Voss quit his
job at his last bank,
and is now a man of
independent means.
The building was abandoned
after the merger of two banks.
It has been empty for 6 years.
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