The term “bankster” has recently become fashionable due to the various financial problems facing governments and economies. Problems arise and are solved in one way or another, but only by financial ruses.
In the 1980s, when I worked with one of the best investment banks in the world in Europe, hedge funds, derivatives and all the products traded on the capital markets were the main theme of everything informed investor.
One of the bank’s most legendary traders at the time recruited the best math and physics minds from the best schools in the UK to train them and create financial products (derivatives).
The boys’ profits were out of proportion to what a normal man or businessman could earn in a normal business, especially since they had just emerged from the university.
Of course, they were all delighted. The simplified procedure was based on the real economy. They created 3 or 4 level products on real assets and these were bought and exchanged by hedge and retirement funds. Since trading was in large quantities on a daily basis, the profits were excellent, but the result, from an economic point of view, was that strong minds were deprived of the production of real goods and services. Instead, profit was created by the paper trade. This generated claims to real wealth without creating a potato.
This has increased inflation and created bubbles. Of course, no banker, financial consultant, or investor wanted to use their logic at the time, because they all plunged into the tide of rising profits without thinking of the immediate future.
It took years before the surprised sector started to see what it knew well that it was wrong when it went bankrupt. Everyone was looking for a scapegoat, and most of the solutions were, again, based on a 2 + 2 = 5 logic.
Regulators will argue that banks are regulated and have been separated from what we called a “Chinese wall”. between trading in bonds and stocks and advising or lending companies to secure and control any type of action that could create Distortion.
This is far from the truth. From the moment that banks are today authorized to be listed, they are free to invest their own money in paper assets and their status is based on their profitability in the capital markets and the game is lost.
This then leads to quests like: What is a bank? What is the role of a bank in a community? What is credit? How can credit create wealth?
Credit, as a word, is a derivative of the Latin verb credo, or “I trust”. Thus, “trust” is the essence of credit and banking.
Bankers were historically distinguished among prominent citizens of a community who could give credit to businessmen involved in the production of an article or good, and thus help them to create wealth.
Big or small, technicians or industrialists, traders or traders of goods, it is the people of production who can create real wealth made up of products and services. The bankers earned their money from the percentages of the company’s profits.
From the moment that the banks became companies and began to compete with the entities in the field of production, they diluted their status and lost their real role of supporting production.
So is there a solution?
Sure, but it takes insight, knowledge, determination, and most of all, courage to first understand the problem, then solve it gradually so that the consequences are manageable.
Each tool created must return to its real function. Capital markets should focus only on manufacturing. This is the reason why they were created.
Banks should be delisted and work as true supporters of production in agriculture, industry and commerce.
As for paper contracts, they should also be limited to actual coverage for the manufacturing industry. It is in any case the reason for their creation.
And you never know … someone, somewhere, could listen to the voice of reason and start this revolution.
The post Could “banksters” become bankers again? appeared first on News 24.