The International is one of the worst movies I have ever seen.  It  tries to invent some sort of multi-headed Hydra Bank controlling developing world conflicts but fails miserably. The Bank – which we know is a bank because it’s a vast Ministry of Truth-style building with about  5 nasty people in grey suits having murderous conversations – makes money by setting up tiny arms deals.  Apparently every politician in the world has a hand in it, because Our Hero keeps being thwarted or told to stop his investigation.  There is nothing remotely bank-like about The International Bank- it is really just an arm’s dealer – although it has an almost unlimited ability to organise teams of murderous gunmen into picturesque locations.  The director, despite spending about £100m on gunbattle special effects, invested about a fiver on how banking works.  No, less than that, because you can read about Banking on Wikipedia.

So, really, it is about arm’s dealing, with one truly dire attempt to wrench this round onto money: when one of the plotters explains to the cartoon African thug: “Control the guns, and you control the debt”.  Woo – ha ha ha! he could have added, without answering the obvious question “What the f___ does that mean??” Debt is a contract, not some monster from the depths or giant space weapon, Hollywood-moron.

A far more interesting account of how finance can control and disadvantage one group of people in a subtle way is given here on Megan’s blog.

The person most willing to take on risk is the one unaware he is doing so. He charges no risk premium… The resulting market equilibrium is that the guy who is unaware of the risk ends up loaded with it. Then the music stops.

So it’s about asymmetric information, about the winner’s curse.

This was evident in the dotcom boom.  When did you know it was over? I knew when the man in the street got onto the magic of the latest wonder-company.  You knew it was over when you could see the tip sheets lying around on your elderly relatives’ sofas. At that time I expressed my views on Motley Fool message boards, and the pattern was so clear you could trace it in parody: first the insiders, then the wider market, and then, finally, the wide-eyed born again naif, chucking all his money at the thing and refusing to believe it was over till it really was over.

Just to take a single example: trace the history of Emblaze, known as Geo Interactive Media for a while.  The message board (I’m very proud of this post, understandably) was fully of techy but naive zeolots.  The insider Chief, I just now learned, who was idolized by said techies all through 1998-2001, is now in some farce of criminal investigation, plea-bargaining and low level crime. Since the stock has gone to £billions and back, masses of money has been lost – and therefore, masses has been won.  The early insiders won, the late outsiders lost.  And this was repeated over many many stocks.  See Baltimore, for example.  Arm Holdings. (Yes I’m very proud of those two posts as well.  But I actually bought one or two of these companies).  And in every case, run by decent people, technical experts, market visionaries.  That is what is interesting about how finance f***s people – it takes hardly any devious assasinations, disappointingly.

It doesn’t need cat-stroking murderous villainy.  This is why I was sceptical about the idea of S&P conspiring to muck around with ratings – it is too conscious and thought-out and, well, villainous. All you need is human nature, exploited almost without knowledge that  it’s going on.  But I doubt they’ll ever make a movie about it, or that even Art will work (hat tip, Tim Worstall)


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