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Nick Leeson Speaks!

NICK LEESON: Let me tell you about losing billions – by the original rogue trader

When markets are going your way, the feeling is brilliant – more intoxicating than champagne, more exhilarating than sex.

A successful trade makes you feel invincible.

But when things start to go wrong, you hide your losses and blithely try to carry on in the hope that you can recoup them.

You can’t tell your colleagues that you’ve lost money – the macho ethics of the trading desk do not tolerate admissions of failure. You certainly can’t tell your wife that your high-end life is at an end.

It is as if you are slipping into a personal abyss as the panic begin to eat at you.

The only way back is to bet more, risk more – and lose more until there is no hope of return.

Emphasis added by me.

So much for the markets being about investment.

It’s been turned into a global casino.

And the rest of us are the losers.

Earlier today: Nick Leeson Shrugged

Author Pirates Self To Increase Sales

Well, this will make many Suits scratch their already-balding heads:

Alchemist Author Pirates His Own Books

Coelho’s view is that letting people swap digital copies of his books for free increases sales. In a keynote speech (embedded below) at the Digital, Life, Design conference in Munich he talked about how uploading the Russian translation of “The Alchemist” made his sales in Russia go from around 1,000 per year to 100,000, then a million and more.

How many times have people pointed out the example of Baen Books freely giving away ebook editions of their printed books?

Why hasn’t the point been grasped yet?

Giving It Away

When my first novel, Down and Out in the Magic Kingdom, was published by Tor Books in January 2003, I also put the entire electronic text of the novel on the Internet under a Creative Commons License that encouraged my readers to copy it far and wide. Within a day, there were 30,000 downloads from my site (and those downloaders were in turn free to make more copies). Three years and six printings later, more than 700,000 copies of the book have been downloaded from my site. The book’s been translated into more languages than I can keep track of, key concepts from it have been adopted for software projects and there are two competing fan audio adaptations online.

Most people who download the book don’t end up buying it, but they wouldn’t have bought it in any event, so I haven’t lost any sales, I’ve just won an audience.

I assert the same thing holds for music and video.

I’d rather go out and buy a CD and rip it at a higher rate than, say, Last.fm’s low bitrate.

TV networks and movie companies shouldn’t fear crappy 240×320 pirate versions of their work on YouTube and other services. With digital TV and its higher resolution just around the corner, how can they really think such low-quality versions are competition instead of free advertisements?

Heed this, Suits:

Most people who download the book don’t end up buying it, but they wouldn’t have bought it in any event, so I haven’t lost any sales, I’ve just won an audience.

They’re Singing, Bye Bye Miss American Pie …

U.S. in role of wounded giant at Davos

George Soros, the financier who made a fortune betting against the pound, went so far Wednesday as to say that the downturn would put an end to the long status of the dollar as the world’s default currency.

“The current crisis is not only the bust that follows the housing boom,” Soros said. “It’s basically the end of a 60-year period of continuing credit expansion based on the dollar as the reserve currency.”

Signs of a new economic order abounded in this Swiss ski resort: the minister of commerce and industry of India, Kamal Nath, noted that China had overtaken the United States as India’s largest trading partner – buttressing his view that India could largely sidestep an American recession.

The head of the National Bank of Kuwait, Ibrahim Dabdoub, said Americans who opposed sovereign wealth funds like the one run by his government needed to come to terms with the new reality.

Completing the role reversal, Nouriel Roubini, an American economist, said, “the United States looks like an emerging market,” with large budget deficits and a swooning currency. By contrast, he said, Brazil, an actual emerging market, had done a better job of overhauling its economy.

Emphasis added by me.

First, recall what I just said earlier this week

Now look again at this bit from above:

the minister of commerce and industry of India, Kamal Nath, noted that China had overtaken the United States as India’s largest trading partner – buttressing his view that India could largely sidestep an American recession.

They are beginning to ask that question.

And George Soros is a very dangerous man. He was profiled by CBS’s 60 Minutes program years ago. I saw it and was chilled to the bone.

It lacks the immediacy of the video, but here is a partial transcript of the critical part.

His lack of empathy, even decades later, is horrifying. It is sociopathic.

People make markets. Markets are made for people.

Individuals such as Soros who ignore the human consequences of their actions are getting all of us into a mess that will take years to get through and which will lead to the unnecessary deaths of millions.

Gone are the days of giants such as Henry Ford, who understood the connection between his factory and the market:

With wages the same everywhere, factory workers often changed jobs. Henry Ford wanted loyal workers who would remain. He raised wages to five dollars a day.

That made Henry Ford popular with working men. He became popular with car buyers in nineteen thirteen when he gave back fifty dollars to each person who had bought a Ford car. Henry Ford was demonstrating his idea that if workers received good wages, they became better buyers. And if manufactures sold more products, they could lower prices and still earn money.

Emphasis added by me.

Today, we have little people such as Soros, who think nothing of the consequences of breaking a nation’s currency. As if money was a thing in itself and had nothing to do with the people who need it in order to live.

What has George Soros and his kind added to this world other than a clever and damaging way of increasing entrenched wealth? What did he ever create that added to the plus side of the human ledger? Point to something tangible that benefits your everyday life. You can’t.

Let me paint a very simple picture of the kind of people these are.

You live in a small village. Everyone in that village survives by getting water from a single well.

Soros and his ilk are the ones who piss in it.

You’ve seen his kind before:

“You’re worth more dead than alive!”

You didn’t want to be him. So don’t defend him now.

iPhone/iPod Touch Will Have The Greatest Apps Evah!

Fake Steve Jobs ragged on this but I think it’s an exciting preview of the strange kinds of apps the iPod Touch and iPhone (and iPod Air?) will inspire.

Macintosh vets will remember the Talking Moose and Neko. As silly as they seemed, they made the PC guys gnash their teeth in envy (as they should have!).

I can’t wait for the SDK (iSDK?) to be released and for the flood of apps to begin. I expect the number and variety of apps to absolutely stagger those who have been used to apps for PalmOS and Windows Mobile.

I saw it happen way back when in the early days of the Mac. This will be those days all over again — only better!

It’s Not For You To Know, So Don’t Ask

Lost Interview Depicts Ledger In Disturbing Light

NEW YORK (CBS) ― Here’s a more candid look at Heath Ledger the person, and what he was really like.

CBS 2 HD’s Scott Rapoport spoke one on one with the actor back in December 2005 about his movie “Casanova.”

The lost interview is even more eye-opening in light of Ledger’s tragic death in New York City on Tuesday.

Jumpy, fidgety and biting his nails …

“Oh, that’s cool. I’m glad you enjoyed it,” Ledger said when told “Casanova” was a fine flick.

That was the Ledger Rapoport found when he sat down with him two years ago to talk about his new movie “Casanova.”

I believe that was the real Ledger. He hated having explain himself or something as ineffable as his work. That’s how some people are.

From time to time I’ve been engaged in Comment Combat over at teleread with people who think an ebook future will demand that writers become more celebrity-like. Especially for those who bypass the global monstrosities of print publishing and do it themselves. That would necessarily mean doing interviews, personal appearances, signings, etc.

I always point out that not everyone can do that. People have different personalities, temperaments.

No one seems to understand that. (One societal by-product of this lack of understanding are pills prescribed for the “illness” of shyness — tagged by diabolical marketeers as Social Anxiety Disorder.)

And I think Heath Ledger was a victim of that failure to understand.

I quote William Hazlitt:

On the Conversation of Authors
(London Magazine Sept., 1820)

An author is bound to write –well or ill, wisely or foolishly: it is his trade. But I do not see that he is bound to talk any more than he is bound to dance, or ride, or fence better than other people. Reading, study, silence, thought, are a bad introduction to loquacity. It would be sooner learnt of chambermaids and tapsters. He understands the art and mystery of his own profession, which is book-making: what right has anyone to expect or require him to do more — to make a bow gracefully on entering or leaving a room, to make love charmingly, or to make a fortune at all? In all things there is a division of labour. A lord is no less amorous for writing ridiculous love-letters, nor a General less successful for wanting wit and honesty. Why, then, may not a poor author say nothing, and yet pass muster?

— from The Centenary Edition of Hazlitt’s Selected Essays, edited by Geoffrey Keynes, F.R.C.S., The Nonsuch Press, 1948; pgs. 446-447

Your curiosity can kill us.

Bookmark this page as a reminder.

Nick Leeson Shrugged

Did SocGen trades trigger market rout, Fed cut?

LONDON/PARIS (Reuters) – Societe Generale’s shock disclosure of a fraud that lost it $7 billion has left investors wondering about a link between the fiasco and Monday’s European stock market rout.

The sharp fall, which was followed by an emergency U.S. rate cut, came as SocGen tried to close out positions built up by one of its traders.

SocGen, France’s second biggest bank, said on Thursday that it had been the victim of a massive and “exceptional” fraud by a junior trader resulting in losses of 4.9 billion euros, and announced a large capital increase.

SocGen said the trader, responsible for futures hedging on European equity market indexes, had taken massive fraudulent positions in 2007 and 2008 beyond his authority.

For those who don’t know: Nick Leeson wikipedia entry.

Also see: Ben Mezrich Knows How To Tell A Story

And: Revealed: ‘Invisible man’ rogue trader, 31, behind £3.7 BILLION bank fraud

The guy was 31:

Kerviel, who earned less than £75,000 per year – including bonus – was described as a “technical whizkid” loner who hacked in to the bank’s immensely sophisticated trading systems.

It will be interesting to see if he actually did “hack” or if this is a cover story to stifle future liability by SocGen. I expect it will come out that their trading system was sloppy, lacked any safeguards, and traders had no credible oversight.

And thus the Collapse Of All Things will happen. It won’t be solely widespread greed. It will be a single egomaniacal adrenaline-junkie jackass with an insanely-leveraged position that crashes the entire global financial system. And then all of the egomaniacal adrenaline-junkie jackasses who run things will destroy our confidence in everything else.

Welcome to your future.