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How To Lose $7.2B With Just a Few Basic Skills
Cityslacker recommends a Register piece speculating on how a lowly trader at the French bank SocGen was able to lose billions using only Excel VB. The author freely admits that his story is not based on hard sources, but his experience in the banking industry lends plausibility.
I wouldn't put any money based on what the Register says. Not a very reliable source!
XML is like violence. If it doesn't solve the problem, use more.
The SocGen "scandal" scares me mostly because it seems, with consistency, the people calling foul in the media tend to be the very people who also want more regulation of banks in investment schemes. As the media calls for tighter controls over investments, I find more people willing to nod their heads in agreement, even though we need to see that it is CURRENT regulations that lead to these fiascos.
Why do we have ANY bailout protections for investments, including savings accounts? When you give someone your money and hope to make money in return, there is risk. Part of the chance for reward (profit) should be loss of your money. That's what investing is. Yet when we get MORE regulatory control, it gives people less fear in losing everything.
The FDIC (and the SEC) are both such organizations that increase regulations so people feel safe, even though they should NEVER feel safe about investments. That's risk, people! The FDIC has to "insure" deposits because of the fraudulent fractional reserve banking system. What we need is full reserve banking, with private regulatory audits, and greater knowledge that the money you put in isn't loaned 8X more than the bank has on your deposit record.
What SocGen did is not uncommon. First, the bank has the ability to create money out of thin air (see the money multiplier effect). Second, most investments today do not generate any profit or income (see dividends), they just grow in value because other sucks have more money in the future than the current sucker had to buy (see monetary inflation), so the price seems to go up even though the value stays on par or goes down.
For me, there is one investment: put money into my own business, which pays me dividends (profits) instead of just showing an inflationary-based stock value increase. If I need to "save" money, I put it into hard assets such as gold, land (not mortgaging it but for cash), or hoarding in a variety of currencies (physical hoarding, not sticking it into a bank to have it cause inflationary-effects via the money multiplier effect) like the Euro, the Rupee, the Yen and even the US Dollar.
It sickens me that people are going to call for more bank regulations, when it is obvious that regulations of any kind on investments only do one thing: make people feel safe when they should think twice about anything risky.