Wednesday, 25 April 2012

Structured products – looks like the Banks never learnt their lesson

 
The staple of the Hollywood B movie was the Mad Scientist working away in his laboratory desperately trying to engineer a monster or come up with a powerful formula which would lead to world domination. Inevitably all these grandiose plans ended in failure and the world carried on as before.

Fast forward to today’s world and the threat comes from a different source the Mad Banker. Working away not in laboratories but behind banks of computer screens these would be Masters of the Universe still try to control the world through their own form of financial engineering.

By developing trading instruments and programmes of ever increasing complexity they have created monsters which just like Dr Frankenstein they could not control.

In the UK with more than £1.3 billion poured into complex investments during the first 2 months of 2012 the ingredients for another toxic cocktail are being put into place.

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