Banking on it

Modern economies are built on castles in the air. We have entire industries depending on a willing belief in their nebulous worth. Entertainers know the fickle nature of their audience and a whiff of scandal can suddenly end a career of decades, no matter what the talent involved. In fact so much scandal has there been in recent years it has created practically a causal link between talent and sexual impropriety. Is this for real, or is it more likely that if the opportunity is there, our base human nature will take advantage of it? I’m going with the latter; it’s far simpler and more pragmatic than searching for the sinister explanation.

When it comes to flimsy, there is no bigger flight of fantasy than the money game. Money was once issued as an IOU against realisable assets. It was a value token for labour against goods and services. One hour of my time buys dinner. Or it buys one hour of your time. I trade my sticks for your turnips and so on and I hope eventually to have a tall enough pile of sticks to never have to worry about starving. But as the Jenga bricks of greedy gelder are stacked higher, reaching impossible heights, the perceived worth of some things – shares and expectations - decouple from reality.

A FTSE 100 boss is paid 150 times what his workers get not because his intrinsic value is so high, but because he can make or ruin a deal just by saying yes or no. Similarly investment bankers get fabulously rich on the backs of their clients, but when they get it wrong they get it wrong big and there was once, in folklore at least, the presumption that a failed banker would take the ‘honourable’ way out and plunge to their death from a high window, that defenestration being symbolic of their fall from grace and power. In recent years the perception is that the money gurus are long overdue such a descent.

There is a story that when Einstein died he arrived in heaven to be informed that his room was not yet ready. “I hope you won’t mind staying in a dormitory.” Said St Peter, “We are very sorry, but it’s the best we can do and you will have to share the room with others" Einstein says this is no problem at all and there is no need to make such a great fuss. So an angel leads him to the dorm and Albert is introduced to the present inhabitants. “Here is your first roommate. He has an IQ of 180!"

"That’s wonderful!" says Albert. “We can discuss quantum theory and relativity." The angel escorts him to an elderly gent with a flowing beard, playing chess with himself. “Ludwig here has an IQ of 150" Einstein shakes his hand and declares “I look forward to discussing mathematics and physics with you, while we wait for our rooms.” Moving on, he is introduces to a third man, Thomas, who he is told has an IQ of 110. “That’s great!” he says, “We can discuss the latest Broadway plays and some of those marvellous new movies.”

Another man steps out to shake Albert’s hand and introduces himself as Tarquin. “I’m your last roommate and I feel inadequate in such august company. I’m sorry, but my IQ is just a shade over 80.” Albert Einstein, ever the genial mixer, smiles back at him and asks, “So, where do you think interest rates are headed?"