Barings is a small commercial bank in London. It made the headlines the world over due to the collapse that resulted from disastrous operations carried out in the Tokyo Stock Exchange by one of its employees, Nick Leeson, their agent in the Singapore branch.
The news would not have attracted much attention had it not been for the amateurish, folkloristic quality of scandal journalism that reports certain economic events, reducing them almost to fiction, in the ambit of the powerful business families, high finance and industry.
But what really happened? The case indicates a speculative mentality that is spreading not only among the small banks, which are used to moving like rogue torpedoes in the increasingly stormy sea of the principles of the international stock exchanges, but also among the giants in the sector. The chance to make enormous profits is affecting not only the individual’s disposition to risk and adventure, but can affect the projects of even the most astute and prudent bankers.
Men like Leeson are nothing exceptional. They are little more than ordinary employees who operate as intermediaries with the stock exchange. They transmit orders for buying and selling in the ambit of exchange and value. The resulting flux of fictitious money—which can be transformed into ready cash at the time of the periodical statements of accounts when they total up what has been bought and sold—is leading to limitless growth in the amounts being negotiated. Moreover, the computerisation of buying and selling contracts has made possible rapid variations that were once unthinkable.
This has led to various consequences. We will consider two of the more important ones here. Such speculations are making it possible to restore the equilibrium of the international market within certain limits (at least that of the dominant stock exchange). This allows time and the possibility for the giants of the world economy to run to the rescue, i.e. to deaden the blows they deal each other in the conquest of markets, the search for better orders, the choice of programmes and production lines, and the importation of new products and new ideas of consumerism. Whereas before, in the face of a risked collapse of the stock exchange, the strategy of the individual multinationals was more discreet and prudent, they have now become more aggressive. Insignificant shrimps like Leeson work like slaves locked up in their golden cages to make this telematic reality possible.
Second point. Banks have now assumed unprecedented importance. They are no longer merely tellers, but have become economic operators themselves. That is to say, they work on their own, making projects for and managing large chunks of the financial market. Finally, higher and higher stakes are created (such as those based on the so-called ‘by-products’, i.e. on the trends of the various world stock market indexes), where there is no longer any relationship with the concreteness, albeit it rarefied, of the individual companies.
Obviously, at the end of the day, there is a price to be paid for the collapse of one single bank and the coverage given by the others called to the rescue.
We leave it up to you to guess who pays it.
[Original title: Un piccolo uomo a Singapore, in “Canenero”, no. 18, 10 March 1995. English translation by Jean Weir published in “Let’s destroy work, let’s destroy economy”, Elephant Editions, London.]