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What, Nothing’s Wrong Here …

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Another day, another bank in trouble.  It might be easy to do little more than roll your eyes at the news that Standard Chartered of the UK is caught in a scandal, except this one is very different for many reasons.  To start with, the allegation is that they were the launderer in chief for the nation of Iran over a period of at least a decade, helping them hide $250B in money transfers around sanctions.  This is also one of the largest banks in the world, with total assets around $600B and operations around the globe.

But where this gets especially interesting is through the still developing role of the firm Deloitte & Touche.  They are one of the “Big Four” auditing firms that has been in the crosshairs of a large number of people convinced that the lack of truly independent assessment is one of the main problems in the teetering financial industry.  This scandal, different as it is, could be the one that coalesces a diverse group of detractors into a movement – even though auditing had very little to do with it directly.

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Investabots Amok!

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You are walking down the street, texting to a friend, when suddenly everything freezes. These things happen all the time, you reason, so as annoying as it is you reboot and carry on.  A desperate text a short time later comes as a call from your friend to please stop bombarding them!  What went wrong?  You have no idea.  You reboot again and keep walking.

Things like this happen to everyone these days and we’re all used to it.  Software glitches.  Bugs.  Crappy software runs amok in the hands of appliance users.

Now imagine that you are a Wall Street trading firm that handles orders for thousands of clients and this happens to you.  Except that this costs $440M in bum trades by the time anyone catches it.  That’s exactly what happened to Knight Capital, the company that used to handle 11% of all trading on Wall Street.  It’s something that was inevitable in a system that is too big to be useful – and the world is starting to realize how dangerous this is.

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Global Currency

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Imagine a single currency, all around the world.  No more converting between Dollars and Euros and Pounds, the money in your wallet is your ticket to ride anywhere.

Sound like a fantasy?  Throughout history it’s been more or less the standard.  The coins from one era might come from Rome or Madrid or London or Beijing, but one accepted unit of exchange was the norm until very recently.  In many ways, the standard now comes from twelve Federal Reserve banks in paper form, printed with green ink.

But we’re a global society now, with total worldwide trade taking up nearly $8T of the global product of $52T.  Is it time for a new global currency that isn’t subject to the needs and politics of one nation?  More and more, the answer is “yes”.  But getting there, as with anything international, is the hard part.

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