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Foreign Exchange

Plus ça change

It is remarkable how often things seem to repeat themselves.

A major problem I have with this column is the image I project. At times, I feel like I’m just portraying myself either as some old curmudgeon who has seen it all before or a rose-tint bespectacled naïf who says how wonderful everything was in the old days. But it is remarkable how often things seem to repeat themselves. And we should all be aware just how quickly history can be distorted. Who knows? In a few years we may be waxing lyrical about what great places Bear Stearns, Lehman and Merrill Lynch were.


Actually, that may be going too far.


As regular readers will no doubt have grown tired of reading, 20 years ago I was working for Midland Bank. This was a completely shot institution, having bought the Californian Crocker Bank – or ‘Crocker shit’ as we called it – which had a massive portfolio of bad mortgage loans on its books.


FX trading became quite important to Midland, because it was relatively profitable – and could have been a lot more so if we’d known what we were doing. It was also a great way of marketing the bank – Midland kept its name in the limelight for very little impact on the balance sheet.


I do recall that one year I even made a fair bit of money, only to get stiffed on the discretionary bonus. The reason was that the bank had done its cods on its sterling mortgage book. “The yield curve inverted,” I was solemnly told. Doesn’t that sound familiar?

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