In Bed with a Wad.

Remember Oliver North? He was at the centre of the Iran-Contra affair where, as part of official covert CIA activity, hugely over ordered on guns for the Home Security initiative, shipped them to Latin America to arm gorillas who in gratitude shipped cocaine on the return flight back to the USA. Hard drugs apparently contribute many billions to the US GDP per year. He was convicted for this win-win economic ingenuity but, and here’s where I’m getting to, some one said, quote, “Steal a yard (garden) and you go to jail. Steal a country and you’re a hero.”

Now I met my financial advisor today, no names, no pack drill. After a long, wide ranging conversation about the current investment situation, banks and world economics he said these astonishing words. “I’m (personally) considering getting a chunk of cash out and putting it under the bed.” Read that again, “I’m considering getting a chunk of cash out and putting it under the bed.” That from a financial advisor! He hasn’t done it but for a financial advisor to even have that thought is a touch alarming. Unfortunately Gordon Brown would have benefited from it when he sold £billions of the UK’s gold reserves in 2002 for 20% of what they would be worth today, the price of gold having gone up five times since he sold it. Oooops!

Psychotic Group Collusion, the capacity for any expert group to drift away from normal rationality, suggests when bankers meet bankers meet bankers in the Basil Accord and such like they will, as a group, gradually drift unwittingly into irrationality. When someone asked a top banker who was part of the second Basil Accord how they came to the decision of requiring bank capital reserves to be 8% he said, ‘well someone came up with 7% and we thought that was a bit low so we went to 8.’ I’m guessing if that someone has suggested 12% they’d have thought that a bit high and gone for 11%. I’m thinking if the complete global financial system collapsed or not on these decisions a little more prudent calculator work is required rather than just sticking your finger in the air to see which way the wind is blowing.