Global Markets are anything but integrated. What if we had a paradigm shift in the way we think, the way we actually do business with each other, between nations. Balanced global trade can only occur if we have transparent, accessible, efficient markets, with standardized contracts and on a standardized platform of global exchange. We are on the cusp of achieving this, although most people cannot see it. Sam’s Exchange aims to give its readers a clearer view and a platform for discussion. Markets, trade and economics are in fact nothing more than the result of our thoughts and actions expressed in numbers, not the reverse.
*
So who are They? They say the world is in crisis, that our financial system is about to collapse. They say if we do not give more taxpayers’ money to the banks, the system will go into a meltdown. They say that if the taxpayer does not bail out their own, and other governments, that entire countries will default. That’s what They say. Who are They? What if we say ‘no?’ No more bailouts. Let the banks go bust. Let the financial system melt down. The banking crisis, and the sovereign crisis, are the same crisis. What will They do if we say ‘no?’
Financial markets run on only two things: fear and greed. Most people will have heard it expressed in terms of Bulls and Bears. So which is it that is running the markets today? Is it fear, or greed? I always thought markets ran on supply and demand. That was how it was supposed to be, but today’s markets are so opaque, and so unnecessarily complicated, with derivatives on derivatives, which are written by the banks, and sold to the banks, for the best interest of the clients of course. These markets are estimated to be around a notional value of up to $600 trillion, and those markets are frozen. Frozen solid. They won’t tell you that of course. Instead, They will tell you that if taxpayers do not underwrite these casino style markets, the system will collapse. They are right about one thing. The system will collapse, and we should stand back and let it collapse.
They said in June, that if we did not give Europe one trillion euros that the euro would likely fail, and that would be bad for all of us. They said that Greece, Spain, Portugal, even France were teetering on the brink of collapse. They never said how this happened though. They just said how much it was going to cost. They said that the taxpayer had to foot the bill. They had already drowned the American taxpayer in generations of “un-payable” debt. Remember TARP (Troubled asset relief program)? Where does all this money come from? Do They just print it? Well yes, but not They, the Federal Reserve does, that government sounding private institution. They don’t print money, They print Federal Reserve notes, and they are actually debt instruments. That’s right, debt, not money.
So are They the Federal Reserve System, the shadow bankers of the world? Isn’t the Fed owned by a group of private banks? I think so. And that means that the banks which need money, go to the Fed, which they own, and have them print more debt, which the taxpayer underwrites and gives to the banks, which is supposed to then enter the economy in the form of loans to business. The problem is They are not lending the money. They are keeping it on their balance sheets, because They have huge derivative positions which are frozen, dead. It is a huge Ponzi scheme, and the pricing mechanisms which supported these markets are also coming into question. How do we price such things as gold, oil, gas, stocks, and bonds? Not via supply and demand, but via fear and greed.
So what now? Now we know who They are? Is it possible that with all today’s modern technology, real time exchange of information of news, of pricing, that They are actually not the enemy, that They could be part of the solution? Is the world ready? Ready for a paradigm shift?
Today’s markets are broken, fragmented. The system is not global: it is a patchwork of regional pieces trying to be global. In reality, the Federal Reserve is not the enemy; it is just an accounting house. What we need is a new medium of exchange. A multi-lateral, not unilateral, a multi-currency - not a single currency, system. A system which encourages and rewards efficiency. A system which ignores fear and greed, a system which is balanced. A system with a global view, a global mandate, which transcends race, religion, color and tribe.
We should see the establishment of a series of interlinked super exchanges, trading global products priced against a basket of asset-backed currencies. We should have transparency and accountability on these exchanges. Products should be fungible, interchangeable between each exchange. These exchanges will represent the main trading blocks of the world, and provide interlocking spheres of influence to support the globalized trading environment.
So who are They? They are us. We are them. The paradigm shift to balanced, transparent, accessible, efficient and global markets is upon us. We have all the tools in our toolbox to build these new markets. Markets based on actual, real trade, which rely on political and economic interdependence, not force or secrecy. Will They let us? Will we let the banks fail, let countries default on their debt? We should, we must.
*
Sam Barden is CEO of SBI Markets General Trading LLC, a Dubai-registered trading and advisory company. Barden, 39, has worked in the global financial markets for more than 17 years in Europe, Russia and the Middle East. He has advised and executed strategic transactions for both the government and private sector, in particular in energy and commodity markets, advising various energy producing nations on their strategic market developments and interaction. He holds a degree in economics and finance from Victoria University, Melbourne, Australia.
