Alessio Rastani was for real - why the disbelief?

Why did people find it so hard to believe that Alessio Rastani was the real deal and not a hoaxer? He’s the trader, a real one, whose brutal candour in a BBC television interview revealed the utter disregard of financial markets for the well being of the broader economy and society.  We shouldn’t have been surprised, of course. It was the economist J K Galbraith who wrote in his classic analysis of the Great Crash of 1929 that “The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil.” Now we are living through the greatest economic crisis of modern times, rooted in the reckless behaviour of speculative finance, and the financial community is bitterly resisting virtually every proposal for reform.

Yet Rastani seemed to shock everyone, whether in the media, those generally friendly to finance, and even outspoken critics of the banks. Why? Perhaps, just because the unvarnished truth is such a rare visitor. ‘Goldman Sachs rules the world, speculators dream of economic and social collapse as opportunities to profiteer, and are simply bored by the prospect of imagining a better system (from which they believe they will profit less),’ we might have guessed all of this, but its quite different when somebody actually says it.

Simple, challenging truths can be the hardest to accept because they might demand we fundamentally change how we operate. That is the case with regard to finance and banking. Keynes supposedly quipped that "Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone."

Accepting the truth that traders in the hormone and bonus-fuelled world of speculative finance, understandably and logically develop a kind of tunnel vision, means that Governments need to control those markets. And, the safety measures required are roughly equivalent to those needed for handling enriched uranium or plutonium. As things stand, however, the markets – a euphemism for finance - to which every policy: social, economic or environmental is still forced to defer, despite the markets' demonstrable failures, are effectively allowed to continue making as much money as possible, through whatever means available, whatever the consequences.

Rastani is an independent trader. He had no boss attuned to the politics of maintaining appearances peering over his shoulder. He had no company line to tow. That probably explains the unvarnished truth with which he explained the real way that markets operate. We should thank him. It was a reminder that without the correct assessment of risk, and knowing the nature of the beast, it is impossible to take appropriate precautions. Rastani reminded politicians and the public that the pool of the financial markets does not swim with plump, overfed carp, but sociopathic Great White Sharks. Until now, regulators have expected us to dive in with them. This brief, invigorating, outbreak of reality tells us why the last disaster happened, and why we are now on the edge of another.