What do the Greeks, Jamie Dimon and PLUS have in common?

Well all three have failed largely due to arrogance, but there is a bit more to it.

Lets start with PLUS. This small stock exchange managed to spend several times its annual revenue for years whilst failing to build a market. The Directors took excellent salaries and whilst they built what could have been a fantastic market, they saw themselves as regulators. Simon Brickles showed great promise  but failed and why his successor was chosen at all will remain a mystery forever.

The problem of PLUS was simple – they refused to be a market, but wanted to be a regulator and they were not even any good at that. Had PLUS been alert it would have taken the 500 companies on lower AIM and in time transformed itself into a comprehensive equity based crowd funder backed by a trading platform. It had every opportunity to be a stunning success but PLUS wanted to regulate but of course nobody wanted or needed this. There are plenty of regulators about and they spend enough time annoying all of us.

Jamie Dimon wanted to become a regulator also. Having missed the job at Treasury he was angling to run the Federal Reserve. After all he is estimated to be worth more than $200 million, all made as a paid employee, so he needed the power not the money. In the meantime Jamie told everyone the banks could regulate themselves whilst ignoring the warnings that his gambling operations were losing a few billion.

In theory we can all regulate ourselves but as management you do have to keep your eyes and ears open. Having taken £25 billion or so in TARP funds courtesy of the US taxpayers Jamie was the last to figure out that there was a “whale” in his organisation (bit like the elephant in the room). Even more embarrassing is that the whale was again using those wonderful derivatives which caused the whole economic disaster we are in anyway. It proves that the management of JP Morgan and the regulators have learned absolutely nothing. But no worries as JP Morgan is too big to fail and with Jamie at the Fed driving seat the future appeared very bright.

Of course one might ask where the Bank of England was in all this or the FSA or whatever other regulator we have around here. The whale was in London and everyone knew that but Mr King was strangely quiet on the issue as he ranted about Eurozone problems. Of course regulators don’t use silly things like Bloomberg. They use sophisticated tools like people (no doubt highly paid) to work within major banks. So whilst the regulators were contemplating their next salary slips and pensions several hedge funds made a lot of money cleaning out the whale and JP Morgan.

So that gets us nicely to Greece. After all Jamie D is of Greek descent so he has some interest. The Greeks do not want to leave the Euro. Most of the people who are affected by the austere regulations put on them by the very very well paid bureaucrats living in much less pleasant climates, are simply fed up paying for the problems caused by those same regulators. The Greeks have overspent, encouraged by banks and major companies, but even worse they have never been successful in getting taxes paid. In fact my impression is that no regulation has ever worked in Greece, so why anyone gave them all that money in the first place is unclear. Banks and regulators made bad business decisions and now the taxi drivers have to pay.

Back to the question what the Greeks, Jamie Dimon and PLUS have in common? They have all found that regulation does not stop simple stupidity and they should have stuck with keeping eyes and ears open whilst doing business. Increasing regulation will not solve the problem; it will only increase the number of jobs worths.

2 comments for “What do the Greeks, Jamie Dimon and PLUS have in common?

  1. 18 May, 2012 at 10:58

    Excellent article Dirk, Firstly I applaud your remark about the crowd-funding opportunity missed by PLUS. I think this should be a warning to any future Pluses. Obama across the pond, helped by his re-election possibility, has woken up and smelt the brew, it’s the ‘online crowd’! Web 1.0 & 2.0 have gone. Web 3.0 is redefined: ‘Mobile’. If I can use my iPhone and can quite legally lose all my money on an online Poker game, why cannot I buy $50’s worth of shares and invest in somebody’s new idea from the same phone, and potentially help the creation of a new SME which might bring new jobs? Why does some regulator feel the need to protect me by threatening me with reading small prints of 50+ pages and signatures in case I have been mis-sold or been solicited these shares. Besides what is $50 nowadays? I was (along with many others) mis-sold an endowment policy lost abot £15000 and even signed more papers than I can think of at the time and nobody lost any sleep, bonuses, commisions over it. I wonder if the FSA are keeping an eye on the US events on crowdfunding or just set the timer for their morning brew.

    I would like to make some comments on Greeks and regulation. Perhaps on the next article. I am sure there will be plenty of opportunity!

  2. Richard Hoblyn
    18 May, 2012 at 08:38

    Spot on Dirk but remember it is the FSA who are the real culprits in the Plus Markets debacle. By redefining risk and tightening up suitability it is now virtually impossible for any regulated broker or fund manager to get involved in micro-cap stocks through analysis, advice or even trading now. The crazy thing is that the very acorns that Enterprise Britain has spoken about for years have simply been crushed by OVER-REGULATION.

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