Assalamu 'Alaikum,Clear thinking article to uncloud the clouded.
Tarek El Diwany
I first applied for work in the City of London as a derivatives dealer in the late 1980s. Over casual chats I was informed that the City demanded a rare combination of intellect, eloquence and sharpness. Those in possession of this skill set would be rewarded handsomely, for the City was a place where talent was recognized, irrespective of age. So I was told, and it occurred to me that if I could succeed in this environment, then I would have proven my worth to the many doubting Thomases around me. A new Porsche 911 said so much more than mere words could.
Thus I acquiesced to the notion that success is measured by the amount of money that one earns. In the City I met many people who were fully committed to that notion, and who implemented it on a grand scale. Money was the sole measure of success. Make money, and you would be promoted. Fail to make money, and you would be sacked. Or moved to the training department. Financial products were invented and marketed not because they met a client need, but because they made an enormous profit for the bank or finance company. Research “stories” were told in order to sell financial securities that insiders wouldn’t touch with a barge pole. Massive gambles were taken with billions worth of depositors’ funds, while in public the language of “prudent banking” was dished out in solemn tones. Investment decisions were frequently made by people whose technical knowledge was shockingly poor, and sometimes for the flimsiest of reasons. “Shares were up ten after a good lunch,” joked one of my bosses, and what a lunch it was!
I found that I was rather good at making money, although few of the financial theories that I had learned at university seemed to apply in my work. For example, the simplest laws of supply and demand didn’t seem to work with regard to City salaries. If there were one hundred applicants for each City job, why did pay rates remain so obstinately high? If African countries were being told that good economic management meant running a balanced budget, why was it that the US and Britain, two of the most prosperous nations on earth, almost never ran a balanced budget? Even the cardinal rule of monetarism, that inflation could be reduced by raising the rate of interest, didn’t make sense to me. The available data showed that a rise in interest rates actually had the opposite effect, by increasing the cost of mortgage repayments.