The Tale of the Insensitive BBC Trader

The latest thing that's got everyone up in arms is a day trader named Alessio Rastani, who got on the BBC and told a story where he seemed to say that he's really eager for the economy to crash so he can profit.  Here's the video:

What he's saying is essentially that traders aren't concerned about the fate of the global economy-- they're looking for opportunities to profit based on market trends.

Now, I kinda get where all the outrage is coming from, but it's misguided.  The reality is that no trader at a hedge fund or at Goldman Sachs or at Credit Suisse is trying to crash the global economy-- they're looking at the economy, finding opportunities, and trying to deploy their capital in a way that benefits their bottom line.  Does that serve a particularly useful social function? Eh, sort of.  But it's hardly something to gasp about.  It's like starting a funeral service in the middle of a plague-- it's pretty unseemly, but it doesn't do anything actively malicious or harmful.

Another useful way for those who are outraged by it (who are primarily liberals) to see it is by looking at an incident that happened 20 years ago involving liberal icon George Soros.  In 1992, the British government was committed to tie the value of the pound to the German mark in a step designed to allow for a smooth transition to a single currency (what would become the Euro).  The British exchequer (their Treasury) committed to keep the pound valued within a certain range of the mark.  But in 1992, as Germany's economy started to overheat in the aftermath of reunification, the mark strengthened in value.  Meanwhile, the British were stuck in a nasty recession.  Realizing that the British wouldn't be able to maintain their peg, Soros (and others) took out a massive short position in the pound-- they bought up pounds and exchanged them for marks until the British Treasury ran out of foreign exchange reserves and had to leave the ERM.  The resulting devaluation allowed Britain to ultimately escape the nasty recession it was in.  In the process, Soros made over $1 billion in pure profit on the trade (at the expense of, essentially, British taxpayers).  Was there anything "evil" about this? I don't think so... Soros profited from a market inefficiency that the British hadn't resolved, and the end result was productive for all involved.

Broadly speaking, traders are in the same boat.  They watch macro trends and profit from them (if they bet right).  They're not evil agents out to undermine the economy-- they're just profiting from governments that can't fix their own economies.  So instead of vilifying this clown, it's probably a better idea to vilify the German government, whose policy chokehold over Europe is set to drive the global economy off a cliff.