What is Not Said

"Every year, the world's most boring people, namely its bankers, await their version of the 'Swimsuit edition', the annual report of the Bank of International Settlements, or BIS. ... In this case, the BIS has avoided mention of the real source of all the dumb money that swirled around financial markets in the first place, flooding banks and investment mamagers with more funds than could be invested with reasonable returns. ... US officials led by Treasury Secretary Hank Paulson recently completed a trip around the [Middle East], where they urged Gulf countries to avoid changes to US dollar pegs, even as those countries struggle to contain double-digit inflation. It is even thought in some circles that the whole idea of 'containing' Iran may have come a a quid-pro-quo from these meetings. ... Back to the BIS report though, this glaring error of omission on the main source of market liquidity that prompted the excess of greed and gluttony not to mention, gullibility makes the rest of the report rather pointless. ... Even as the BIS makes an attempt to draw a line between incompetence, greed and perverse incentives, the world's governments continue to avoid taking responsibility for their own actions. ... In times of crisis, there are some curious market rituals to be observed, by far the most entertaining of which would be to observe what investment banks say about each other. .... [T]he most entertaining of reports make their way suggesting that investment banks would have to cut about 25% or more of their staff into the global downturn. Most of the business models are irreparably broken, according to the analysts. This represents a logical, it somewhat perverse question. If the analysts in question are so smart, why do they work for an investment bank themselves? And if they aren't smart enough to have decamped to a hedge fund or climbing Mount Everest, why then should normal equity investors listen to them? ... The point though, is that this particular ritual [Moody's recent CPDO fiasco] exposed the rating agencies for what they are--a bunch of businesses that make money providing so-called independent opinions that really only represent the best interests of the investment banks selling [CPDOs]. ... Thus it is starting with the BIS, then harkening to the Indian Finance Minstry, and going on to investment banks and to the rating agenices, we find it is not what people say that matters--it is almost always what they don't", Chan Akya (CA) at Asia Times, 4 July 2008, www.atimes.com/atimes/Global_Economy/JG04Dj03.html.

I agree with CA. Connie Yu, are you listening yet? CA's comments remind me of the OJ Simpson case and all the pieces of evidence the prosecution didn't introduce: murder weapon, motive and theory of the crime. Also the dog which did not bark in the Sherlock Holmes story, "Silver Blaze".