Apportioning Blame: Alessio Rastani and the Culpability of the Financial Classes

A bit like Russia Today, Press TV is an international news network whose rather obviously selective coverage of certain topics – particularly those directly concerning its purported backers – all too often obscures the fact that it puts out some genuinely superb content. A recent edition of Epilogue (16th December 2012), a book review programme hosted by the avuncular former Conservative Party MP Derek Conway and featuring Shabbir Razvi – the Founder and Managing Director of International Finance Solutions Associates – and the legendary Santoro Projects Limited head honcho Alessio Rastani.

Rastani, a man famous for telling us as much about the global economy in four minutes as most analysts manage in a lifetime of television interviews, pulled no punches as the presenter and panel discussed the 2010 John Lanchester classic Whoops!: Why everyone owes everyone and no one can pay. But one contribution in particular lingers in the memory as Rastani explained his fatigue with much of the media’s insistence on collective guilt for the ongoing global financial crisis: ‘The average person…will not sit down and go through the equations [that will lead to a crash]…I would say if there is a collective [element to the] fault, it is…95%…the banks’ responsibility, and the rest with the people.’

On many levels, Rastani’s statement is more than persuasive, and a reminder of why nearly 18 months after his fateful BBC interview he remains one of the most authoritative and cogent financial analysts anywhere in the world. However, we do wonder whether the people at large should – despite the indubitably incredible conduct of many of the globe’s financial institutions, and the governments that were meant to be regulating them – shoulder a slightly higher share of the burden:

1. No Questions Asked. Particularly in certain now familiar crisis-ridden polities – the tier-two eurozone economies, as well as the United States and the United Kingdom – many members of the public were all too happy to rejoice in the ‘good news’ of an artificial credit boom, lapping up endless programmes about property speculation and wolfing down both government and private sector Kool-Aid about how the ‘new economy’ meant that economic busts were the stuff of history books and funny-looking monochrome film from another era.

2. We’re All Bankers Now. As pondered over by Nobel laureate Joseph Stiglitz in another excellent 2010 tome, Freefall: America, Free Markets, and the Sinking of the World Economy, recent cohorts of the best and brightest students – particularly in countries hosting the major financial hubs of New York and London – have felt no higher calling than investment banking, with surreal power trips and telephone number salaries trumping any temptation to contribute to the commonweal.

3. Living High on the Hog. With financialised economies having squandered any pretence of moral authority in their quest to gorge ever-more stuff without so much as paying indulgences to the state, an ironically self-certified economic crash of gargantuan proportions was guaranteed. To make lots of money and fast – this was the only salient criterion that most people really cared about. But over five years on from the tangible beginnings of what may yet be the greatest financial crisis ever, has anything really changed?

BBC Three’s Most Annoying People: Miscasting Alessio Rastani, Again

From time to time within a given milieu, one person or phenomenon has the ability to show up a culture for its vacuity, mendacity and poverty, and it would harder at this moment in time to find anyone who fits that description – at least within the United Kingdom – than Alessio Rastani. Since being justly catapulted to stardom as a result of his now world-famous 26th September 2011 interview on the BBC News Channel, Rastani’s analysis on what is transforming from a global financial crisis to a global financial meltdown has been sought by – amongst others – CNN, RTÉ and Al Jazeera English. However, the reception given to him in the UK media has been generally hostile, with ITV in particular guilty of an asinine attempted character assassination when a little rational analysis was called for.

Yet even the mindless abuse heaped upon Rastani on ITV1′s Adrian Chiles-hosted That Sunday Night Show is not, it seems, enough: presumably as part of its ‘seasonal’ programming, BBC Three is featuring the Italo-Iranian as part of a 90 minute tabloid-style special ominously entitled Most Annoying People, which purports to list the 50 people who have ‘vexed’ the Great British Public during this Year of Our Lord 2011. Even as an exercise in cheap, filler television it is a waste of space – the total capitulation to some of the baser manifestations of celebrity is manifested here on a scale that might even make some of the smaller digital channels dotting the UK’s broadcasting landscape retch – but the inclusion of Rastani as the forty-fifth most annoying person of 2011 is tasteless, and worrying, in the extreme.

In the programme, the director of Santoro Projects Limited is painted – not again! – as an ‘”evil” “banker”‘ who (we are never told how) is somehow worthy of pointing a finger at simply because he told presenter Martine Croxall that the eurozone crisis was something to which there may be no conventional solution, and that the New York-based investment bank Goldman Sachs enjoys vastly disproportionate influence. Yet the parade of nonentities lined up to poke fun at Rastani could come up with nothing more substantive than a comment on the coral pink tie that the person who is now surely the planet’s most famous independent trader was sporting that morning.

All too predictably, Rastani’s most salient point – that the general public should get prepared, and protect whatever assets they have from an impending financial tsunami – was not even noted. And so viewers in the UK – in between cheerfully scuffling over designer handbags and booking next summer’s holidays – are liberated to get annoyed at one of the select few commentators who has repeatedly warned them that their economy is on the precipice; those that actually engendered this crisis, of course, are spared our disapproval.

Alessio Rastani on 2012: ‘The System as we Know it is Going to Collapse’

It’s difficult for most people to recollect an era when the future seemed to be so uncertain, but whatever happens in as yet unelapsed time, we at Mediolana cannot be accused of ignoring the phenomenon that is Alessio Rastani, director of the London-based company Santoro Projects Limited who was catapulted to global stardom this autumn via an instant classic of a BBC News interview. Rastani – who has since featured more times on national and international television than even we can chronicle – is looking increasingly visionary; his observation that ‘governments don’t rule the world: Goldman Sachs rules the world’ has taken on the status of life imitating art as ‘Super Mario’ Monti and Lucas Papademos – both heavily connected with the investment banking and securities behemoth of 200 West Street in New York City – are now respectively in charge of troubled eurozone economies Italy and Greece.

This past Saturday, Rastani outlined a new dimension to his thought at the Bank of Ideas (‘BAI’), an impromptu educational facility that was only inaugurated on 19th November 2011; the BAI is located in an abandoned UBS AG building on the fringes of the City of London. Rastani’s main talk was, as usual, perceptive and honest. He pulled no punches in telling his audience that Wall Street would always defeat them as long as it could manipulate the general public’s ignorance of all matters financial and play on human irrationality; meanwhile, Rastani’s exhortation that people should stop wasting their lives obsessing over reality television shows and soap operas was a call that is as salient as it is unlikely to be heeded, at least in the short-term.

Yet the truly striking – and troubling – development in Rastani’s burgeoning theoretical corpus was articulated not so much during his talk, but whilst waiting to enter the building at Sun Street, Hackney: chatting to some fans, Caffè Nero cup in hand, the amiable Italo-Iranian noted that the state of play in the financial markets ‘is a lot worse than people can actually imagine’, and that soon – perhaps as soon as January, 2012 – ‘people are going to have to realise that the entire system as we know it is going to collapse‘.

This particular strand of Rastani’s thought is disturbing, but not because we think that one of the world’s most famous independent traders is incorrect on this count; quite the reverse is in fact the case, and it is this that perplexes us. During his main talk, Rastani cited the example of MF Global (‘MFG’), a financial services provider that is now in the death spiral of Chapter 11 bankruptcy and liquidation. Facing the inevitable fallout from gigantic bad bets made on European sovereign debt, it appears that MFG heisted hundreds of millions – perhaps billions – of dollars from customer accounts. But, incredibly, these same customers are facing serious obstacles to legal redress, with the judge in their case at the Manhattan Bankruptcy Court refusing their request to form a committee to represent them while, at the same time, ex-MFG CEO Jon Corzine – the man who oversaw this fiscal and ethical meltdown – walks free. As Rastani warns us, this is a sobering precedent – and one the general population would do well to contemplate.

Dreaming of a Depression: The Alessio Rastani World Tour Hits Ireland

As an introduction to a television programme, the animated sequence at the beginning of RTÉ One‘s The Saturday Night Show is a bizarre juxtaposition to the Republic of Ireland’s current economic predicament: a panoply of ironic hedonism. Once the camera switches to the studio, a barely comedic summary of various news items quickly reveals a nation filled with fiscal foreboding; weak punchlines about emigration to New Zealand abound. On the 8th October 2011 edition of the Brendan O’Connor-fronted extravaganza, Warner-in-Chief Alessio Rastani stepped into this most sullen of sets; having witnessed the choreographed mauling that the panel of That Sunday Night Show attempted to hand out to Rastani a little over a week ago, we at Mediolana expected another sensationalist treatment of the ‘Rogue Trader’ whose stock is rising faster than the markets are falling.

In fairness to O’Connor, while his behaviour towards Rastani was never exactly objective, the former cheerleader of the Irish property bubble did at least give the besuited director of Santoro Projects Limited a little more time and space to expound on some of his central themes: why shares are overvalued; why the present economic crisis is only just beginning; and how the administration of the United States overlaps with the key movers and shakers at certain investment banks.

Yet on reflection, the interview – carried on Ireland’s most-watched channel at 21:40 on a Saturday night – raised more questions than it provided answers; this notwithstanding the efforts of Rastani, who came across as lucid, amiable and gracious.  Two issues in particular keep resurfacing in our minds:

1. Strategy. On more than one occasion, O’Connor stated that most people in the ‘broader economy’ do not have a strategy to cope with a recession, the implication clearly being that Rastani’s positive spin on the consecutive economic contraction over two quarters was misplaced. The lack of a game plan may well ring true for many, but one has to ask: why on earth should this be the case? Much of the developed world has been staring down the barrel of prosperity’s machine gun for some time now, with the first stirrings of the credit crunch obvious to wiser minds years before Twitter reached critical mass. Are we to conclude that unparalleled access to knowledge in the form of  libraries, bookshops and the World Wide Web at a time of a seismic paradigm shift in global society equates, in the eyes of the majority, to nothing more than passive resignation?

2. Gravity. One of Rastani’s most interesting points is that a recession is one of the best opportunities to pick up assets that might be unattainable at any other time. For many, this is a once-in-a-generation opportunity; locked out of the boom, or simply unwilling to indenture themselves and their children for a shot at mediocrity, savers across the developed world are scanning a horizon of precipitous property prices. Yet when the Internet icon posed the simplest of questions – why would anyone wish to buy in an upward market? – and affirmed that it was time for everyone to ‘dream of a depression’, the atmosphere in the studio seemed poised to explode. Was an entire generation – prisoners of the idea that booms and busts are merely historical artifacts – ever aware that ‘up’ is not the only direction in which an economy can move?

The Contentions of Alessio Rastani: the Debate Commences

As our regular readers are well aware, since this blog’s first post on 1st January 2011, mediolana.wordpress.com has enjoyed expanding traffic; first steadily, and then more spectacularly. But little could have prepared us for the phenomenal reaction to yesterday’s post on the topic of Alessio Rastani, the head honcho at the until recently little-known Santoro Projects company who has become a global sensation on the back of a gloriously frank live BBC News interview telecast earlier this week. We have literally had the scale of our graphs recalibrated as the seemingly insatiable demand for quality analysis of this extraordinary man translates into an Internet stampede of the like that is rarely witnessed.

In our post of 29th September 2011 entitled ‘Alessio Rastani: Rogue Trader or Prophet of Doom?‘, we lamented the fact that many commentators (of, we feel compelled to add, questionable financial literacy) seemed to delight in the idea that Mr. Rastani might be a hoax; alternatively, some posited that owing to his modest residential address and the fact that Santoro Projects can be categorised, with little hesitation, as an SME, Rastani should not be listened to.

From a perusal of his leadingtrader.com blog, however, two things seem to be clear. Firstly, the idea that Rastani was purely a hoax should never have gained much traction: leadingtrader.com links to Rastani’s YouTube account, which shows that he has been uploading videos relating to financial matters (as well as more personal content, such as a video clip detailing what a visitor can expect to see on landing at Imam Khomeini International Airport in Tehran, Iran) for around one year; his blog contains many interesting, if perhaps slightly derivative, posts on the art of trading in shares.

Secondly, the deluge of comments on his recent posts illustrates that Rastani has obviously tapped into deeply-held fears that much of the developed’s world’s population hold about the likelihood of a prolonged period of fiscal uncertainty, and for his direct, brutally honest assessment of the state of the global world economy – as well as his urging ordinary people that they should act to protect their assets from devaluation – Rastani is being hailed as a postmodern folk hero.

Indeed, we at Mediolana looked upon arguments based on little more than prejudice and poor research as a sign that many media outlets were simply unwilling or unable to tackle the London-based independent trader’s contentions, and challenged those that scoffed at Rastani’s ostensibly humble material circumstances to address the points that he made.

Finally, the requested debate appears to be commencing. BBC News has taken three days to comment analytically on an interview it originally broadcast, but at least it has now published a piece on whether Rastani’s views actually have some merit; Russia Today, meanwhile, has pointed to the fact that hysterical, knee-jerk responses to Rastani’s appearance on BBC News have, rather than any serious examination of his ideas, been the default position, in some senses echoing the words of this blog.

As the newest kid on the economic punditry block appears on CNN (above), amasses many thousands of followers on Twitter and sees his Facebook page deluged with praise from adoring fans, Alessio Rastani may well have occasion to reflect back on a week in which he pricked not a few paradigms, and in so doing shifted the media landscape in a way that until recently would have been unthinkable.

Alessio Rastani: Rogue Trader or Prophet of Doom?

Squeezed between the established CNN and the dynamic Al Jazeera, BBC News – all too often characterised by tired sets, characterless hosts and unchallenging programming – is rarely the choice of the global viewer seeking quality current affairs output. Yet in the last 48 hours or so, the channel has delivered a genuine ‘scoop’ of sorts: the definitive arrival into the pantheon of economic punditry of none other than Alessio Rastani.

Resplendent in a Bishopsgate suit and coral pink tie, Rastani stunned the watching lunchtime audience with his take on the latest proposed eurozone rescue plan. His comments can be summarised thus:

1. Markets are ruled by fear;

2. The euro is going to crash spectacularly;

3. There will be an investors’ rush towards the ‘safer’ assets of the US dollar and Treasury bonds;

4. The market is ‘toast’, with the stockmarket in particular being ‘finished’;

5. The savings of millions are in jeopardy;

6. The recession is a huge money-making opportunity for those that are prepared for it; and 

7. Goldman Sachs – as opposed to national, purportedly sovereign governments – rules the world.

Perhaps predictably, acres of coverage have ensued. Much of it has concentrated on the issue of whether Rastani is in fact a ‘prank’ or ‘hoax’ analyst; some of it has dwelled on how Rastani’s prosaic reality – accommodation in a semi-detached house in Bexleyheath, one of south-east London’s most remote and anonymous suburbs, and directorship of the presently indebted Santoro Projects company – contrasts with his Midlantic drawl, impeccable grooming and newly-acquired status as a fiscal savant.

Yet few if any in the media appear to be asking the following question: to paraphrase the legendary former tutors on the Advanced MBA programme at the Stockholm School of Economics, Jonas Ridderstråle and Kjell Nordström, what if Rastani is even 10% right?

While Mediolana would question Rastani’s contention that – at least in the medium-term – United States Treasury securities and the American dollar will be viewed as ‘safe havens’ for international capital, many of his other assertions raise vital questions about the structure of much of the present historical phase of Western (particularly Anglo-American) capitalism that do not have any easy – or certainly palatable – answers. Those commentators and journalists who are quick to deploy crude snobbery over someone’s residential address or supposed City of London credentials (whatever that means in the current context) would do well to turn their pens to some of the most profound economic questions of our time and answer Rastani’s primal scream with a measure of cogency. Until they do so, the independent trader with a first name straight out of Shakespeare could yet return to haunt them.