Some political commentators have suggested that the recent near-meltdown of JP Morgan Chase because of inability to cover its gambling debts might prove uncomfortable for Mitt Romney, who seeks the repeal of the Dodd-Frank law, that would likely have forbidden the gambles that the bank lost all the money with. How unimaginative! Surely, this is just one more example of how the Democrats, by attempting to rein in dangerous practices in the finance industry, are simply rewarding their Wall Street paymasters, while Romney is the lonely voice of equity (private), allowing the fat cats to suffer the consequences of their malfeasance.
I’ve been increasingly interested in the outsized role played by finance in the running of the modern world, and the role of mathematicians in intellectually laundering the financiers’ money. The most interesting (and chilling) book I’ve read in quite a while is Nicholas Shaxson’s Treasure Islands, a thorough investigation of the scope and method, nearly incomprehensible to outsiders, of tax havens and the global network of secrecy jurisdictions. Much of the otherwise impenetrable nature of British politics makes vastly more sense when one understands that the British Empire did not disappear, but was transformed into a network of shell countries centred on the City of London, whose vast financial power makes the paltry debates at Westminster nearly irrelevant (when the interests of the bankers and their clients are affected). Among the more minor but astonishing revelations is that the City of London — effectively, the representative of British finance on Earth — has its own representative in the House of Commons, the “City remembrancer”, a lobbyist for finance who is officially seated behind the Speaker’s chair (and has been since 1571). The City itself is exempt from many acts of Parliament and is outside the purview of the elected mayor of London, and its own self-government, the Corporation of the City of London, is selected almost entirely by the representatives of large banks.
And now the US seems on the verge of electing as president, not a Manchurian candidate, but a Caymans candidate, someone who is heart and soul part of of the international plutocracy, with his own funds stashed in the Cayman Islands and Switzerland. I am genuinely disturbed by this prospect.
My own comments on mathematical finance may be found here.