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Please Hold Me

I used to work on an emerging markets bond trading desk. When the Spanish speaking clients called to trade with the English speaking traders, hilarity ensued. Because it was imperative that both parties understood each other explicitly lest a mistake be made, the traders  quickly learned that brevity (and nicknames) were the best way to survive.

UncertainityWe had a broker out of Texas who would only talk to “Bob Low,” an Argentine trader whose real name was “Pablo.” For some reason, the broker couldn’t say Pablo so he called him Bob Low instead. When the desk got busy, and there was no time to do anything other than put the calls on hold, we had a group of Spanish clients who knew this and would  call and request “Please hold me” instead of “Please place me on hold.”

We also used code names to identify the clients in order to be able to pass them off as quickly as possible to the appropriate trader.  The traders dubbed Jim, a laconic and slow speaking broker, “Dead Jim.” Another broker was aptly named “George War” as this was the perfect translation of his Spanish name and, hence, much easier for the “gringos” to remember.

Life can be like our trading desk. We all use code words and names to make our lives easier. Sometimes we have to much too process in too short a time span and the quicker we can codify and package things, the quicker we can engage the tasks at hand.

We do this with larger problems as well. Whenever there is any type of crisis, especially in the U.S, the pundits, media and the population all clamor for help. We look for simple and quick ways to solve the problem and for remedies that prevent a recurrence of the problem. For example, after the banking crisis in 2008, the media faulted the banks for the errors they made then clamored for more regulation and supervision. Or when General Motors went bankrupt, the workers as well as the creditors begged the government for help lest the company go by the wayside.

In both instances , we wanted a simple answer for what happened and a quick solution to ease our frazzled nerves. The fact is, the banking crisis of 2008 and the bankruptcy of GM were caused by a multitude of complex issues. To this very day, the history is still being written with new books cropping up with new perspectives. In both instances, the causes were nuanced and far from simple.

What amazes me is our tendency to always look to government for help. Our society has gotten so weak and feeble that our first response is to look outside of ourselves for solutions. One only need look to Nature for the randomness and unpredictability of life: floods, famines, tsunamis, volcanoes and tornadoes are just a small sampling of the unpredictability of life.

Yet, when it comes to our own lives, we somehow expect to be immune from that unpredictability and the corresponding tragedies that often accompany it.

During the financial crisis of 2008, I saw most of my life’s savings wiped out. Most of my holdings were locked up in the company’s stock and I was prohibited from selling it. I  fared better than most people in the financial industry as my company was eventually taken over and  I was able to recoup a small percentage of my assets. But I had done nothing wrong. I had worked hard and made a lot of money for my firm. Yet there I was with 90% of my wealth gone.  Many of my colleagues who were wiped out completely, in some cases losing millions of dollars, were forced to start all over again with no money, a family to support and a mortgage to pay.

Practically all of these people who worked in finance and lost all of their savings did not work in the real estate market. They had zero responsibility for what caused the housing crisis. Like the victims of a tsunami these people were in the wrong place at the wrong time.

The banking solution to the crisis was the Dodd- Frank bill which essentially halted all trading by the banks. The law has caused a massive global slowdown in trading; a problem, which left unattended, could cause a financial crisis much worse than what we experienced in 2008.With GM we resurrected a bankrupt company, wiped out all the creditors (a first) and gave all the money to union workers. GM is a dead company, on its way to bankruptcy again- with the same problems as before. The postponing of the bankruptcy solved none of the issues.

Such political solutions solved nothing but they satiated the public’s clamor that something be done. We wanted a simple solution and the government gave us one. Yet, simple solutions never fix complex problems.  In fact, they often make them worse.

My formal training in the military and in finance was built upon embracing uncertainty. My first job out of college was as a Marine Infantry Officer. We were evaluated on how well we coped with uncertainty. For example, we had to navigate a platoon of Marines (40 + people) though thick and dense woods after dark. The distance between the first and last man could be as much as 400 meters while the most you could see was 10 meters in any direction. I assure you that when an instructor is barking at you and you’re trying to navigate for hours on end without knowing where everyone… is it’s extremely unnerving.  Yet, if you trusted the map and followed the process of land navigation, it usually wasn’t a problem. But the lesson was invaluable: get comfortable with not being able to control everything.. because you can’t, When later, I worked in finance and learned that the whole industry is based on imperfect information, I quickly learned that the force of the market is greater than any one individual. And so the uncertainty principle was brought home to me once again.

The politicians know if they give us the simple answer and solution it gets them more power and better yet, assures they stay in office. How ironic that in our knowledge of life’s uncertainty we reach out to politicians, people in whom we have no trust, to provide us with certainty. It is this irony that causes us conflict.

Given the enormity of problems we face, it is wiser and easier for us try and break down the issues to make things as simple and manageable as possible at the most local level. Things will change only when we can live with the discomfort of not knowing and avoid demanding that our politicians give us that quick fix.

Get comfortable being uncomfortable. That’s a motto to live by in an ever-changing world.

Steve

sleeclark@gmail.com

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