Answering questions about the Eurozone bailout plan last Monday [Sept 26th], financial trader Alessio Rastani was rather more candid than the BBC had been anticipating. As jaws began to drop in the studio, Rastani explained that insiders such as the hedge funds don’t buy the rescue plan because “they know the market is toast”:
“They know the stock market is finished. The Euro, as far as they’re concerned, they don’t really care – they’re moving their money away to safer assets, like treasury bonds, 30 year bonds and US dollars. So it’s not gonna work.”
“Listen, I would say this to everybody who’s watching: this economic crisis is like a cancer. If you just wait and wait thinking this is going to go away, just like a cancer, it’s going to grow and it’s gonna be too late. What I would say to everybody is: get prepared!”
By Tuesday, Rastani’s remarks had gone viral and the question suddenly became who is Alessio Rastani? Could the BBC have fallen victim to a hoax perpetrated by The Yes Men?
Well, Forbes decided to get to the bottom of the matter:
FORBES: Have you heard of the Yes Men?
AR: Heard of it before? Not quite sure why they’re calling me that. I have no idea where that came from.
FORBES: Because there’s a video of you posing as a Dow Chemical spokesman.
AR: What? A Dow Chemical spokesman? Have you seen this video? That can’t be right. I’ve never spoken to Dow Chemical before in my life. Maybe it’s a fake. Are you sure about this? Honestly, listen, I’ve no idea where that came from. That interview yesterday was one of the first ones I did live.
And then CNN also looked into matter, veering toward a somewhat more level-headed conclusion:
Firstly, Rastani is an amateur trader using his own money (as a “hobby”, he has told other media) and he’s not registered with the Financial Services Authority to trade other people’s money. He doesn’t claim otherwise, but there was a feeling after his first interview that he was some sort of suit from the City or Wall Street giving sage advice to his clients.
But why all this fuss in the first place? Which of Rastani’s many remarks had got so many in the media running around in circles trying to discredit him? Was it his bleak prognosis? Well, some might see it as a little alarmist, but what he said is hardly earth-shattering:
“The first thing people should do is protect their assets – protect what they have – because in less than twelve months, my prediction is, that savings of millions of people is gonna vanish. And this is just a beginning.”
Or was it his seemingly callous detachment? His remarks that “if I see an opportunity to make money I go with that”, and that “personally, I’ve been dreaming of this moment for three years”:
“I have a confession which is [that] I go to bed every night, I dream of another recession. I dream of another moment like this. Why, because people don’t seem maybe to remember but the ’30s depression… wasn’t just about a market crash. There were some people who were prepared to make money from that crash, and I think anybody can do that… it’s an opportunity.”
But again, where’s the problem? Isn’t this exactly how markets are supposed to operate? With independent traders all looking after number one, and behaving with callous disregard for everything besides the profit motive. No, what really ruffled the feathers was Rastani declaring live on the BBC that:
“The governments don’t rule the world – Goldman Sachs rules the world.”
Of course, down at Goldman Sachs, this wasn’t news either. In fact nothing Rastani had to say would have surprised any of the self-appointed “masters of the universe”, as the BBC, CNN and Forbes ought to have known already:
“A top Goldman Sachs Group Inc. strategist has provided the firm’s hedge-fund clients with a particularly gloomy economic outlook and suggestions for how these traders can take advantage of the financial crisis in Europe.”3
The strategist in question is called Alan Brazil, and his recent analysis formed the basis for an unofficial 54-page report [dated Aug. 16th] that was then sent to hundreds of Goldman‘s institutional clients. But it was also leaked to Wall Street Journal reporters Susan Pulliam and Liz Rappaport
So just what have Goldman Sachs been telling their friends and holding back from the rest of us? Well, the report forecasts a deepening of the financial crisis in the US and Europe, based upon the fact that large numbers of financial institutions in Europe are teetering on the brink of collapse:
“[Brazil’s report] argued that as much as $1 trillion in capital may be needed to shore up European banks; that small businesses in the U.S., a past driver of job production, are still languishing; and that China’s growth may not be sustainable.”
Business Insider also picked up on the leaked report, summarising the recommendations to clients in an article entitled “Goldman: The world’s going to hell in a handbasket – here’s how to cash in!”:
- Buy a six-month put option on the Euro versus the Swiss Franc, thus betting the Euro will drop against the Franc (the Franc being the currency that an official Goldman report recently referred to as the most overvalued in the world)
Not the sorts of advice that the average Joe can actually cash in on, whatever Rastani may think, but significant for a different reason. Since it irrefutably proves — as if proof were needed — that Goldman Sachs says one thing publicly, whilst offering contradictory advice privately to their friends (as we see clearly in the example of the Swiss Franc). A great insight into how the “free market” really works.
Anyway, by the end of the week, Rastani was receiving calls from as far afield as Australia. Asked what he thought of his instant fame, here’s what he had to say to the Sydney Morning Herald:
In other words, “the Emperor has no clothes on!” But hey, that Rastani, he’s one funny guy. And you’ve gotta laugh, right?
For further comment on the incident, I recommend an article posted by The Yes Men in Thursday’s Guardian. It begins:
This week, an insignificant market trader and self-proclaimed financial self-help guru, Alessio Rastani, rocketed to stardom after speaking frankly on the BBC about the collapsing market and his plans to make money from it. We Yes Men heard about it right away, because soon after the broadcast, people started emailing from all over the world to congratulate us on another prank well done. They couldn’t imagine that a real trader could possibly speak so candidly about the market, so they assumed Rastani was one of our posturings.
1 From an article entitled, “Trader or Prankster? We Called Alessio Rastani And Asked” written by Emily Lambert, published by Forbes on September 27, 2011. http://www.forbes.com/sites/emilylambert/2011/09/27/trader-or-prankster-we-called-alessio-rastani-and-asked/
2 From an article entitled, “UK trader becomes an Internet sensation” written by Jim Boulden, published by CNN on September 28, 2011. http://edition.cnn.com/2011/09/28/world/europe/uk-trader-viral/
3 From an article entitled, “Goldman Takes a Dark View: A Private Note to Hedge-Fund Clients Gives a Strategist’s View; Ways to Gain From Global Pain”, written by Susan Pulliam and Liz Rappaport, published in the Wall Street Journal on September 1, 2011. http://online.wsj.com/article/SB10001424053111903895904576542703587784540.html
4 From an article entitled, “GOLDMAN: The World’s Going To Hell IN A Handbasket – Here’s How To Cash In!” written by Editor-in-Chief of Business Insider, Henry Blodget, from August 31, 2011. http://www.businessinsider.com/goldman-the-worlds-going-to-hell-heres-how-to-cash-in-2011-8?comments_page=2
5 From an article entitled “Alessio Rastani” written by Miriam Steffens, published in The Sydney Morning Herald on October 1, 2011. http://www.smh.com.au/world/newsmaker-alessio-rastani-20110930-1l1bn.html
6 From an article entitled “Sorry, but this trader’s banking confession was no prank” written by The Yes Men, published in the Guardian on September 29, 2011. http://www.guardian.co.uk/commentisfree/2011/sep/29/alessio-rastani-no-prank?newsfeed=true