Deal or no deal?

Investment banking isn't a casino, they are at least fun


Imagine I offered to sell you a box. I have no idea what’s inside of it but the price tag is let’s say £1m, although I am prepared to haggle. The only thing you know is that there’s a reasonable chance that someone else will buy it from you and that I have bought this box from other people in a similar profession to us both. Fancy it? I would guess not, but then you aren’t an investment banker.

If you think that I am being flippant or dismissive at the behaviour of banking world in the wake of yet another disaster, then you might be right. But please first hear the words of a man who knows rather more about these types of things. Professor Robert B. Reich, President Bill Clinton’s secretary of labour, told Newsnight yesterday: “I recently asked an investment banker exactly what it was he was trading, and he just laughed and said ‘I have absolutely no idea’. 

In a similar vein, presidential hopeful John McCain described the banking world as a casino. But of course it’s nothing like that at all. Casinos are fun, exciting places full of men wearing cowboy hats and girls dressed as bunnies. Banks aren’t anywhere near as interesting. But if we must pick a game to compare them to, and I feel compelled to do so, then it’s Noel Edmond’s Deal or No Deal.

On this horrible little show, which is nothing more than a game of pure chance, gullible viewers and participants succumb to Noel’s mesmerising powers and are persuaded that ‘with the right feeling’ they can affect the outcome. ‘What’s the feeling in the room?’ he asks, ‘do we believe we can do this?’ They ask around, concentrate really hard, experience confidence and make decisions which are mathematically irrational. Then the phone rings and ‘a banker’ makes them an offer…

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