New "World Currency": A Misleading Report

At least two online news organizations (here and here) picked up that bit on Russian President Dmitry Medvedev showing off to media at the recent G-8 meeting in L'Aquila a gold coin, which purportedly is a sample of the new "world currency". Between the two, I'm disturbed by the news published by Telegraph.co.uk whose headline and lead sentence are both written in a matter-of-fact manner that quickly draws a reader's impression that the adoption of the new "world currency" is already a fait accompli (no, it is not), a wrong impression which is further reinforced by the use of a photo of the Russian president holding the said gold coin. Here's that portion of the report I'm talking about:

Russian President Dmitry Medvedev pulls new world currency from his pocket

Russia's President, Dmitry Medvedev, pulled the world's new currency from his pocket at the meeting of G8 leaders in the Italian city of Aquila.


Mr Medvedev, who has been seeking ways to displace the dollar as the world's dominant reserve currency, produced a sample coin of what he described as a 'united future world currency'.

Well, how did that strike you? Do you think I have a point or do you think I need to retool on my English language skills for having misunderstood a few simple words?

You know, I spent a good half hour today checking and re-checking the online archives, using the Google, Yahoo and Bing search engines, in order to ascertain the facts about that so-called new "world currency." My research brought me to two websites (here and here) which basically explained that:

• World leaders attending the G-8 summit will each be presented with two gifts--one from the past and one for the future;
  
• The gift from the past is a Canova book commissioned by Italy's Premier Silvio Berlusconi from the Bologna-based art publishing house Fondazione Marilena Ferrari;
  
• The other gift is a gold coin representing an imaginary future world currency (emphasis mine); and
  
• The gold coins were made by Belgian Luc Luycx, who designed one side of the Euro coins, and produced by the United Future World Currency, a group pushing the idea of a global currency.

You can take a closer look at both sides of the gold coin held by President Medvedev in the above photo:


I'm taking the pains to point out the wrong impression that one could get from the Telegraph's headline and lead sentence because the idea of a "world or global currency," beyond its economic ramifications, is an emotional one as well.

For instance, here's an actual comment from one of the websites I visited where the news report on the new world currency was the buzz: "Say bye bye dollar, buh bye, US dollar will soon be devalued!!!" Here's another one: "It is progress in attaining a one world order. The drawback for us? We give up our national sovereignty..."

Then, of course, there are the conspiracy theorists who believe that a One World Government dictatorship will be ushered in by the adoption of a global currency. And let's not forget the religious right, who are waiting for signs like the coming of age of a one global currency which has long been prophesied. These people, in fact, see the Eurodollar as the precursor to a one-world currency.

As you can see, media's burden is responsible reporting because of the apparently acute sensitivity of some of its publics to the notion of a one "world currency." I'd like to believe that media wouldn't deliberately whip up its various publics into a frenzy over something they very well know is imaginary. Having said that, however, I still wonder why Telegraph chose not to provide the proper context for the gold coin (see my research above) shown by President Medvedev to media. It may be part of what we can vaguely call journalistic license, but for now, I guess media should let the idea of a one-world currency remain a dreamer's dream, which it is at this point in world history.

A Reminder from the Sergey Aleynikov Affair

I’ve sat on the Sergey Aleynikov news for a week now, but with Reuters reporting today that Citadel, the $11-billion hedge fund firm, has joined the fray, I thought that this industrial espionage story has entered a more interesting phase. Here's the excerpt from Reuters:

Citadel Investment Group, one of the world's most powerful hedge fund firms, sued a former top executive in its highly successful quantitative trading unit and two others for setting up their own firm.

Chicago-based Citadel, founded by 41-year-old billionaire Kenneth Griffin, said in a lawsuit filed on Thursday that Mikhail Malyshev and two other former employees had violated their noncompete clauses by starting their own firm, Teza Technologies LLC.

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Malyshev, a Russian emigre with a doctorate in astrophysics from Princeton, left Citadel's quantitative trading unit in February after the funds he helped run returned about 40 percent last year. Their performance stood out at a time most hedge funds lost money and Citadel's flagship portfolios tumbled 50 percent.

Now, this Reuters report caught my attention because it was the start-up firm, Teza Technologies, mentioned above which Sergey Aleynikov joined after leaving Goldman Sachs in early June.

I guess you know by now what Aleynikov did before leaving his employer on June 5: On four occasions between June 1 to 5, Aleynikov used personal passwords to download, from his desktop computer at Goldman's New York offices, 32 megabytes of ultra top-secret Goldman Sachs quant trading proprietary code, which he then encrypted and uploaded to a website in Germany, with a UK owner.

To make a long story short, Goldman learned about Aleynikov's deceit around mid-June, but waited until July 1 to notify federal authorities about the code theft. Things happened quickly after that, with federal authorities arresting Aleynikov at the Newark Airport on July 3 and filing the appropriate criminal complaint against him the following day (incidentally, a holiday). Aleynikov is presently out on bail, after posting the required bond on July 6.

Anyone can possibly read any sort of plot in this story (the blogosphere, for example, is abuzz with speculations about international espionage and other conspiracy theories). What stares me in the face, however, is a boringly recurring theme since biblical times--the frailties of human nature at work again. Matthew Goldstein, the Reuters columnist who broke the news on the Goldman trading scandal, expressed this best in the following excerpts:

Management at Goldman should wonder whether its great success at so-called quantitative trading has spawned a degree of jealousy among the computer geeks who make nice salaries, but don't receive the kind of big bonuses that investment bankers and prop traders take home.

After all, as federal authorities say in the criminal complaint filed against Aleynikov on July 4, the trading platform the 39-year-old Russian immigrant worked on will "typically generate many millions of dollars of profits per year." Bonus envy is certainly bound to crop up with someone working on a trading system that's almost literally printing money.

It's a valid observation, which could very well have pushed Aleynikov to grab Teza Technologies' offer to triple his $400,000 annual salary at Goldman Sachs and steal the top-secret proprietary codes of its money machine. The prospect of profiting from the combined secrets of Goldman and Citadel, coming up with a better trading platform that would outperform both players, and cornering the program trading market was probably simply too much for Aleynikov's ego to refuse.

This thought troubles me as I revisit what Lisa Endlich said about Goldman Sachs’ business in her book about the partnership (at the time). That it's a business “where almost all of the assets go down the elevators and out the front door each night” is as true today as it was in the 1980s when she wrote her book about the investment bank. Indeed, people are an investmet bank's most important assets. Unfortunately, they could also be its soft underbelly, like what Aleynikov has just recently reminded us.

(Photo credit: Google Images)

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UPDATE - July 10, 2009

Bloomberg published today more details about how Aleynikov stole the Goldman Sachs proprietary codes. Click here.

Are You Ready For A Life Like This?

I'm neck-deep in work on an important project but I couldn't resist the pull of the touching story of Carlos Araya, an ex-crude oil trader on the New York Mercantile Exchange who used to order lobster, filet mignon and $200 bottles of red wine at the Palm Restaurant in midtown Manhattan, but who now seats customers as a host at its Tribeca branch. Here are excerpts from Mary Pilon's WSJ report on Mr. Araya:

Mr. Araya, 38 years old, lost his job in 2007 as a crude oil trader on the New York Mercantile Exchange. After visiting dozens of headhunters with no luck, he applied in August 2008 to be a host at the Palm to support his wife, two young daughters and mortgage payments. His salary has plunged from $200,000 to $25,000.

If the financial crisis was the flood, then the Arayas are one of the families standing in the stagnant waters left behind. Some former Wall Street employees, highly trained and accustomed to comfortable salaries, are having trouble translating their specialized skills to other fields that pay well, and instead find themselves forced to accept low-wage work. Now, Mr. Araya is on the brink of losing it all and is doubtful that he will ever return to Wall Street.

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Nowadays, during Mr. Araya's late nights at the Palm, reminders of his old life crop up when former colleagues come in. Some are encouraging and offer hugs. Others sneer, he says. "The way they look at you, you know they're thinking negatively," he says. Some are laid-off like him, and ask if the restaurant is hiring.

As a host, Mr. Araya wears a suit and tie. He's on his feet most of the day, either escorting guests to tables or manning the podium at the front, answering phone calls, managing reservations on the computer and fielding orders from wait staff and managers.

Although he's thankful for the work at the Palm, paydays can be bittersweet. "At the end of the week, I get my paycheck," he says, "and I think, 'I used to make this much in a day.' "

I don't know Mr. Araya but I can emphatize with him. While nothing short of getting back the job and life he used to have will bring back his lost self-esteem, he could at least console himself with thought that he is not alone in this predicament.

At an abstract level, his story is instructive as a cautionary tale. It demonstrates--quite rudely--just how fragile life could be. We could literally lose everything we have patiently and painstakingly worked for in an instant.

The Arayas have reluctantly embraced what I would call a "crisis lifestyle" so they could stretch every dollar they have saved, and yet they have started to miss their mortgage payment. Is foreclosure and bankruptcy far behind?

It's an awful thought, I know, but that's how the cookie crumbles. We should pray for them as well as for us, that we may be spared from bitter lessons of life like this, for which we can never be too ready.

(Photo credit: Google Images)