Viswanathan K's Thoughts

Becoming a billionaire is not all that uncommon. We know it can be done over decades. Or even just a few years, as happens so often in Silicon Valley. But I doubt anyone will ever beat George Soros’ time of doing it in a single day! Well ok, the build up to the event took time. But Soros’ net worth moved from way below a billion to more than a billion on a single day. And in the process, the man broke the British Pound and brought the Bank of England to its knees. Here’s the story as told by Rohin Dhar . But first, the backdrop. In 1979, the European Exchange Rate mechanism (ERM) was created “to fix their exchange rates with each other instead of “floating” their currency and letting capital markets set the rates”. But of course, one can’t just “set it and forget it”. As trade happens, market forces will put pressure that currencies increase or decrease in value. So the government needs to intervene, in one of two ways: 1)       Buy or sell its own ...

Ever heard of Jérôme Kerviel? He is the world’s indebted man: he owes, hold your breath, $6.3 billion. Nope, not a typo: that is indeed billion with a “b”. Wonder how someone can run up so much debt? Well, the guy was a trader for the French bank, Société Générale. Through a series of frauds, including hacked trading accounts, he bet way more of the bank’s money than they had ever authorized. And when his  bets went wrong, the bank lost $6.3 billion. And so the judge ruled that, after completing his 3 year jail term, Kerviel has to pay $6.3 billion to the bank as fines. What I found interesting was that the fine is so ridiculously unpayable that it effectively might as well have never been imposed. So why then did the judge impose it? Is the law really an ass? Not so, says Frank Partnoy, a former investment banker and current law professor. He explained the fine has two intents. First: “They'll likely reach some kind of agreement where a significant percentage of any money...