TRASHFUTURE - *UNLOCKED* Britainology 20: London Finance Geezers feat. Matt Edwards

Episode Date: September 30, 2022

This is perhaps something of a combination of Britainology and a regular TF episode in which we've brought on Matt Edwards, Milo's (much) older brother, who worked as a foreign exchange trader in London brokerages in the 1990s. We learn about the geezer-rific work environment of a bunch of guys yelling into a phone about numbers, some of the antics they got up to, what's changed since, and--perhaps on a more serious note--Matt's personal experience with what happened in Greece post-2008, a country he's worked in extensively. We very much hope you enjoy this. To get more Britainology and all the TF bonus content, sign up on the Patreon here: https://www.patreon.com/trashfuture *MILO ALERT* Here are links to see Milo’s upcoming standup shows: https://www.miloedwards.co.uk/live-shows *AUSTRALIA ALERT* We are going to tour Australia in November, and there are tickets available for shows in Sydney: https://musicboozeco.oztix.com.au/outlet/event/3213de46-cef7-49c4-abcb-c9bdf4bcb61f and Brisbane https://www.eventbrite.com.au/e/trashfuture-live-in-brisbane-additional-show-tickets-396915263237 and Canberra: https://au.patronbase.com/_StreetTheatre/Productions/TFLP/Performances *WEB DESIGN ALERT* Tom Allen is a friend of the show (and the designer behind our website). If you need web design help, reach out to him here:  https://www.tomallen.media/ Trashfuture are: Riley (@raaleh), Milo (@Milo_Edwards), Hussein (@HKesvani), Nate (@inthesedeserts), and Alice (@AliceAvizandum)

Hello, and welcome to yet another edition of Britannology. I'm Miles Edwards. I'm on day two of a two-day hangover, and I'm joined as ever by my co-host, Nate Pathay. Hello, lovely day to not yet be hot and sweaty, but then also getting rained on because it's summer in the United Kingdom. Love it. We love June in the UK, a time where it's definitely summer. It is actually really fucking hot in the office.

The weather sucks, but it's like really hot also. So we have convened on this strangely weathered day to talk about a most august British institution, because I think all of our listeners are familiar with Wall Street Guys and Wall Street Vibes, something which has been discussed at length on the podcast. But what about their British counterparts, people in the esteemed financial district of the city of London,

and by popular demand, at least among other hosts of the podcast, we are joined by my brother, Matt. Good afternoon. Pleasure to be here. Who has worked in finance in the UK and certainly very much in the city in the 90s. Just to talk about the vibes. The culture.

Yeah. There was definitely a vibe. Well, that's what we are very glad to hear. For listeners who may not be familiar with the concept of the city of London, as opposed to London, there is a district in this kind of central east part of London called the city of London, which has historically always been a separate administrative zone,

which goes back to the era of William the Conqueror, because it was the only part of the city with high city walls. And so the Norman army was unable to capture it. And so they sort of made a deal with the inhabitants of the city of London that they got this kind of quasi-autonomous status in exchange for acknowledging him as the king. And so there's still this kind of funny, like, regulatory chicanery that goes on with the city of London.

It has its own special representative in Parliament. It's kind of, it's like a sort of weird area. You'll notice it if you know London, when you cross the boundary into the city of London, there'll be all these things marking the boundary, like you're now entering the city of London, then there's kind of a different aesthetic when you're inside that zone. There's all these little, like, kind of,

what would you call them, like, bollards with the kind of city of London crest on them and stuff. It's like a little quirk. And that is where all of, well, at least the majority of London's financial centre is based there, and to some extent in Canary Wharf, which is a newer thing built out in the old docklands. Yeah, we don't talk about that one.

No, we don't. But yeah, so a lot of times people will refer to working in the city, by which they mean specifically city capital C, the financial services industry, more or less. Sometimes law. Occasionally, there's quite a lot of law stuff in the city as well, but it's primarily a kind of financial. Yeah, there's a similar vibe in New York with working in the city

or going to the city, meaning the island of Manhattan, but it doesn't necessarily denote what job you've got. It just means, like, you're not in the outer boroughs, you're on the island of Manhattan, but I've noticed here where people will talk about city jobs or things like that, capital C, city job, and that seems to imply, like you were saying, like finance investment or some sort of related field.

Yeah, sometimes consulting or law kind of gets lumped in with it. The kind of the industries that largely service the financial services, at least in this country anyway. So I think that kind of covers the basics of the city. I think, like, much like Wall Street, there have been some big cultural sea changes in the way these things operate in the last 20 years, and I think that the image that people have of the city,

much like the image people have of Wall Street, is probably very governed by a kind of, like, 80s and 90s idea of how things operate. So I thought it would be fun to, like, I don't know, I don't want to go too riley on this episode. I don't want this to be, like, a drudge through technical history of, like, financial services and regulation in Britain. What we want to get at here.

You've got the wrong guy for that. What we're looking to get at here is what it was like. I think a good place to start is probably with the people involved. So there's like a strong, my understanding of it is, there's a big divide in people who work in, let's say, kind of banks brokerages and so on, between kind of what are traditionally more, like, highfalutin graduate jobs in the city

and what are more traditionally kind of, I don't know, your wide-boy geezer jobs in the city. Yeah, the bankers were the graduates, in essence, and the brokers were the oaks. You know, we were the barrow boys, right? We were the guys, but, you know, we were an essential cog in the wheel, if you like, back then. I suppose it's changed a lot since then.

I mean, the 90s was really was the golden era for broken, if you like. It was before electronic platforms, it was before algorithmic trading, it was before all that stuff. So voice-broken was a real essential component of what went on in the city back then, and there were some characters.

There is a similar kind of divide, but it's going away in the U.S. where you've got, yeah, like you're describing guys who went to, you know, Wharton School of Business are the actual investment decision-makers, and the guys who had until recently had, you know, 80 different phone lines connected to this thing that they could then, you know, pick on a relay,

which one they wanted to call. Those guys often were way more working-class, or at least they'd gone to school, they went to school like Hofstra or something like that, like a university that wasn't as elite, but like those guys had to be, how do you describe it, combative as hell all the time, and it's a very different culture between like them

and the guys who wear vests and buy, you know, $25 salads every day for lunch, and do triathlons and stuff like that, which is a type. But that is going away. It's getting kind of blurred now, whereas you could definitely tell the people who'd been in the business a long time in the U.S. like it was either one or the other,

and there was not a lot of mixture in between. Yeah, because there's a different like, I mean, I know plenty of people who work in the city doing kind of like M&A, investment banking-style stuff, where basically all you do all day long is make PowerPoints. Yes. And you will spend 16 hours in the office making PowerPoints, but I think that,

and then there's a big divide between that and like, yeah, broken or trading, I think is another profession which is slightly more... Yeah, I mean, if you look at... I mean, now it's all about private equity, hedge funds, these type of guys, right? And if you look at a private equity fund, in essence, it's a box-ticking exercise, okay?

You're going to go with your presentation, and they're going to compare your presentation against their little box tick. And if you don't tick every single box on their little list, they're not going to fund your project. There's no entrepreneurism in it at all. Mostly their accountants, from what I can see, the broken business was completely different.

You just had two lights, and basically the only two words you needed to know was mine and yours, followed by a number, which under pressure was quite difficult. Actually, believe it or not. Okay, so talk us through broken as a business then. Well, in essence, you had a... You know, you had a desk back in those days.

You had an orange light on the left and a green light on the right. The orange light was bid, the green light was your offer, where you sold. And typically, you'd have a bank of ten clients, which were all banks. So back in those days, you had banks like manufacturers Hanover Trust, Chemical Bank,

Bankers Trust, Merrill Lynch, Charter House, Hill Samuel, Coots, all banks that you don't ever hear anymore. Now, because they've all been amalgamated into Royal Bank of Scotland, probably five of them are JP Morgan. Yeah, Chemical Bank is kind of taking me back, because that's like an old-timer New York term now,

because people, it doesn't exist anymore. Sounds like a dubstep producer. Chemical Bank merged with Manhattan, and then they merged with Chase, and then JP Morgan merged with Chase. Yeah, with Chase, yeah. Exactly. Bankers Trust was bought by Deutsche.

Okay, yeah, yeah, yeah. In 98, Bankers Trust were probably the biggest bank in foreign exchange in the 90s. Got it, okay. They were huge. So in those days, like contrasting it with the culture now, what stands out to you as like a big departure? Well, if back then, you would have,

when I was working at Tullits, for instance, you had a whole floor for foreign exchange, and on that floor, you would probably have had 150 brokers. If you were to walk into ICAP now and see the voice-broken section of the floor, you would have less than 10, and that's for all currencies. Hello.

So that's what electronic trading is done for the broken business. Voice trading now is virtually obsolete. Everything's done on platforms, through Reuters, through Bloomberg, and even traders now, there's not even any proprietary desk left, hardly any.

Gotcha, okay. So all the trading has gone to algorithmic computer-based? Algorithmic trading. The banks now are basically brokers. They're taking execution orders from their clients. They basically do this, their clients profit takes, stop losses. They've effectively taken over the broken business.

And the brokers now, particularly on foreign exchange, forwards, and even to a large extent, bonds have gone on to electronic trading platforms like EBS, like BrokerTech, these kind of things. So it's fully automated. Okay. So I think that sort of covers a little bit of the technical aspect of what was going on.

But in a more sort of cultural aspect, what was it like walking onto a trading floor or a broken floor in the 90s? What was the kind of social milieu? Yeah, you start as a trainee, right? So my first day, I walked into an office, which wasn't much bigger than this, actually, with a round desk in the middle and around that desk.

On the podcasting floor here. On the podcast. We're all wearing those stripey jackets. Yeah, and technology-wise, it was nowhere near as advanced as this, my friend. You had a round desk, kind of looked a bit like a donut. Okay. With 11 guys sitting around it, right?

10 or 11 people. And I didn't have a clue what they were going on about. I didn't recognize any of the bank names. I literally went in there completely cold. And it was my job in the beginning to get their breakfasts. Now, the breakfast thing you might think is quite mundane. But if you can remember a breakfast order for 10 or 11 people, then you can remember an order from one of your clients.

Got it. So it was part of the process. I didn't think it at the time, but actually it was quite an important. It's memory training, if you like. You just had to work out in the beginning how much you could rip off the people in the office to cover your mistakes. Got it.

Because if they ordered a runny egg, they wanted a runny egg. One of the first people I was introduced to on that desk was a guy called Dave. I won't give you the surname. He's dead now, mate. Rest in peace. It was a lovely chat. And his nickname was Growler.

Right. And he was a big six foot four ex rugby player, right? And you expect a man called Growler to have a certain type of voice, don't you? Well, when I met Dave the first time, he said, I said, hi, Dave, nice to meet you. I'm Matthew. He went, hi, my name's Dave.

So that was Growler. We had another guy on the desk called Johnny Clark. He was now in Australia, so I think we're safe from any retribution there. He was called Splinter because he looked like Splinter out of the Teenage Mutant Ninja Turtles. I kid you not. We had another guy on the desk called Tony.

His nickname was Bones. Right. Because he was very thin. Right. Makes sense. We had a mad Irishman on the desk called Eugene. I mean, yeah, completely, completely bonkers. An Irishman called Eugene.

Yeah. That's interesting. I think I've told you about his Russian business trip when he took his clients to a Russian nightclub. And he was telling us a story. And they said that he said that the bouncers, they started cutting us with sticks. I said, do you mean swords?

He went, yeah, that's the fucking word I'm looking for. It was fucking swords. Yeah, exactly. I didn't realise you worked with Dave Courtney. No. The Irish Dave Courtney. Well, he didn't have a sword. He ran.

He was like Usain Bolt, mate. I don't know about Dave Courtney. He didn't hang around for long when the swords came out. I can tell you. Right, yeah. Was this the same guy who found himself in a cab rank at South End Rail Station? Yeah, he is the same guy, yeah.

Yeah, he got on the train one night after a very, very long night out. Absolutely desperate for a crap. And he realised once he'd got on the train that there was no toilet on the train. So by the time he gets to South End Station, he is burst in a blood vessel to get off that train. He gets off the train and they close the toilets

in South End train station. So he goes wandering out at the train station and apparently there was a row of hedges as you came outside on the right-hand side. So he jumped over the hedges and took a squat behind the hedges and noticed that there was lots of flashing lights and horns bibbing

and he realised it was actually a taxi rank. So that's another one of his classics. One summer he had this fan because it was very hot in the office. We've just set up a fan in our office, a reference. This one's actually... This one's plugged in properly, I can see, but this one certainly wasn't.

He didn't have a plug on it at all. It had two wires and he was plugging the two wires into the plug hole. Because the middle of the desk was hollow, so he'd got in there and he was jiggling around with these wires and he managed to short out the whole desk. So we couldn't do any broking

for at least four hours while they were fixing it. He wasn't too popular that day. He came up with this... The director of the desk said, when it just went like bang and everything stopped, he went, Eugene, what the fuck have you done in there? And I remember Eugene coming up with his hand all black going,

I think I fucked up their hutch. It was just an absolute classic. But the bloke was a nightmare. An absolute nightmare. Funny guy, though. Yeah. Well, this sort of immediately sounds like the kind of thing you can't really imagine happening now

just because I feel like all of these working environments are much more sanitised. No chance. Than they used to be. No chance. I certainly can't imagine anyone being allowed to fuck around with electrical wire in an office. No.

Can I imagine what the sort of health and safety HR implications would be of that? If you go into a brokerage now, it's silent. Because it's all done on keyboards. No one says anything. It's bizarre. When I was there, I mean, it was noisy, right? It was screaming, shouting.

I've seen physical fistfights in the office on more than one occasion. OK. What might generate a physical fistfight on a 90s brokerage floor? Typically, when you are second. So if I'm paying 50 for 5 million, right? And the two guys, you've got one guy gives me first,

the other guy gives me second. I go, no, you were first, you get your five done. The other guy has to go back to his client and say, sorry, I missed it. That's typically the circumstances where it would happen. Normally, when one of them was pissed and one of them wasn't. After a lunch, for instance. Another aspect of things that seems to have changed,

I don't recall in any of my time working in, not on Wall Street, but in New York, alcohol at lunch. It sounds like that was a culture that existed. Absolutely. Absolutely. You know, you'd go out. Well, you were encouraged to go out, actually. I mean, that was what it was all about.

It was about developing relationships and getting business out of people. That was the whole premise of it. Now, you're not even allowed to go out with clients. So I don't know how it works now. I mean, for me, it's bizarre. How can you build a relationship with a computer screen? But this is what you're asked to do now.

Back then, you would have lunches and you'd be out three nights a week after work with clients. Yeah. I mean, the impression that I've got is that some of that stuff does still happen, but not as much, basically not with publicly traded companies, because they can't have contact with anybody that's not like a C-suite executive.

And that's obviously way more regulated. But with private companies, from my impression, is that there's a little more wiggle room as far as like going out and sort of making friends with people, put it that way. I mean, that side of the business is highly regulated now. I mean, back when I started at Tullitz, I remember looking, because as you came into Tullitz, on the right-hand side, there was a corridor that went along.

I was on the third floor. But eventually, I kind of had a little explore round. And there was a government-bond-broken room there. And it was the size of this office. And there was probably five people in there, broken, what you would now call sovereign debt. Right? That was the whole sovereign debt-broken operation

was in one room. So that pretty much proves how much sovereign debt has increased per country from the 90s. Gotcha. OK, yeah, that makes sense. If you go into a broker, if you go into a broker's now like an ICAP, you'll see that probably half of the floor is government bonds.

Got it. So I'm wondering, having to go out and make friends with clients like you've been describing, there must have been some encounters, some weird shit going down as far as just having to go out and entertain. And my impression was, at least from my experience, is sometimes when things get weird, you kind of have to look the other way, because I mean, it's just,

what are you going to do? It's clients, that kind of a thing. So I'm interested in this stuff that, as long as it doesn't violate the, what's the right word here, the statute of limitations, we can disclose it, that kind of a thing. Nate, it's the 90s, son. We're well outside any statute of limitations, my friend.

If you'd have asked me this in 2001, I couldn't have possibly have come into it, but now. You'll go and get it all, brother. 9-11 was really the watershed for this stuff, you know. Once Osama brought those two boys down, you know, it was all over, really, for the banking secrets. Yeah, I mean, look, it was typically the pub after work kind of thing.

But I mean, there were a couple of old haunts. The Stratford Sauna was one. So is this in Stratford? It is in Stratford. Oh, Stratford in the 90s. Yeah. Not sure I'd have fancied that. No, it was Stratford in the 90s.

Yeah. It was Stratford in the 90s. I mean, Stratford now, to be honest, but Stratford in the 90s. I'll leave it up to your imagination as to what went on in the Stratford Sauna. Mm-hmm. But suffice to say that I once went in there and I was sitting there having a beer and I looked to my left

and there was a guy sitting there in bright red underpants and it was the head of trading from Barclays. And I just looked to him and I said, all right, John. And he went, well, he was mortified. So I turned up. I said, you know what you're going to do first thing in the morning and first thing in the morning and he was making us quite a lot of prices.

Mm-hmm. So you have it. It was worth hanging out at the Stratford Sauna. Caught red-handed or red-panted. Yeah. As you might say. Red-panted in the Stratford Sauna. We were in Langans one evening and I was there with my manager

and a couple of other guys on the desk and a couple of clients and my manager was quite drunk. And on the table just behind us was Shirley Bassey and he said, and he turned around and said, oh, is that Shirley Bassey? Yeah, that's Shirley Bassey for sure. He's like, I fucking love Shirley Bassey. At which moment he stood up and went over to a table

and started serenading her. Oh my God. Yeah, which was highly embarrassing, as you can imagine. Yeah. What was Shirley's response? Did she... I mean, I wish I'd... You know, we didn't have mobile phones then otherwise

I'd have definitely got a picture of Shirley's face because I can assure you it was a fucking picture. She was... It was a face of horror, anger and embarrassment. All rolled into one. Like the scream, Edward Munch. Something along those lines. It wasn't good. Well, that's generally the reaction you're looking for

from an impromptu musical audience. When you've got some old bloke coming up and he was quite old at the time, pissed out of his face. To be fair, that is kind of Shirley Bassey's fan base, yeah. Building out the miniature walk in the joint. You know, you can imagine it, can't you? It wasn't good. I'm fascinated by that as an approach, though,

to be like, right, I love Shirley Bassey. How am I going to impress Shirley Bassey? I'm going to do a very poor cover version of a Shirley Bassey song to her at a dinner. Yeah. Of all of the methods of entry you could have employed there, I think it's probably the lowest success rate. He didn't think it through.

No. That's all I'm saying. He was drunk. He was a bit Red Lipton reckless. But not Red Panted. No, absolutely not. That was all about Barclays. You see, if he'd have bumped into Shirley Bassey in this Trafford sauna, he might have had a bit more leverage. I don't think Shirley went down there.

I should hope not. She was a bit out of that particular social setting. She didn't need to work. No, presumably not. I'll say one thing about the city in the 90s. It was everybody had a purpose. Everybody was there to do a job, whether you were a broker or a trader, whether you were doing equities,

whether you were doing bonds, FX, whatever you were doing. Everybody was there to do a job. We weren't burdened by huge amounts of regulation. We didn't have 50 man HR departments. We didn't have 25 people working in compliance and a legal department of 100 people. These are cost centers now, right? And therein lies the problem.

Back then, the cost of running the operation was much slimmer. You could make money and you got looked after. You got good salaries. You got good bonuses. I don't think you're allowed a bonus, are you? Or is it capped at twice your salary or something along those lines? They definitely still get bonuses, but I don't know how much. My experience has been that it really depends on what your job is. There'll be some people where it's absolutely capped

and some people where high-risk, high-reward jobs where you absolutely can make a lot more. But then also, if you make a bad trade, you're gone within an hour. You're packing up your desk and that's it. One of my friends from school worked on an industrials team for long-short equities and a hedge fund. He went through five or six analysts in a year because basically the minute that their portfolio manager wasn't happy,

it was like, now they're gone. I think it's probably worth at this point talking about. We've alluded to the fact that things were a bit more laissez-faire and now they're less so. I think it's probably worth getting into some of the kind of incidents that might have tipped it in that direction. I flagged this to Matt earlier, but I feel like we can't really talk about the city in the 90s

without talking about Nick Leeson and Bering's Bank, which I believe technically happened in Singapore. He was an equities trader in Singapore. Yeah, but he started off in the back office at Bering's Bank and then he ended up managing their sort of entire operation out in Singapore, but I think was doing a lot of business in kind of Southeast Asia in general. Essentially, this all came to a head in the 92 or 93 where it basically acknowledged that he had been making these incredibly risky trades

and hiding all of his losses in an error account, which was supposed to be used for basically adding up errors at the end of the day for when the trades didn't align or something of that nature. Yeah, there's kind of mixed information about it, but in essence, Leeson, for I think for a couple of years, he made a lot of money for Bering's, right? I mean, I think he made something like 10% of their total trading profit on his own, which is quite impressive.

And I gather from that that he kind of got a lot of leeway on how he traded, how he reported. I think the essence of him, the downfall of him was that he was losing money. He'd covered it up through the back office system and he'd somehow worked out a way to cover up the losses as well on the electronic reporting system. I don't know how he did it, but he did it. And then, of course, when you start losing money and you're covering it up,

you take more and more risk. And he took a big punt on the Tokyo Stock Exchange and then the earthquake hit. Got it. So the Nikkei fell out of bed, margin calls all over the place, and that's when they discovered I think it was a $1.3 billion black hole. Right, in the trading. And of course, in 1992, $1.3 billion was a lot more than it is now. It was a huge pickle.

Having said that, if you look at that bearing situation, bearings actually probably could have worn a $1.3 billion loss, but it was the process of how they wound those trades up because there are only paper losses. There are only paper losses until you physically come out of the transaction, right, until you physically sell out of your future, out of your option, out of your net position. So I can't remember who handled that process.

I have a feeling it was Barclays. And I'm pretty sure they weren't kind to bearings when they were exiting those bearings positions. And in the end, ING bought bearings for one pound. So a German banking dynasty, I think it was German. Isn't they Dutch, ING? ING is Dutch, but I think bearings originally was German. Oh, right.

Dynastical German banking family, I think. A merchant bank completely disappeared for a quid. That's wild. Quite sad, but it was a huge story back in those days. A huge story. Yeah, what was it like when the sort of news broke in London? I imagine the fallout from it was quite large. Took a few days to find out what exactly was going on.

But a bank like bearings who were quite conservative going bust was a shocker, was a shocker. Because in the foreign exchange market, bearings was quite a conservative bank. They were a good bank. They made money. You just didn't expect this kind of thing from a bank like bearings. Yeah.

You would expect it from a bank that was more risk-on, that had a huge proprietary trading operation. You could kind of like a Lehman's, that kind of bank. You could kind of expect it. Lehman's as it was then was Shearsons. But bearings... Lehman's went on to be completely fine. Yeah, no problem there at all.

Lehman's was the golden egg. Did right. Lehman's, Bear Stearns. I think Bear Stearns was AAA on the day it went bust, right? Yeah, it might have been. Amazing, eh? Well, that was right in Jason's. He did a cracking job.

Cracking job. There's a video actually. I think it's the chairman or the CEO of Bear Stearns. He's giving a speech when he gets the news that they've basically just gone bust. Yeah. Cracking video. It's a cracking clip.

If we can pull some audio from it, we will. We'll stick it in. It's a bit like the Donald Trump Twin Towers one when he's reading the kid's book. Oh, George Bush. Yes, George Bush. Yeah, yeah, yeah. When he sees...

Remember that one? Yeah, I think that's whispering in his ear. Yeah, and he just goes like, it's one of those. Yeah. It's a cracker. Oh, that's mad. Yeah, it's a good one. Bear Stearns was a...

Yeah, I'm sorry. Bear Stearns was a real surprise, yeah. So, like, I'm just guessing that risk management, as people talk about it now, that just wasn't really... It wasn't as ratcheted down back then as it is. The processes were completely different, right? Mm-hmm. But now it's all electronic systems.

Yeah. So, it's quite difficult to hide things. Having said that, I mean, in recent history, we've seen the guy at Sokgen. How much did the guy at Sokgen lose? I think it was about 3.5 billion. And we also saw the guy at UBS even more recently drop an absolute clonker.

That was one point something billion, I believe. So, it does... Mm-hmm. It can still go on. It can still go on. The question with the Sokgen one is, how do you manage to lose billions and billions and billions on equities when equities are basically only been going up?

Yeah, I mean, there is that question, isn't it? Like, the way that things have been happening. Yeah. We talk about this on our show a lot, that there is this bizarre situation where hype is taken over and you can look at a company's fundamentals. Like, they are dog shit. They are absolutely garbage.

But for some reason, their price keeps going up. Their share price keeps going up. And it's just this weird... The joke we've made is that... We're referring to the equities markets as just the joke being it's the line. Like, people are obsessed with the line going up. The joke we've made on the show is that the line is divorced now

because there's no real relevance in some of these cases. Tesla's a great example between their actual fundamentals and, like, what their share value is. It makes no sense. No, I mean, it's money supply, right? You've got so much money supply at zero. Zero percent interest. Look at the US, what they're doing.

I mean, you're talking about trillions and trillions of dollars in stimulus. Now, they're going to tell you it's for infrastructure. It's for the people of the United States. It's not. Where does it go? The rise of private equity since the financial crisis in 2008 was not by design.

There was just a lot of cheap money on the street. All the big private equity firms are owned and they were founded by ex-bankers. Yeah. And where did they get their money from? Presuming... You think Apollo has got 170 billion from private clients? Yeah.

No, it's impossible. Well, I mean, and I think about that too with some of the things that you're seeing. I mean, it's kind of tangential to London, but some of the effects of that you're seeing, there's just so much money sloshing around that private equity getting into like the newspaper business for some reason in America, you hear about this, like local papers getting bought up by private equity firms.

Now, they're typically doing asset stripping, but like your local newspaper in Denver, Colorado, for example, might be owned by a private equity office in Boston or New York or something like that. And it's just, there is so much money out there that, yeah, we've started to see that happen with us. Just last week, there was a U.S. private equity firm trying to buy Morrison's supermarkets.

They ended up not getting it. It almost went through. Yeah, they do. I mean, they've all got different appetites, but they do invest in retail. I mean, okay, supermarkets, I guess, is a reasonably safe bet. But retail for sure is a weird one for me now. Yeah, for sure.

Given what we're seeing on the high street now, I think retail is an odd one. Yeah. I read something over the weekend where apparently private equity now, or 54 billion of investment money is going into ESG funds. I mean, I think I know what ESG is supposed to mean. I don't think I do at all, to be honest.

Well, no, it's confusing. But how are you going to place 54 billion into ESG? It doesn't work. Can you give a positive explanation of what it is for the listener? Well, I think ESG is supposed to be social impact stuff. So it should be green tech. It should be renewable energy.

It should be... Yeah, I mean... Riley's talked about this a lot before, about these investments, and it winds up being a lot of it being sleight of hand and stuff like that. Oh, it's definitely labeled it. Yeah. But what lurks behind the label is not sustainability.

Yeah. Well, I'm wondering like, so say 30 years ago, what was it like as far? Because I mean, it sounds like the money supply, the kinds of investors that were involved, like the people who were putting the money up, which just wasn't the same. You didn't have... What is it? BlackRock?

Is it having trillions and assets or things like that? It wasn't as lumped together as it is now. No, your typical kind of buy side bank clients back then would have been central banks. This was before central banks got into the business of buying assets. So one big client back then was Bank Negara, which is the Indonesian central bank. Got it.

Okay. I think it's the Indonesian. Then you would have had typical players like Shell, like BP. Quantum was a big one back in those days. Quantum was George Soros' fund back in those days. The guy that crashed the pound, right? Yeah. Actually, that's a good question to just jump off really quickly if I can

interrupt you. Was it the flash crash on the pound in 1992, wasn't it? It was Black Wednesday. Black Wednesday, yeah. I was there that day. What was that like? I worked about 36 hours straight. Cable.

Reef break to the Stratford Sorner and then back. Yeah. You're talking about pricing that was half a big figure wide, a big figure wide. It was all over the place. Sterling Mark was the one where it really went on. So the Sterling Mark desk had a direct line to the Bank of England and the Bank of England was on the bid.

They were trying to support Sterling, obviously. Yeah, yeah, yeah. And it got to the stage where the Sterling Mark desk were just going 25 yours, 25 yours, 25 yours. And the Bank of England said, OK, minimums of 50, 50 yours, 50 yours, 50 yours. Then it was minimums of 100 and it was 100 yours, 100 yours. It was ridiculous. Quantum was one of the big players in that.

I remember a big American bank was interviewed that afternoon, that evening after making a fortune on the day and crowing with delight that he'd played a part in fucking the Bank of England. And the head office were on the phone about five minutes later and he was fired within about half an hour for making that little faux part on live television. Yeah. So I mean, because we've heard about it, you know, people talking about it in

the news and stuff like that and related to like politically what was happening in the UK at the time. I mean, I was, I think you weren't born yet and I was a little kid. So I don't have any real memory of it at all. But I just hearing about the kind of thing that like at the time now, correct me if I'm wrong, but nowadays there would be some kind of risk limits that would stop trading in a situation like that. It was, it was very, it was, it was a weird one.

We've seen it since then. We saw it quite, quite recently with the Central Bank of Switzerland, for instance, the Central Bank of Switzerland tried to hold down the value of the Swiss franc and they said, no, no, no, our appetite is limitless. Three days later they pulled and that's when several platforms went bust because they couldn't handle the volatility. A lot of people lost their money on that one. And it was, it was a mad move.

It was a mad move. Back then it was the, it was the purview of central banks to support their currency. Right. We've seen it to a large degree since 2008 with the ECB policy. So if you look at how the ECB has bought sovereign debt since that day, they're basically keeping economies flow by underpinning the value of their sovereign debt.

So Italy, for instance, Italy, there is no way Italian debt is at 1%. I mean, it's just not. Yeah. For the benefit of the listeners, and correct me if I'm, if this is the wrong interpretation here, but like Italian debt is far more risky than something that would be, like you would, you would offer a higher interest rate with the expectation that it's going to, it's probably not going to be as safe as an investment.

Yes. Your, your, your, your yield, your, your interest rate correlates directly to the perceived risk. So in the case of Germany's negative yield. Absolutely. Yeah. Absolutely. They were selling a, they were selling a German 30 year sometime last year.

It was like, I was massively over subscribed and it was something like minus 50 basis points. Something, I mean, something ridiculous. People giving their money and actually paying for the privilege. Yeah. What is the benefit of that? This is the limit of my understanding kind of. It's just safety.

Gotcha. It's where can I put my money and not lose it? Gotcha. It has to be. I mean, there's no other driver, right? I think also, because you and I talked about this before, that some people are in these, are in these trades just because they know other people are going to be in them.

And so you get a sensation where someone's like, well, I'll buy a load of this German deck because I know someone else will buy it off me. That's also, yeah, if you're, if you're going to trade it because the demand far outweighed, you know, far outweighed the, the, the physical amount of the asset that was available. Yeah. You're in the driving seat. If you're holding it,

I feel like that's a similar thing too, especially with equities that when people see one shop or one, one trading platform or someone making a large trade on things that generates interest, but I didn't realize the same was true with, with Forex that like people are just following, following the herd, I suppose. You had a natural back in those days. First of all, you had a natural appetite for Forex. There was a lot more foreign exchange going on in the world. You physically have more currencies, right?

In Europe, you had a lot more currencies back then. And so there was a natural demand for currency, dollars, German marks, big trading partners. These were the two big ones. The dollar mark was, was huge. Yeah. Dollar mark was a huge currency. I mean, I remember, I remember sitting on the dollar mark desk and these guys were throwing it around.

It was by far the biggest, the most active currency pair. And I remember somebody asking for a price in a billion dollar mark. Okay. Now remember, it was a big ticket. Yeah. And I remember a Finnish bank called Consalis Osaki Panky quoting a choice price. Try and say that when you pissed in the Stratford sauna. The, the bigger the amount you're quoting in the wider the price.

So if you're asking for a price in five million, you'd quote 4550. Let's say if you're asking for a price in 10, you're going to quote 4552, 4855, whichever way you read it, something like that. You're going to widen the price a bit because it's going to take you a bit longer to get out of the trade. Got it. So this was in a billion. Yeah.

And they quoted one number. Wow. I'm 46 choice. You can buy or sell at 46. So is that basically saying you're not really making a profit on that trade? It's just saying, I don't care if you buy or sell a billion dollar mark. I'm quite happy with the position. That's the amount of liquidity there was in that market then.

And this was going through voice brokers. Gotcha. Man. Yeah. So it just feels like a lot of that has gone away. And the correct me if I'm wrong here, but the kind of like deal making or the culture of sort of having to like shop around and stuff like that, calling people you knew, things like that, that has changed too.

Completely gone. It's all done on platforms now. Got it. It's all done on platforms. What do you think that's done to like the culture of people who work in trading now? Killed it. Really? It's absolutely killed it.

Yeah. I mean, they just go in, sit on their little tippy tappy, do their trades and go home. There's no soul left. Gotcha. In the job. Everybody used to meet after work. There was a good social aspect of the job. Days of the races, all these kind of things with clients.

Now that's been, it just doesn't exist anymore. And I think it's a shame. I think it's a shame because there was a lot of camaraderie back then. Even when, you know, people were working for different brokerage houses. We didn't care. We used to bump into each other out. We always used to have a laugh. There was, there was a competitive spirit, but it wasn't, it wasn't a bad competitive

spirit. And I'm still friends with most of the traders that I was doing business with in the 90s. So even those relationships, you know, they were proper people. They were decent people. And they, some of them helped me a lot in my later when I moved to Greece in 97 to take over the brokerage there. Some of those guys were extremely helpful. Let's talk about Greece a little bit and the work there.

Cause I think that that's probably, it's kind of, it's a little bit of a digression from our, from our main topic, but I think it'll probably be like an illustrative one, especially given the sort of headlines that Greece makes these days in the financial world. I think kind of that, that like period of the Greek economy opening and being involved in trading there is quite interesting. Yeah. I mean, I'd never been to Greece.

I got offered this, this job in Greece. Um, I still don't know how I did. And I thought, you know, why not go and why not go and give it a crack and see how it works out. So I went to Greece, not knowing any Greeks, not knowing any Greek banks at all, not having a clue about the Greek market and took over a Greek brokerage. Um, so my first, the brokerage was, wasn't making any money. Um, they were doing a couple of deals a day, which for me was incredible.

Um, but one, the difference between London and Greece was the in London as a broker, you were a tiny fish in a huge pool. When you go to a smaller market like Greece with the kind of profile that I had as a Londoner coming in, all of a sudden you're a big fish in a little pool. And I had some, I suppose, automatic respect because I'd come from London. Gotcha. Um, Athens with Athens, London was London. Having said that, you know, I went around, I saw all of the banks and they were all extremely

supportive apart from a couple. Um, it was a completely different dynamic from London. And I'll give you an example. Um, the first order I got in Athens was to buy a hundred and fifty million Euro Euro draper. All right. And my first thought was, okay, look, we're dealing in a thin market. There's not a lot of, not a lot of depth.

Um, so I turned to the guy to my left, the Greek guy. And I said, okay, who are the panickers? And he said Midlands. He said American Express Bank. These are Athens based banks, right? Ergo Bank and another one. So I asked these guys for prices in five and they gave me a price in five. And even though I was a buyer, I sold them five yours, five yours, five yours, five yours.

And I passed them the name of the buyer, knowing that they would immediately panic and sell 10 to try and get short and make some money. So they went out, they took my five and they went out and they all sold 10. Right. They've got five away to London banks. They got five away to local banks. And then I go back to the market and I asked for prices in 10, prices in 20, knowing now that the market's 20 points lower.

And that's when I started buying them. Gotcha. So I fit the first order I ever got in Athens. I filled it comfortably and I filled it. I filled the whole order at around about 02 if I remember rightly. And the market was when I got the order was around about 80, 85. So I filled it within sort of 20 pips and I did about 180. So that was a real test.

So I'm interested because I've talked to people in the past who've worked in Eastern European or in the Balkans or elsewhere in markets that were kind of liberalizing in the 90s. They're always just crazy stories about sort of cultural, if not like mismatches, then just like a lot of big events happening and being in the center of things. I've talked to people who worked in Poland or in Russia in the 90s and they have wild stories about some of the things experienced.

I'm wondering like having worked in the Balkans and having worked in Greece, like, did you have any experiences like that where you're just, you find yourself in a very interesting situation, you know, not necessarily like, you know, buying a whole army base is worth the Soviet hardware, but you know, something along those lines, like just wild mismatch kind of situations. Yeah, we weren't gun running or anything like that. It was, yeah, I mean, I suppose one that still always makes me laugh to this day but I went to lunch with one of the traders from National Bank of Greece.

They never went for lunch, right? But this day, let's go for lunch. So we went for lunch. But a very nice lunch. We had some wine, we had some whiskies after the lunch and we went back to the office and I get into the office and you've got, you know, in front of you, you've got speaker boxes and all the banks come out of the speaker boxes.

You've got a microphone and two phones, okay? And National Bank of Greece's speaker box. I can hear this like, ee-ee-ee-ee-ee-ee-ee-ee-ee-ee. We're coming out of the speaker box, right? I'm clicking in the line. Hey, mate, what are you going on? And he's like, mate, where are the mouses made? Well, where are the fucking mouses?

What are you talking about? You know, the mouses made. I said, you mean mice. And he's like, yes, yes. Where are the fucking mice? I said, mate, I don't know what you're talking about. Okay, let's see where the mice are. And he comes in, he goes, okay, 80 bid.

80 bid, Euro Greek. 80 bid, 80 bid, everyone. Yours. Okay, okay, okay. I said, you've got a few there, mate. Don't worry about that. Figure bid now. We go up.

Everybody again, yours. Okay, thank you. 20 bid now. Off a 50 bid. So the guy just moves the market up, up, up, while laughing and saying, where are the mouses made? Where are the mouses? So in the end, he's getting a few.

I get a call on the outside line from another bank in Greece. And he says, listen, Matthew, I don't know what you think you're doing, but what you're doing is misleading the market. I said, I beg your pardon. I said, because you gave me and now it's gone higher. I'm misleading the market. No, no, no.

If you've got any balls, sell some more. I'm not misleading the market at all. So I put the phone down on this guy, click his box off. I'm not going to speak to him again. In the meantime, the guy in National Bank is going crazy. We're the EEEE. Where are the mouses? Where are the mouses?

We did a lot of business that afternoon. I don't know how he got on from a profit sense of the word. Not very well, I would imagine, but it was a funny afternoon. He was just so hammered that he was... What he meant was that, the point he was trying to make was that all the people in the market are mice.

Okay. Right. And that was his analogy, right? Like on the cat, where are the fucking mouses made? Where are the mouses made? Where are the mouses? The same guy, funnily enough, there was a guy that used to be very senior

at a Greek bank, okay? And he wasn't the best looking fella. He looked a bit like Groucho Marx. Right. You know those masks you get? With the nose and the glass. With the stupid glasses, the nose and the moustache? Mm-hmm.

Well, he looked a bit like that, right? So me and the guy from National, there was a Christmas party. So we turn up at this Christmas party, and in he walks, and he sees Mickey sitting at the bar. And he goes, Okay, listen, my friend.

The carnival is over. Take off the fucking mask. And I'm just like, I didn't come in with him. I just kind of melted into the background and sidled off to the left. Okay. The carnival is over.

Take off the fucking mask now at the top of his voice. I mean, hilarious, but not something I would do. Yeah. Certainly a way to approach a business relationship. Yeah. I mean, it's almost a greeting.

Mm-hmm. Yeah. But I mean, it did crack me up. Absolutely cracked me up. So I think this would probably be a good way into it. What I wanted to wrap up on was 2008 and the crash and sort of the effects of that and what that happened.

I mean, were you still in Greece? At the time, were you in Portugal then? I was in Portugal then. I moved back to Greece in 2009 where I was head of business development for a large London broker for Greece and the Balkans. So I saw what happened directly after that

because I was in the market. I wasn't actively broken. Then I was business development, but obviously I was still in touch with everything that went on in the market. So what was your kind of overall perception of everything that happened in that period? From a Greek perspective,

the Greek banks were always quite conservative. Mm-hmm. They always had good tier one capital ratios. They're loaned to deposits within, you know, very good levels. Unfortunately for the Greek banks, they held a lot of Greek debt. And because of the crisis,

Greek debt effectively became worthless. Gotcha. To the point where it cost too much money to physically hold Greek debt. You can't... Typically you would repo your bonds. You do a repurchase order with another bank where another bank lends you money

at an LTV against your bond. But after the crisis, of course, with effectively junk paper, you can't repo it. That's when the ECB introduced these... Effectively you repo'd your debt directly with the ECB at a cost. Mm-hmm.

And then we all saw what happened to Greece, right? They basically went bankrupt. Yeah. I'm not saying that the Greeks were blameless, but what was done to them afterwards, in my opinion, was pretty harsh. Well, in terms of the sort of credit controls and austerity that was imposed...

Yeah, I mean, I think... I think if you're supposed to be in it together, I think there are a fairer ways of tackling a situation and the way they did. I think the Germans set out to make an example of the Greeks. Yeah. And of course, when you bring austerity into a country and you crucify people

and people become desperate, they make bad choices. It was always... There were two mainstream parties, New Democracy, which was centre-right and PASOK, which was centre-left. What the European Union did was they destroyed that. PASOfication has become kind of a buzzword.

We hear about a lot about happening to centre-left parties in Europe post-crisis that PASOK went from something like a winning parliament, something like 42-something percent to like single-digit percentage in the next election. Yeah. And Syriza won and then... They had the rise of Krizi Avgi as well.

Again, this is desperate people making poor choices. But when I look back at that time, I mean, OK, the far right has got no place in politics. But Krizi Avgi, the Golden Dawn, there's nothing... Which is nothing you can order at the Stratford Sauna. Absolutely. Don't ask for it.

Absolutely not. No. Absolutely not. I'm not going back to that one. We don't do that here, officer. Please don't get me involved in this. Please don't get me involved in this Stratford. Fucks sake.

But Golden Dawn, yeah, of course, they got up to a high of something like 10% of the vote or something. They were never threatening to take over the country. But they were quite aggressive. And from an outsider kind of looking in, you know, Golden Dawn were out there. They were giving people food.

They were giving people food parcels. They were doing stuff that other people weren't doing. And if you're someone desperate, I can understand why that message might resonate. That period from 2008 on was an absolute disaster. So what did you make of the state of play going into it? I mean, I think people who listen to this are probably familiar with the Big Short

and Michael Burry and stuff like that. And to some extent, like the CDO crisis and what was going on at the ratings agencies. But it's interesting from, I don't know, from like an insider perspective or to some extent an insider perspective, like what of what they were doing was like genuinely very bad practice and what of it was kind of, they got unlucky.

From what I've read and my own personal opinion is that it was, I mean, the subprime crisis is one aspect of it. I've read a bit about. So in essence, you could take a portfolio of 10,000 mortgages. You could wrap them up into an instrument, a bond, wrap it up. You could rate that bond because it was asset backed

by properties. And you could sell that bond to your counterparties, i.e. Lemons, Merrill Lynch, Bear Stearns. They were lapping this stuff up. They were making money on it. But what Burry found out when he looked at, see, he looked at a bond, which was an asset backed A-rated security.

And he broke it down into its constituent parts, which could be, which was thousands of mortgages. And he looked into the default rates of those mortgages and he discovered that default rates on those mortgages were at something like, if memory serves me right, 64, 68%. And he worked out that that's not sustainable. So he put on what is now known as the big short, right?

He went around the street and he went to these people and said, I want to go short of these securities. And they laughed at him. And they said, why? Because it's what I want to do. Can you do 50 million? He sure will do 100. Now, that leads me to believe that the people

that put those securities together never looked at the underlying performance of the individual assets that formed the base of the security. Now, this is negligence. I mean, clearly. What I recall from that period is things that are maybe more familiar to UK listeners,

but maybe not as much in America. Variable rate mortgages, for example, are not a common thing in the United States. They became much more popular when you just had an asset valuation kind of snowball effect where it's very common now for people who held on to their homes during the crisis to basically still be paying 30 or 25-year mortgages

on properties that were valued at time of purchase at twice what they're valued now. Now, it has caught up because there's been a massive cash in America spreading over people trying to buy homes, a lot of private equity getting involved in buying homes. That has changed. But over the course of the last decade, my sister-in-law is an example of this,

somebody who bought a house at the peak of the market because mortgages, you have cheap credit available. And then a house that was valued at $375,000 was suddenly worth $175,000, $180,000. And so you're basically lifetime paying on a mortgage, working lifetime paying on a mortgage that when you own the asset, present the asset is not anywhere near

what it was worth when you bought it. And that I feel like, just like you were describing in Greece, there was a huge political ramification of that in America of people who were sort of like, well, the government says they're going to help us with mortgages, help us with mortgage relief. And then when you called the government helpline,

they just connected you with the bank that was foreclosing on you in the first place. And there was no meaningful relief. And you see huge political changes because of just people being disgusted by what they see as a government that doesn't do anything besides making money for the people who are connected to it. And maybe that's a superficial interpretation of what happened,

but it did strike me that like, yeah, the knock-on effects of this stuff are still going on. I mean, when I used to teach at a university, when I was a graduate student, I mean, I had so many students who were from Outerborough, New York, in like Brooklyn, Queens, and then Staten Island, whose parents had lost their homes.

But that was just a very, for kids that age, if they were in college in the early parts of the 2010s, that was just a very common refrain that their family, they were suddenly renters when their families had owned homes before because they had been foreclosed on. And that got ignored mostly in America after a certain point, but you're still seeing the, of just the fact that a lot of this stuff was,

there was an incentive to inflate the house prices, there was an incentive to do cheap credit for these mortgages, and then there were all of these, as I see it, even institutional investors who were like, well, Moody's rated these CDOs at AAA, so we can invest Swedish kindergarten teachers' pensions in them, why not? And then the whole thing fell apart.

Yeah, well, it wasn't good. I think your average person is probably three months from bankruptcy, at any given moment in their life. So if your source of income goes, and in a crisis, invariably, a lot of people become unemployed, you're going to have a problem. And if assets start to plummet,

then obviously the companies, the institutions that hold those assets have got a problem. We're probably going to see it in the not too distant future in stock markets, I would imagine. You know, you read, depending on what you read and who you read, there seems to be a consensus that we are looking at a bubble now in stock market values in company valuations. So, you know, we might see another big crash.

Who knows? I wouldn't bet against it. Yeah, I think in a lot of ways, we were anticipating something last year when stuff started closing down and it looked like it was going to happen. And then it seems that instead, asset prices have gone up, equities have gone up, things like that. But there is this feeling,

at least for us, for our show, when we talk about startups and we talk about things like the SoftBank vision fund and things along those lines and the ways that all of the venture capital stuff that goes into these total loss-making enterprises, there's this feeling that at some point this is going to stop. But when it stops, it's not going to be a slow backing off. It's going to be just a crisis where all of a sudden

all of these things that have been put forth as these instruments that are going to reshape the economy are just going to go away because they're all based on, like you were describing earlier, getting zero interest loans effectively, getting from institutional investors to people who can borrow at low rates and then operating at a loss but dominating market share.

But then at a certain point, it's like, okay, but that's in the best case scenarios. In some cases, these are companies that are never going to make a profit. What we've seen is an unprecedented level of share buyback by big corporations. They are buying back billions of dollars of stock and they're doing it with cheap cash. They're doing it with cheap funding.

We haven't seen this level of share buybacks since the big Wall Street cash. When was it, 29? 29, yeah. Well, I was thinking about that too because I remember reading an article recently about this that that's what a lot of emergency funds that were doled out in 2020 in the US went to.

They were the way that the UK government issued coronavirus relief stuff to companies and they were lending through high street banks to keep comp like the furlough scheme. In the US, the similar program, so much of the money that they received went to stock buybacks. Yeah. Yeah, that's been, that was same thing with

overseas profit tax holiday, the same thing with the tax cuts that went to happen, the corporate tax cuts that happened in the US under Trump. That money all went towards buybacks and then executive compensation. What could be dodgy about buying your own stock? Surely that's a vote of confidence in your own company. It's your vote of confidence.

My company is doing so well. I'm going to buy all of it stock. The idea of floating in stock is to let the market decide the valuation of a full mentioned stock where you hold it all. That's kind of the point, isn't it? They're buying up stock with liquidity so that it drives the price up higher

so that then if they, basically all of their shareholders wind up wealthier on paper. Yeah. But it's effectively, that's not money that's going into I don't know, CAPEX, taking up business development or compensation

for people below executive level. It's just going into raising the asset price and then subsequently like for compensation or shareholder compensation or dividends they're making more. Yeah, I mean, you play the game, okay? You play the game and that's all great. Until it starts going down.

Yeah. When it starts going down and you know that you've got it on your balance sheet that you used to buy back your shares, do you think your creditor is going to keep funding you if your share price is plummeting? Highly unlikely. The likelihood is there's going to be a series of

massive margin calls, but let's wait and see how it develops. I mean, I'm not, you know, I don't want to be a, I don't want to be a seer. Of course, yeah. The one question I had for you, and I know after this you want to wrap Milo, is we have spent in the last year on Trash Future,

not on Britonology, but on Trash Future, talking about Greensill and supply chain financing. And really... Our favorite Australian. Riley read a couple of articles in the FT. It was fascinated by it and started digging into it and started talking about it.

But we were not surprised when it all unraveled after looking into how it worked. And I'm interested in your take on the way that, everything from just like the concept to the way that it seemed to implicate a lot of people in higher echelons of UK politics, for example, in this thing that even on paper, you're like, that sounds like a means of just hiding

debt on your balance sheet so that you can get a better audit. Yeah. Well, look at Wirecard as well. Right? The German company. I mean, they say... They do own a lot of Libyan mercenaries, to be fair.

But they, you know, they made a statement that they had a billion dollars, I think it was a billion euros on account in... Where was it? Argentina, I think. An Argentinian bank, right? And the auditors didn't think that that was a little bit dodgy. And we're talking about supposedly one of the big four.

Yeah. Right? I'm not going to get onto that subject to say I loathe them as an understatement. And then you've got this green seal. I mean, I don't know the origins of green seal. I do know that they received an awful lot of money. I mean, SoftBank, for instance,

you know, basically bought into green seal to the tune of one and a half billion dollars. Trade finance, in essence, should be fairly simple. I mean, you should be funding transactions. You shouldn't be funding people or companies. I think what they did was they bought loan books, which is a lazy man to trade finance, because it means you don't have to do due diligence

on each transaction. Gotcha. You're just buying a rated loan booklet. If you look at someone like ABN, right? ABN Amro, the Dutch bank. Yeah. They're closing down their trade finance. So they're selling off their trade finance portfolio of loans.

I think that was the kind of thing that green seal did, which is fairly similar to the subprime crisis, actually, if you look at it, right? I mean, you're buying a package of something without actually knowing every underlying asset. Whereas if you lend, if you originate your own transactions and you lend into those transactions, you know the transaction you're lending into.

You know that you've got a letter of credit. You know that you've got an SBLC. You know that your buyer is this guy, and you know that his investment grade. You know that your trade has been in operation for over three years. I mean, this is some of the basic things, right? You should look for in a transaction.

Did green seal do that? I doubt it. There was an anecdote. We spoke to one of the FT's reporters about this, and he determined from digging through one of the green seals investor. I want to say it was like one of their quarterly reports, or something along those lines,

where they had talked about a bunch of different firms that had adopted the green seal platform for supply chain financing and for the payment systems that they had set up. And his reporting team just went through and contacted these companies to confirm this. And none of them had any idea what he was talking about. Really?

They had just wholesale fabricated it. And he's like, ah, but this is the thing that the former prime minister of the UK is going to bat for. He just seems like it was a lot of people buying into the hype. Well, he didn't do any due diligence, did he? I mean, he took the paycheck without doing any due diligence, which is criminal.

For me, it's criminal. All best DC. Great job, David. Great job. But I think, you know, with these kind of companies, I don't think you can do that on a platform. First of all, I just don't think we're there yet in terms of tracking, in terms of technology, in terms of vetting documents.

I don't think he's there yet. So when I read that about green seal, I was thinking, no, I don't believe they've got some kind of platform where you can borrow and lend. I just don't believe it. Oh, yeah, no, there was no technology. The technology was the smoke screen for. And this is something we were always saying on the show,

is like, whenever a company says that they have developed technology, it's invariably, almost always, a way to get around labor or financial regulations. Yeah. And that the actual technology involved is just like Microsoft Excel. Yeah.

But I think it's the, you know, if you paint a nice veneer on something, it's surprising what you can get away with, isn't it? Because, you know, he promoted green seal as, you know, the solution, the trade finance solution, the loan lending solution, right? Green seal was, this is how it was, this is how it was dressed up.

And people fell for it, but it's not the first time in history, is it? No. I think the thing that really kind of shocked us was the fact that it was pretty obvious that by classifying, by allowing green seal to acquire your accounts payable, companies could then in audit, not report that as obligations

because they basically, it was off their balance sheet. So it was sort of this soft bank backed instrument to make companies that green seal had invested with or partnered with seem way more solvent than they actually were. And it was just like, to us even, I mean, we're not exactly experts in the field. The fact that all it took was reading a couple of articles

and we're like, wait, this sounds really bad. But yeah, it seemed as though the FT was probably the only paper that was sort of digging into this. I mean, it folded pretty quickly. Yeah. It didn't last long, did it? No. If you look at the timeline,

you know, green seal was not around for that long. No. No. Actually. Yeah. Once sort of credit Suisse stopped buying what they were selling. Well, I think the thing that did shock us that we only found out later was that they had been doing supply chain financing

against notional future revenue streams. So people, they were allowing companies to basically write like future invoices that they would notionally send and basically take on debt against. Yeah, that's not trade finance. That is just, that's junk. I mean, that's junk.

Seriously, as a company, you're going to go to somebody and say, what is your revenue going to be for 2019? Well, I think my revenue is going to be $38 million. Okay, we'd like to lend you 70% of that. Yeah. No. That's just a flat.

I mean, I don't understand that. That's quite frankly, that's ridiculous. And he deserves everything he gets. Yeah. I mean, we saw it coming and we're like, well, surely this is going to end much like so many of SoftBank's other investments. And it turned out to be exact.

SoftBank is basically a Saudi money losing machine at this point. And it makes great content for us to report on on the show. The Japanese, right? Oh, yeah, there. Yeah. All the money is mostly Saudi, I think. Oh, yeah. Yeah.

The Japanese, if I remember correctly, they at one point owned one of the major telephone, like mobile phone providers in Japan, because I remember visiting my brother there and seeing ads for SoftBank phones. But that's basically the only normal business that ever owned. I'm pretty sure that they got a lot of money from Gulf countries to invest.

And that's the money they've been dumping into, you know, like the various things we've talked about on the show. And it's just, yeah. Yeah. It's, you know, I think black, I think black boxes now are not very fashionable. I think people are pulling back from investing in black boxes.

I'm not saying SoftBank's a black box, but effectively it is. If the Arabs have stuck a load of money in SoftBank, not knowing that where SoftBank's going to invest that money, it's a black box. I mean, it is. You're just investing on what? On the reputation and the name of SoftBank,

which as far as I know, hasn't really got much of a reputation. They certainly don't make much money. It's got a reputation for investing in some fucking insane companies. It's got great reputation. It's got a reputation on this show. Let me tell you that. It's got a fantastic reputation for investing in a lot of old shite.

Yeah. Yeah. Well, I don't know if you've got anything else you wanted to ask. I did want to close out on because I think we agreed that we were going to get a Lahore kebab house after this. Perfect. But I wanted Matt for you to talk about your Lahore, your own Lahore kebab house days,

because there's a storied Indian restaurant on this show. We talk about Lahore kebab house a lot. So the fact that you had also been a customer of the Lahore kebab house, I think, was the interest. When I used to work for Marshall's, it was a weekly or bi-weekly thing that we would get a vindaloo, a beef vindaloo,

and a vegetable rice from the Lahore kebab house. Typically on a Friday, because typically we've been out on a Thursday, so we'd have it for lunch on a Friday. Yeah. So the order would typically be vindaloo, vindaloo, vindaloo, vindaloo, vindaloo, vindaloo, vindaloo, vindaloo. And then the last guy, it was called Marble,

because he was as sharp as a fucking Marble. He would order a korma. Always. So that was the step. He always got asked last and it was, I'll have a korma. Oh, fuck sake Marble. He's done it again.

Easy to remember. That particular order. Yeah. Well, that's quite funny because I actually do quite often get the Lahore kebab house korma. He does, yeah. He's a very good korma. Not always.

I'm an adventurous man when it comes to curry, but sometimes. Yeah. It's a solid korma. It's a little bit of an embarrassment, mate. I've got to tell you that. Don't please, Sud. I'd rather you have caught that one up.

You are my younger brother and I love you dearly, but for Christ's sake, son, it's knocking on your head with the fucking kormas. Holy shit. So I suppose at that juncture, that insight into the Edwards family dynamic, it remains to thank Matt very much for coming on. It's been an absolute pleasure.

I hope by a glimpse of information and gave you a bit of a chuckle. We can always do a round two. Oh, that's good. The next financial crisis, we'll have you back. But no more talk about a straight foot, all right. We'll leave that in the annals of history, boys. It's a respectable business.

It's a respectable business. This episode brought to you by the Stratford sauna. A respectable health spa where you can be subject to many treatments, not the golden door. It was lovely. It was lovely. There was another one actually in Stratford as well

called the Aqua sauna. Yeah, there were two. I think I'm either into the high road, I think it was. The Aqua was slightly more upmarket. Oh, okay. Well, next time listeners are in Stratford, do you check those? I think it's still there.

Oh, right. I mean, I don't know. Clearly, I haven't been to Stratford for a number of years. Not even under the guise of seeing an Olympic event when the Olympics wasn't even on. No. Not me. No, absolutely not.

And so that's why it'll just be Lahore kebab house this evening, maybe the Stratford sauna. Subsequent appearance. Yeah. Now, somewhere in entertaining some trash future clients, maybe. Absolutely. Absolutely. All right.

Well, thank you very much for being a Patreon subscriber. And we will see you soon.