The Kerviel unit is about E4.9 billion, approximately $7.2bn. This is the amount lost by the n°2 French bank Société Générale. There is also the Kerviel Plus, about E50bn ($72bn). This was the total position taken by the young trader; SocGen felt it had to dump it in the midst of a bear market. It’s a little too easy to call Jérôme Kerviel a “rogue” trader. He’s rather a searchlight suddenly throwing a piercing ray of truth on the the financial system follies. Unfortunately, even if this only about a very narrow sector of the system, Kerviel becomes a beacon for the legion of opponents to the free market economy. Plus, and here’s an interesting surprise, he’s exonerated, even lionized by the crowd . See Le Figaro’s poll last Friday, only 13% think Kerviel bears most of the responsibility in the SocGen mess, versus 27% who say it’s the regulators, and 50% the management of the bank. People are ready to forgive the index rider who went, well, slightly off track. But this new metric turns out to be an interesting tool to compare real and virtual economies. Let’s wonder : how many Kerviels (kvl) is your company worth these days ?
- Yahoo (11,500 employees) : 6,2 kvl (according to Microsoft)
- Google (11,400 emp) : 22 kvl
- Boeing (154,000 emp) : less than 9 kvl
- Total (95,000 emp): 23 kvl
- News Corp (53,000 emp.): 8.3 kvl
- The New York Times Co. : (11,500 emp) one third of a kvl Well, you get the picture. These economic discrepancies don’t make any sense, except that all the companies mentioned above feel the tremors when a market related incident occurs (drop in stocks, increase in interest rates, etc.). -
> A large part of the excesses of the financial sphere is tied to a corrupting compensation system. Read this insightful analysis – written before the SocGen debacle – in the Economist.
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