It would be wrong to howl with the wolves

A Mediterranean TGV high-speed train which derailed, a failure in the nuclear power plant in Pierrelatte, benzene in Château Latour. EUR 4.9 billion fraud be cleaned by Société Générale is not less than that. A drama. A HABs flagship threatened. The political class and public opinion were mobilized to save Alstom. The Bank of the defence, on the contrary, is lynchée, even though the taxpayer is not applied, that no client is has been removed, that the Bank is not even in loss. For shareholders, this is part of the risk associated with investment in shares. Just a little understanding and perspective development would not harm...

As the TGV, the actions of the Socgen derivatives should be a national pride. This statement may offend those who, in France, see the Bank as a little respectable profession. "Money is the great crime more than talent", sighed Emile Zola. Derivatives shares, it speaks less as a speed record or the epic of the atom, but in the international finance gotha, this activity has taken value of legend. Or how the small French egg skulls are the high hand on the American intelligentsia. For the rest, Wall Street and the City duly the pawn in Paris. But options and other innovative products, Société Générale had managed for twenty years to maintain a position of world leader. A tower of strength in a world where copyright exists, who fired all the French financial industry, BNP Paribas at Calyon.

Small precision, it is not, for the most part, speculation activities the bad word. It is for operators to play on large volumes to capture small margins related to abnormalities in markets or to structured products financial for an insurer or a company, anxious to cover against natural disasters or the decline of the dollar. This sector provides jobs to added value in France for young graduates of the schools of engineering and commerce. Finally, banks and bankers are good taxpayers for the French Treasury...

But this success beyond our borders. London, on the desks of products derived from Goldman Sachs, Merrill Lynch and Bank of America, talking English with French accent. Polytechnique and other special battalions have a stranglehold on the high-flying financial City. So that this Gallic enclave in the anglo-saxon world annoys phenomenally. This is not for nothing that the British and American media rage against Société Générale. "A style of French capitalism is now tainted", commented on the "New York Times". As if the "sub-prime" abyssal the Citigroup and other Merrill Lynch losses tarnish not American capitalism...

It would be wrong to howl with the wolves. Of course, Société Générale has faulted. His image is reached. It will be may be sold. But the economic model of derivatives actions is not dead. First, stop the collective fantasies on the theme "we cache everything, we are told nothing." It is unthinkable that Daniel Bouton, the President and CEO of the Bank, has sought to put on the back of a rogue trader losses generated elsewhere. There will be a criminal investigation and any officer of the Bank, whose fortune has been long established, has completed in prison to save his job.

Another important point, internal control failed. But not on its core business. The expertise of Société Générale, is to design, develop and then sell sophisticated financial products while minimizing the residual risk on its balance sheet. Given the amounts involved, it is better not to miss. Others, such as Natexis, a few years ago, have paid the absence of relevant model of development. Société Générale, it pay expensive to have not imagined that it could try to detonate a homemade bomb in a nuclear power plant. In the world of sophistication, "we did the old", sighs were for Société Générale. Systems delivered necessarily, weeks after weeks, their lot of anomalies, but the Bank controllers gave not just important to a succession of flashing. Of complicity Perhaps. In the end, the loss is enormous, but this does not call into question the basis for the General in terms of mathematical models and technology.

Under cover of anonymity, all the bankers, in Paris, London or New York, admit that the internal procedures are far from the zero-failure. Yes, traders sometimes exceed their limits, Yes, some small malignant leave with part of the recipe of the day. They are not always pursued. The cost of the risk is part of the result of a Bank, such as subway hackers and unknown markdowns large surfaces. The only difference with the General case, it is the magnitude of the error.

At no time, the overall position of Jérôme Kerviel still EUR 50 billion, was detected by the systems. Aberrant. Unacceptable. A lesson that all banks of markets will be quick to draw. But, for Société Générale, another education appears watermark. The pathetic story of Rastignac's Pont-L'Abbé reflects this deplorable elitism in French, this arrogance of caste. When it is that the FCC, it is not taken seriously in the Kingdom of derivatives actions And the controllers would be a sous-race If the business model remains valid, a cultural revolution is required with the search for managers in this State in the State with a real human dimension. It is this which should be punished.

Damage, in the end, are not irreparable. Trade SURFs on the needs of structuring of risk around the world, and the troubled period ahead will strengthen this request. Remains whether if customers judge Société Générale as strong enough consideration to entrust their swap contracts and other guaranteed savings products. Credit, in every sense of the term, is the sinews of war. The capital increase provided should meet part of these requirements. A good old capital increase to the former, with preferential right of subscription, unlike the bailout of UBS, Citigroup and Merrill Lynch, emergency by opulent firefighters come from Asia and the Gulf.