Rough Trade - currency traders and the economic crisis in Asia

Washington Monthly, June, 1999 by Nick Thompson

Beyond these business transactions, there is speculation: the purchase of currencies purely to make money. If a trader thinks Brazil's interest rates are going to go up, he (they're almost all men) buys the real. If he thinks that Indonesia's political system is going to crumble, he sells rupiah. No trader pretends that these transactions add value to an economy. These trades are simply about making money, and it is this type of currency trading that now makes Southeast Asian officials steam. A business wants to hold its currencies for years, and a stock investor is likely to at least hold his investment through the short term. A speculator just needs a trade that will last until the market makes its next move--and that can be instantaneous. As John Maynard Keynes famously wrote, "Speculators may do no harm as a bubble on a steady stream of enterprise. But the position is serious when enterprise becomes a bubble on a whirlpool of speculation."

The people who go into currency trading are quite unlike most young people. They are the brightest and the best. They all graduate from college with honors and ambitious dreams. But they also lust for intensity and unpredictability. They crave being called at 3 o'clock in the morning and forced to make a deal. Some have screens displaying currency prices arranged throughout their houses--from the bedroom to the kitchen to the bathroom--just in case they are put into this situation. One currency trader at a major firm glowingly told me of another young rising star.

"He likes to drive a motorcycle and carry a knife in his boot.... If he's bored on a plane, he's not going to sleep or read a book; he'll flip a coin 5,000 times to see if there is a slight advantage that can be gained by guessing one side or the other."

These are not young money-hungry investment bankers. They like to have their weekends off to dive from mountains or meditate or just live; they want to work 60 hours a week, not the 100 that other graduates who aim to get rich do. It's not a profession for the straight and narrow but it's also not a profession for idealists. Young men and women who want to save the world don't go into markets; they go into medicine or work for non-profits or travel a thousand other roads that don't mandate that The Financial Times be gobbled with the morning's orange juice. As another young trader responded when pressed to give a moral justification for his career:

"Look, it's not the Peace Corps."

In fact, almost every trader argues that his profession is a fundamentally amoral one. For every winner in a trade there must by definition be a loser. Even investment bankers can claim to be helping to make companies with good ideas grow. Currency traders know that they would immediately lose their jobs if they started to act on deliberate moral impulses. However, behind this veneer and pride in amorality, there is a sense among traders that they are the disinterested jurors casting out quasi-divine judgment on economies that stray from the road of proper free market economics. To one trader, "we just serve as the thermometer. If a country is sick, we tell him."