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Total Posts: 481
Joined: Dec 2004
Posted: 2011-08-20 08:27
Moscow is not answering

It was 19th August 1991, the night between Sunday and Monday, exactly twenty years ago. The foreign exchange market was open 24 hours a day, five days a week. Being the most junior in the company – and thus least useful – I was put to work the night shift. So there I sat, guarding the camp fire and watching the markets, even though all our customers were well asleep, we did not have any positions on and any limit- or stop orders we had could easily have been placed at our counterparties.

The Finnish Option Brokers’ exchange member terminal had been left open on Friday. For some reason I did not turn it off. I guess the stale closing prices made me feel like I was in control, or maybe I wanted to be reminded where the market was left. Maybe the already back then dated look of green monochrome fluorescent numbers somehow made me feel nostalgic. Monochrome was the new fireplace.

Telerate’s Teletrac terminal was drawing in real time five minute bar charts of the major currency pairs in gorgeous VGA graphics, powered by a fast Intel 386 processor. Matrix terminal was showing news headlines from AP-Dow Jones. A slow, quiet Monday in Asia.

Tim Berners-Lee had announced couple of weeks back his World Wide Web project. Internet and having an independent television channel not operated by the government was still utopian. Warsaw Pact had just been ended and the two superpowers had signed the START I-treaty. War in Persian Gulf had made CNN a household name and we finally got the Music Television on cable. The leading weekly magazine Suomen Kuvalehti told us that the new music genre “techno” was linked to neo-nazism in Germany. The only sign that the days of Finlandization were finally over was one or two independent local radio stations that played and talked what they wanted. Soviet Union was still in existence and only few hours’ car ride away.

The U.S. had landed in a recession after the crazy eighties. The savings&loans had gotten excited about financial innovation and massively increased loans to the housing sector. Housing construction soon dropped to its lowest levels since WWII and the banks were taught a very important lesson: heads I win, tails the taxpayers lose. In Finland the SKOP bank had just been bailed out by the central bank, and the whole banking system was very weak. The government led by Esko Aho had just started – because of his relatively young age he was called the JFK of Finland. The president was Mauno Koivisto, a WWII vet who had operated behind enemy lines under the command of legendary ‘Larry Thorn’. The Maastricht treaty would not be finalized until later that year.

USDFIM was called the “rag”, DEMFIM “masa” and USDDEM simply “the dollar”. Swissie was “cuckoo clock” and DKK “porn”. A loss had more nicknames than a profit, probably because profits were rarely seen. The Asian markets were quiet, most trading concentrated on JPY, kangaroo (AUD) and kiwi (NZD). My nickname was “cyber” – my rants about W. Gibson’s Neuromancer, corporations taking over the governments’ role, global information networks and human augmentation had made some people call me by that name. I thought it was a good nick.

Unlike now, PC applications before Windows were stable and reliable. I wondered why the price of USDDEM was not updating on the screens. Even though the markets were open 24hrs, in practice the first hours of the Asian session before Japan came in were very quiet. Also the Japanese had a funny way to actually have their lunch break. By some unknown gentlemanly unofficial policy, nobody traded during the lunch time. But it was way past lunch time already, perhaps a data communication error? No, the news feeds and other prices were updating and all the light on the modem banks were green.

The data vendors were using error correction algorithms – prices deemed out-of-line with recent activity were automatically removed in order to avoid polluting the historical data with outliers. But by now the algos should have given up, as after several quotes at the “outlier price” they were supposed to accept that the market had jumped. I saw the headline: Gorbachev was “sick” and his holiday is extended, while someone else would mind the store in Moscow.

I called a broker in London, who confirmed my suspicions – it was not a failure of error correction. The markets were jammed. The exchange rate between USD and DEM was not updating, because there was no market. Nobody wanted or dared to guess the value of DEM, as the threat scenarios were obvious – who were these guys, are they ever going to pay back Soviet debts to German banks, will they have tanks rolling in the Baltic countries or maybe even Germany? The first quotes came after almost two hours – dollar was almost 2% higher against the DEM. Sun was rising in Helsinki and the first colleagues would soon arrive to the office. Time for me to head home to get some sleep. I was young and foolish in many ways. I was not scared, not even of the Russian bear. There was nothing in the West that was under threat, I believed it was all about the oil, just as it had always been.

This was the first and the last time I saw the market fall apart. In the turmoil of 2008 there were moments in the interbank money markets that came close, but that night in 1991 has burned into my permanent memory. The crisis is not over – it has not even properly started yet. It is time for the next generation to learn the feeling of looking into the eyes of a dead market, a look that is not returned. The only thing visible will be the mirror image of your own horrified expression.

Hard for many to understand inflation, but not for me.


Total Posts: 98
Joined: Feb 2009
Posted: 2011-08-21 03:14
MoreLiver is this an original piece you authored? I enjoyed it, cheers.


Total Posts: 481
Joined: Dec 2004
Posted: 2011-08-21 07:33
Mine, yes. Nice to hear you liked it.

Hard for many to understand inflation, but not for me.

Now with added evil

Total Posts: 650
Joined: Dec 2004
Posted: 2011-08-21 07:37
Dude, seriously - wow, that was good.

Back from the dead. And still not a girl.


Total Posts: 46
Joined: Jun 2007
Posted: 2011-08-21 11:13
Great read. Thanks MoreLiver.
That was interesting 20 years ...

- Smiling

Founding Member

Total Posts: 8356
Joined: Mar 2004
Posted: 2011-08-21 11:41
Great work, MoreLiver.

The Figs Protocol.


Total Posts: 1540
Joined: Apr 2004
Posted: 2011-08-21 20:26
nice one

"Deserve got nothing to do with it" - Clint


Total Posts: 63
Joined: Jun 2010
Posted: 2011-08-21 20:59
Great stuff! Keep up the good work :)


Total Posts: 2850
Joined: Feb 2005
Posted: 2011-08-22 08:41

"No trade with death / No trade with arms / Dispense the war / Learn from the past / Ausgebombt !"


Total Posts: 2324
Joined: Mar 2004
Posted: 2011-08-22 10:48
Nice piece; thanks Smiley

I used to be disgusted; now I try to be amused...


Total Posts: 107
Joined: Mar 2010
Posted: 2011-08-22 18:28
Super stuff, MoreLiver! Please write more.


Total Posts: 481
Joined: Dec 2004
Posted: 2011-08-22 19:42
Okay, chapter two coming up soon. But you'll have to promise to buy my book when it's done - and give rave reviews, drop grave tweets for all the meeks that inherit the debts and the regrets, while we all slide down the right tail of peak oil, while the nightingale's be cool.

Hard for many to understand inflation, but not for me.


Total Posts: 124
Joined: Oct 2007
Posted: 2011-08-31 09:35
hat's off, You are the William Gibson of spot Fx


Total Posts: 481
Joined: Dec 2004
Posted: 2011-09-02 09:57
Asian Crisis part 1

It was March 1997 and the weather in Helsinki was terrible. The streets were filled with sohjo, a mixture of half-molten snow and icy-cold water. The Finnish language had a whole galaxy of names for permutations of snow and water – that’s how overbearing it could be. Sohjo guaranteed that every trip out of the door left your feet wet and cold. To keep the roads unfrozen, salt was applied generously. It stuck to shoes, cars and pet’s paws, forming white crust and slowly eating everything away. In the eighties finance professionals were able to deduct suits from income tax – and everyone could deduct eyeglasses. During the depression of 1991-1992, these exemptions were removed in the name of austerity and nobody complained, as the whole crash was supposedly the fault of yuppies in suits. The politicians were the same, only that they were promoted and moved further away from the line of fire, from temporary elected positions to permanent positions of power, money and lack of personal responsibility. EU was very helpful in the process.

Rest of Part 1

Hard for many to understand inflation, but not for me.


Total Posts: 1056
Joined: Nov 2007
Posted: 2011-09-02 19:57
I very much like the part on snow reminds me of a Danish Book by Peter Hoeg  Miss Smilla's Feeling for Snow that I quite liked. Like your description and hope your hero will also  have some Leipäjuusto at one point :-) keep writing.

Свобода - это то, что у меня внутри. (Ленинград и Кипелов - "Свобода")
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