View Full Version : Contest #1: Best Interview Question for Banking Industry Expert
Let's say you got to interview one of the top experts -- arguably the world's top expert -- in banking and money:"Since 1967, he's written 12 books on Banking, Investments, Markets and Money. He's been a Columnist for American Banker; Member, President's Panel on Educational Research and Development (Kennedy and Johnson administrations); Member, President's Commission on Housing (1981-82); Consultant, Twentieth Century Fund and Carnegie, Ford, Kettering, and Sloan Foundations (1962-1966); Consultant to the American Council of Learned Societies (1962-1964)."
And let's say you are going to interview him in mid-July and get to ask him one question. What would it be?
For our first iTulip.com contest, we're asking registered iTulip.com Forum Members to submit questions to ask our interviewee. (We'll tell you who it is later. You're welcome to guess, but we will neither confirm nor deny.)
What kind of question? For example, you may be wondering:
1) What is the greatest risk facing the U.S. banking system today?
2) Do you think that the U.S. economy is at the turning point in the credit cycle and will it "be different this time"? We won't have a crises like the one that caused the U.S. banking system to freeze for six months in the early 1990s?
3) Do you think the U.S. banking system may require help from the Fed or even a tax payer bailout ala the Savings and Loan Crisis if housing prices decline significantly in many areas of the country at the same time?
Please post your questions below.
You must be a Registered Forum Member to post. To register, please go here (http://www.itulip.com/forums/register.php).
Question Collection Period Opens: June 26 noon ET.
Question Collection Period Closes: July 3 noon ET.
The top ten questions will selected by iTulip.com.
Then, we will open a poll where Registered Forum Members will vote to rank the top ten questions by level of interest.
The one question that receives the most votes, wins.
Question Polling Period Opens: July 7 noon ET.
Question Polling Period Closes: July 11 10AM ET.
Vote here (http://www.itulip.com/contest1.htm).
The Prize: One Ounce U.S. Gold Eagle
http://www.itulip.com/images/2006_AEGold_BullionObv.gif
The winner will be announced by member name on July 11.
In case of a tie, two coins will be awarded to two members.
iTulip.com, Inc, employees may not participate. Void where prohibited.
these are a series of interrelated questions about derivatives risk:
what measures are financial institutions taking to manage counterparty risk in their otc derivatives, and how do these measures vary according to both sector and individual actor [i.e. commercial banks in general, versus variation among individual commercial banks]?
do these institutions know who their counterparties are since these contracts are often assigned after being negotiated?
what will prevent a daisy chain derivatives implosion from causing not just a financial, but an economic catastrophe, short of the fed injecting massive liquidity and making all contract holders whole [i.e. the ltcm solution]?
ltcm was a single, albeit huge [in terms of the nominal exposures of its derivatives contracts], institution so that the fed could intervene, as it did, in a very focused way. are there scenarios in which multiple institutions could blow up simultaneously and overwhelm the fed's managerial capacity?
Jim Nickerson
06-25-06, 09:34 PM
Mr. Banker,
What is your total, absolute, unequivocal asset allocation at this moment?
This is the only question that should be asked to an expert from whom one wishes to gather that person's truest beliefs about investing in markets. EJ told me I could not pose this as a question.
So, Mr. Banker, Whatever is the greatest realistic risk to the banking industry, and you do not even have to tell me because that would constitute a second question, were that risk to be realized what realistic effects would it have on the US economy?
What are the top three or more things you've learned in your career that both the general investing public is unaware of or undervalues in importance, and that were relative surprises to you too?
Goldenhands
06-26-06, 07:00 PM
Please provide in detail your opinion of the events leading up to and the impact to both Global and US Ecomonies in the event of implosion of both or either Mortgage Backers (ala chronic "Enron-itis"), keeping in mind the increase in Forclosure which are sure to come as the Interest rates are increased in the coming Months, as a result of easy access Monitary policies in the previous several years. What effect of such an implosion on the Overseas Investor confidence level as relates to the US Treasury and Bond markets would occur?
With the current investigations into questionable accounting practices of both Corporations, and the likely losses forthcoming one must seriously wonder about the stability of these institutions, as I am quite sure would be the case of the Worlds Central banks as well as overseas citizens now holding US debt instruments in Dollars.
Could or will America survive economically in such an event?
Arthur Dijkstra
06-28-06, 12:41 AM
Dear Mr .......,
You have so much experience could please tell us your dream as if you were sitting on a cloud looking at Earth: What would be your DESIGN of a financial system. The thing in today's words including Central banks, Commercial banks, rules between them, shares, interest, euros, dollars, yuans, etc. but leaving the United Nations with its constituting countries intact.
lobodelmar
06-29-06, 02:51 PM
...ok, so I know who it is...but don't want to spoil it for everyone...
Anyway, Mr. M, my question is about US currency and its dominant role in international trade. Some would argue that the Dollar is losing its position, and with current account deficits as large as they are, that other currencies have already or will become the "gold standard" for safety and security in the investment community. What can the Fed do to keep the dollar well positioned, and is this even something that SHOULD be done?
Looking forward to hearing your answer...
-Lobodelmar
My question for the banker:
How is money created and where do the interest payments come from?
Assuming you received an honest answer, the answer would show the root of inflation, the reason for exploding government and consumer debt, the source of our credit and housing bubble, yen carry trade, etc.
The fraud that is central banking would be exposed.
...ok, so I know who it is...but don't want to spoil it for everyone...
Anyway, Mr. M,...
-Lobodelmar
is it Mr. Monopoly [the little guy with the top hat, monocle and cane]?
ChessMan
06-30-06, 10:41 AM
Mr Banker, my question is:
For decades price stability has been the key to robust economic growth. In recent times, technological innovation and increased global trade has eased inflationary pressures and allowed interest rates to trend down to very low levels. In your view, is it possible that high money supply growth (even when needed to avoid falling prices), is it possible that the high money supply growth introduces imbalances more dangerous than a deflationary price environment?
Mr Banker, that is my question.
The question is phrased as if you were asking it live, not reading it. If one were asking the question via email or print, then the redundency isn't required. I find that transcripts of reporters' questions often have some redundency in them. It's probably to make sure the questionee hears you correctly.
Spartacus
06-30-06, 10:31 PM
GATA claims the gold price has been reduced and is actively being held down by a conspiracy among a cabal of central bankers, bullion banks and derivatives traders (these last 2 usually are the same corporation).
Leasing is one technique they use.
If you were hired by such a cabal and tasked with doing this (secretly suppressing the price of gold), how would you do it - In fact, COULD you or any agency you know of do it?
I don't believe it IS being done, my question is about the ability of someone to do it and keep it a secret..
I'm not asking about the PPT - anyone who believes in that is an obvious whack-job ; )
Oh, and one more thing, who is the one big Silver short?
Sounds like some explanation is required. The answer to my question is (assuming the banker was willing and able to tell you):
- Money is created when someone borrows it into existence. (government via bonds, banks via discount window, public via fractional reserve lending) Money is created the instant it is borrowed. Then it can be spent into the economy.
- Interest payments. If you were the first person to borrow the first $100 into existence and the bank wanted $5 as interest, you'd need $105. But only $100 exists. So someone else must borrow new money so you can get the $5 from them.
Therefore this system creates a constantly expanding money supply as borrowers continually chase dollars to make their interest payments.
An expanding money supply will of course ensure each dollar becomes more and more worthless over time.
Productivity and economic growth dampen the inflationary effects, but the system is inflationary by design. This has a few potential outcomes:
- borrowing stops and the entire system grinds to a halt
- borrowing continues until the dollars become worthless
- borrowing is perennially held in precise balance with economic requirements by omnicient Fed interventions
This system allows:
- The Fed to receive interest on money they created out of nothing.
- Government to create bonds and sell them to the Fed. They get to spend the money and simply have to pay interest on the bonds.
- The public gets caught with the bill and must run faster and faster as their dollars continually depreciate.
I'm not sure a gold standard is the best solution, but good money structure is certainly not the above. It's interesting how you can see this structure reflected in every aspect of today's economy. It's fractal and expresses its distortions perfectly.
Spartacus
06-30-06, 11:51 PM
Former economics professor Fekete claims the prices for Gold & Silver are not being set for the most part by industrial demand and mine supply supply on the commodity exchanges but by bankers trading back and forth.
He claims when the COMEX suspended buy orders on Silver in 1980 he was in Swizerland and saw vans going back and forth across bridges - and was told the vans were full of Silver - when a single large party defaults, worldwide exchanges go from paper to physical, even if in many cases the transactions net out to zero.
The claims of trading volume surprised me when I heard first it, but then I saw this corroborating data.
http://www.lbma.org.uk/clearing_charts.htm
apparently the financial back-and-forth of Gold and Silver is HUGE compared to the industrial consumption.
for Silver, ~800MOZ is industrially consumed per year, but 250MOZ trades DAILY, and that's ONLY LBMA. It's not Mumbai & Dubai & Shanghai.
Do the US banks have similar volume, and what do you think of the theory that Gold and Silver prices are NOT being set by pure demand and supply considerations?
Former economics professor Fekete claims the prices for Gold & Silver are not being set for the most part by industrial demand and mine supply supply on the commodity exchanges but by bankers trading back and forth.
He claims when the COMEX suspended buy orders on Silver in 1980 he was in Swizerland and saw vans going back and forth across bridges - and was told the vans were full of Silver - when a single large party defaults, worldwide exchanges go from paper to physical, even if in many cases the transactions net out to zero.
The claims of trading volume surprised me when I heard first it, but then I saw this corroborating data.
http://www.lbma.org.uk/clearing_charts.htm
apparently the financial back-and-forth of Gold and Silver is HUGE compared to the industrial consumption.
for Silver, ~800MOZ is industrially consumed per year, but 250MOZ trades DAILY, and that's ONLY LBMA. It's not Mumbai & Dubai & Shanghai.
Do the US banks have similar volume, and what do you think of the theory that Gold and Silver prices are NOT being set by pure demand and supply considerations?
spartacus,
why doesn't monetary demand count as demand? what you are pointing to is the fact that the precious metals are being remonetized, and that their use as money dwarfs their use industrially. the banks are settling for their own and their customers accounts.
it's 35 years since the dollar, [and thus all currencies since the dollar is the reserve currency], was detached from any physical value and became pure fiat. what will the dollar be worth 35 years from now?
Here is the question that has been on my mind the most recently. I'd love to hear the answer of a banking and monetary expert:
It's been theorized that in the last 35 years asset bubbles have been created by a combination of monetary expansion, increasing debt, and easing credit standards. If you believe this to be the case who ultimately is paying the price for these fiscal policies and how can an individual investor not only hedge against the inherent risks associated with these bubbles but also profit from them in a real not just nominal way?
JD
Spartacus
07-01-06, 02:02 PM
Fekete suggests the bankers follow different rules than everyone else.
I don't know the answer - that's why it's a question.
Also, the numbers on that page are much bigger than I expected (, but they are tiny in relation to, for example, FOREX markets.
spartacus,
why doesn't monetary demand count as demand?
Spartacus
07-02-06, 04:21 PM
This actually is one reason I focus on relative sizes - precious metal monetary flow relative to FOREX, relative to the same PM flow of 1980, relative to each government's M1, M2, M3. Others focus on what will happens when these money flows need to be tied to something real, I'm wondering what prevents the PM money flows from being handled the same(untied, frictionless) way as FOREX & Derivatives.
There's this FLOOD of money that doesn't need to be tied to any "real" assets, and then there's this miniscule faucet-drip of money that for some reason has to be tied to Gold and Silver.
Some questions I ask myself when evaluating my PM position (an imprudently large part of my portfolio)
1. WHY does all that money need to change hands in the form of Silver and Gold?
Historical accident combined with stubborn tradition?
Insurance against unknown counterparties?
Surely by now most of that could be done completely electronically, and divorcing the transactions from Gold and Silver would surely reduce friction (transaction costs, audit costs, etc...)
2. what is the relative importance of this intra-bank trading
2a. relative to 1980 (my guess is that it's declined hugely)
2b. relative to FOREX interbank settlements
2c. relative to the M3 measures of various countries?
Fekete's article has this line which I thought I vague
ly understood
" Provided, I hasten to add, that you know what a monetary metal is, and you also know how to make it yield a return. "
I was drawn to Fekete around 1 and 1/2 years ago - There was quite a dust-up between between Fekete and the (current crop of) Rothbardians over the doctrine of real bills. (I found myself agreeing with Prof. F. for the most part.)
Since I read this article I've been turning it over in my head (no conclusions drawn yet, but I'm skeptical of one of the theses, that some bankers (maybe central) are taking advantage of price moves to accumulate Silver on dips).
http://www.gold-eagle.com/gold_digest_05/fekete060306.html
It's a long read, and the first time I've had Basis explained to me.
On a side note, Eric, are you familiar with Nasser Saber's work? In short, he starts from the observation that an option is not a right to buy, it's a right to default, and from this, derives Black-Scholes, without some of Black-Scholes' assumptions, like being able to short treasuries.
It's a wildly out-of-the-ordinary way of looking at derivatives.
spartacus,
why doesn't monetary demand count as demand?
Vote here (http://www.itulip.com/contest1.htm).
ChessMan
07-07-06, 11:10 AM
I voted twice. I was expecting to see a "You have already voted." page when I did so, but I didn't.
Probably you want to fix that?
Uncle Jack
07-07-06, 01:12 PM
I see my question was either left out or so seriously edited that it doesn't resemble anything that I submitted. And all this week I thought I had a fair shot in this contest.
I understand the need to edit the winning question before the actual interview with Mr. Mayer, so as not to seem like a fool to the expert, but the questions should stand for a vote in their original form.
ChessMan
07-08-06, 02:31 PM
I see my question was either left out or so seriously edited that it doesn't resemble anything that I submitted. And all this week I thought I had a fair shot in this contest.
I understand the need to edit the winning question before the actual interview with Mr. Mayer, so as not to seem like a fool to the expert, but the questions should stand for a vote in their original form.
I agree that the questions shouldn't have been edited. Some people I'm sure took pains to write out their question just the way they liked it. It's not fair to them. In addition, people who cannot spell or accurately write out their thoughts get unfairly helped by editiing.
I voted twice. I was expecting to see a "You have already voted." page when I did so, but I didn't.
Probably you want to fix that?
The unique IP addr checking is no longer working with the ePoll software for unknown reasons. This isn't a Florida election, so the only fair thing to do is re-start the voting using a the Forum polls vs the separate ePolls where the IP tracking can be counted on. The voting will be limited to registered users only.
Does everyone agree with Uncle Jack that the questions should be posted "as-is" without any editing?
The unique IP addr checking is no longer working with the ePoll software for unknown reasons. This isn't a Florida election, so the only fair thing to do is re-start the voting using a the Forum polls vs the separate ePolls where the IP tracking can be counted on. The voting will be limited to registered users only.
Does everyone agree with Uncle Jack that the questions should be posted "as-is" without any editing?
Yes, even though I had difficulty understanding a few of them. A few were also too long for my taste.
Perhaps do both - add a short recap and label it as interpretation?
Ok so we'll re-run the voting within the forum with unedited questions starting tomorrow.
By the way, this is not the first contest we plan to do, so there will be plenty of chances to win.
Anyone like these?
http://www.usmint.gov/images/mint_programs/2006_AEPlat_BullionObv.jpg
I'd like to thank you all for your participation in our first contest. I hope that everyone is satisfied that JD won fair and square.
There will be many more contests in the future. If you have ideas for future contests, we'd like to hear from you.
Sincerely,
Eric Janszen
President
iTulip, Inc.
lobodelmar
07-12-06, 09:22 AM
Eric & Fred, I am also disappointed...the way my question was edited left off what I thought was most important. I was more interested in hearing if he thought the US FED should actually try to actively maintain the position of the dollar as the most important currency. JDs question clearly won more votes, so I am not complaining about losing the contest, but I think it is good to be careful how editing is done. Maybe you can set a word limit for future questions so they don't have to be edited...
Just looked at the revised poll, and I think you did a better job editing my question in that version...guess it didn't make much difference in my case...but a word limit might be helpful.
lobodelmar
07-12-06, 09:29 AM
Oh, and when is he going to answer these questions? Will it be a live chat or an article? Will he only answer JDs question or all or several?
I'd like to thank you all for your participation in our first contest. I hope that everyone is satisfied that JD won fair and square.
There will be many more contests in the future. If you have ideas for future contests, we'd like to hear from you.
Sincerely,
Eric Janszen
President
iTulip, Inc.
Kudos to JD, it is a very good question.
I'm looking forward to the answer.
is it Mr. Monopoly [the little guy with the top hat, monocle and cane]?
Martin Mayer (http://www.brookings.edu/scholars/mmayer.htm)
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