Trading Beads and JP Morgan
Kuching, Malaysian Borneo – Manhattan Island was traded for a handful of beads? When I was growing up, this is one of the stories about how English colonists duped the American Indians. However, from their perception, nobody could ever own the land as it was as free as the air.
Throughout the early contact period, beads were used as an item of exchange. They could be bartered for goods in Africa, America and Southeast Asia. The people had plenty of beads and the natives had plenty of whatever, so both were happy with the results, thinking each other fools.
“Look at all the coconuts I got for just a few beads,” the European trader probably said.
“Look at all the beads I got for the coconuts,” said the denizens. Both were gleeful and probably thought the other was an oaf.
In reverse commerce, the beads are now traded back to the Europeans and Americans for dollars and Euros. The bright red beads have the most value and can cost several hundreds of dollars. The very tiny ones, the size of a pin head, are rare because they were so easily lost.
The beads became incorporated in the culture of Borneo. The Iban and Bidayu people often handed them down as heirlooms. Sometimes they were part of ceremony performed by shamans. They are part of elaborate vests and head dress, still being sewn today.
The beads are no longer a rarity they once were. They are mass produced and used in jewelry and embroidery. Many village ladies earn money crafting wondrous articles for the tourist trade. Sometimes modern beads are almost indistinguishable from the collectibles – and it takes a trained eye to tell the difference.
Contrast this exchange of beads for commodities to the recent losses at JP Morgan in the form of $2 billion trades. I really don’t know what the equivalent of $2 billion worth of beads in the 1700’s might be, but suffice it to say the trader would have had his head smoked above a fire in Borneo, or he would have been keel hauled under a ship, be it a many mast schooner or a small dhow.
Jamie Dimon, in an article in the London magazine The Economist, stated everything was okay because the company had “$1 billion in realized gains and $8 billion in unrealized gains.” In 1700 terms, I guess this means they paid 10 beads for 10 coconuts, and received an extra (realized) one as a friendship gesture. When they counted the coconuts in the hole of their ship, they discovered they had (unrealized) eight extra coconuts.
We have already discussed what would have happened had the trader lost 3,000,000,000 beads in 1700 terms. The guy who executed the trade at JP Morgan, one Bruno Iksil, aka “The London Whale” (true), was either retired or sacked. In another account on the Internet, nothing happened to him and he will receive his bonus and other perks. “Can’t replace knowledge” said a report in The New York Times.
We all remember what happened to the whale in Melville’s Moby Dick. I just hope there is a Captain Ahab someplace in the system before the entire economy sinks again because of banking follies.
Oh, there is a guy who moved in next door to me here in Borneo. He is dealing in coconut futures on the London Exchange and has introduced himself to me as Bruno Whale.
…Life is good. . . . .