Few insiders in and around the banking industry take the trouble to explain,
in an accessible way, about the machinations of the world’s most influential
industry. So the expose by Satyajit Das, a former dealer with Citibank, Commonwealth
Bank and Merrill Lynch in the 1970s and 1980s, and also later treasurer of
transport group TNT, is a welcome addition to the literature.

Das, who consults on financial derivatives when not writing books, has spent
more than two decades immersed in the detail of the world of derivatives, a
catch-all term that embraces all manner of financial chicanery, much of it
entered into in good faith and which achieves expectations. Yet there is plenty
going on in the world of derivatives that may dismay banks and insurers and
cause their corporate clients to wonder at the motives and sales practices
within this corner of high finance.

Guns & Money

is the fourth book by Das about derivatives, and represents a break
from dry multi-volume tomes aimed at students. His objective, according
to his preface, is to explain the industry in an accessible way, and
also to “set out the practices, some of which are insane, of this
mysterious area of finance.”

A lot of the book retells familiar episodes of the worst of
derivatives markets and banking over two decades, with plenty of
material to work with as cavalcades of ill-informed commodity traders,
local authorities and insurers are sucked into deals, supposed to
manage financial risks, that often don’t. Wound around this are plenty
of vignettes of the antics of Das’ workmates and clients as they
cajole, mislead and lie their way to closing derivatives deals, meeting
profit targets and often moving on before the repercussions emerge.

Das writes at one point:

“Look, it’s quite simple,” I said, breaking down the hierarchy of the trading

“There are sales people – they lie to clients. Traders lie to sales and to
risk managers. Risk managers? They lie to the people who run the place –
correction, think they run the place.”

“The people who run the place lie to shareholders and regulators.”

“Oh yes,” I remembered our quantitative colleagues. “I forgot the quants –
our fabulous rocket scientists! When last heard from, they were trying to
develop a model for lying.”

“And clients?” One of the trainees asked tentatively. I thought about it for
a few seconds. “Clients. They lie mainly to themselves.”