Mind Scalpel

Proving that computers radically increase the efficiency with which people can commit world-shattering screwups, one 31-year-old French guy banging on a keyboard managed to aerosolize $7 billion of his bank’s assets.

This is remarkable, not least because the French are notoriously averse to any sort of serious, sustained effort at pretty much anything other than the courtship of former supermodels or protesting the removal of 35-hour work week limitations. So either this Jerome Kerviel guy was an unusually industrious Frenchman, or technology was the force-multiplier that enabled this market-crashing trainwreck.

As is sometimes the case, a seemingly unrelated news story occurring at about the same time as the above event provides a good illustration of the magnitude of this event. I am referring, of course, to the recent headlines about a Japanese chimpanzee who proved better at memorization than an international memory expert.

This naturally led me to wonder how Monsieur Kerviel might stack up against a competing monkey for monetary-destruction skills.

To be fair to the French (and because of a lack of publicly-known, financially-savvy monkeys), I decided I would compare Monsieur Kerviel to a normal monkey, rather than one trained by the Japanese, who, by the way, clearly have far too much time on their hands.

To be fair to the monkey, I decided to make its task simple and straightforward — I imagined a situation where the monkey was faced with one big red button, which would incinerate a dollar bill every time the monkey pushed it. The monkey would be incentivized with a combination of positive rewards (say, bananas and exposure to monkey porn) and negative rewards (say, electric shocks and exposure to Al Gore speeches) to push the button as frequently as possible.

Let’s say that on average, the monkey manages to push the big red button about once per second (I say on average because even monkeys need sleep, although the average monkey would probably stay awake for days at a time in a rapid button-pushing frenzy to avoid exposure to another Al Gore speech before it collapsed in sheer exhaustion).

Running the numbers, the monkey would need about 222 years to destroy all the money that this French trader managed to eliminate in a mere 2 years.

So Monsieur Kerviel’s skills are about the equivalent of a team of 111 monkeys. And that’s without limiting the monkeys to the French’s 35-hour work week! He is truly an extraordinary Frenchman.

Which leads one to wonder whether French bankers, who have in the past prided themselves on their expertise and internal controls, would have done any better protecting their bank against 111 monkeys running rampant through their trading floors than they did stopping Monsieur Kerviel.

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