Nemesis

What none of the shareholders bargained for was that the South American continent was effectively under Spain’s control, and so the monopoly granted South Sea Company by the English Crown wasn’t worth much.  In fact, Spain only recognised the monopoly (in part) for only one year, after which the business model of South Sea Company […]

What none of the shareholders bargained for was that the South American continent was effectively under Spain’s control, and so the monopoly granted South Sea Company by the English Crown wasn’t worth much.  In fact, Spain only recognised the monopoly (in part) for only one year, after which the business model of South Sea Company unravelled.  More remarkably, the slave business earlier anticipated, did not work, as the Spanish people had enough slaves to choose from among the Incan tribes of South America.  Perhaps that was some saving grace for some of us in Africa who would have been further displaced.  To the promoters of the company, and by extension their shareholders, it didn’t matter that human beings should be sold like fish in the open market!  Like financial people like to say, they were simply ‘following the money’.

And so it came to pass that Sir Isaac Newton lost £20,000 from the crash in the price of South Sea Company’s shares.  Stock Exchanges were not this standardised then.  The amount he lost is worth about N500 million in today’s money.  Someone went to Newton and asked:  ‘Sir Isaac, you are an Inventor, a Physicist, an Astrologer, a Theologian, a Historian, among other things.  How come you could be so deceived as to have lost so much money in the South Sea Company?’.  Newton was said to have answered: ‘I can tell the movement of heavenly bodies (with precision), but not the madness in the heart of man’.  The great Poet, Jonathan Swift also wrote a poem that finally put a seal on the word ‘bubble’ as it relates to financial markets.  Said he in the poem:

“The Nation too, too late will find

Computing all their Cost and Trouble

Directors Promises but Wind

South Sea at best a mighty Bubble”

They say that the only tangible lesson to be deduced from history so far, is that human beings never learn from history.  Admitted.  The second lesson I have learned from history, especially as it concerns money and finance, is that nemesis always catches up on the evil intentions of people who set out to cheat others, and those who knowingly or unknowingly urge them on by giving tacit or express approval to the schemes of those greedy rogues who call themselves capitalists but who are indeed insane idiots, out to cheat other people in order to accumulate monies that they can never spend.  

For England in 1719-1720, it was South Sea Company and an ill-conceived business model based largely on monopoly power and slave trade.  For Nigeria today, almost 300 years after, it is refined petroleum, and banking.  The promoters of refined petroleum trade set out to cheat as many Nigerians as possible (and I still wonder why they think Nigerians are not poor enough), by ensuring our local refineries are dead so that they can take us all to the cleaners.  They also love monopoly where they can find one, or when they can’t, they make do with cartels.  Many of us also invested in banking shares, and we refused to ask ourselves what businesses the banks really do.  Banks all over the world are known to be greedy cheats, but the Nigerian ones took this cheating to a whole new level entirely.

In comes Nemesis.  The greedy refined oil barons struck fantastic deals when the price of crude oil hovered around $150.  Perhaps they thought it will forever keep rising.  Now many of them (including Mr Rahamaniya who is supposed to become Madam Turai’s son-in-law, except the first family may have done its due diligence research and opted for a surer bet in the FCT minister), owe tens of billions of Naira.  Their banking collaborators, who also benefited in many ways when the going was good, cannot cover the losses anymore hence the bedlam.  One sweetener to the Rahamaniya/Intercontinental Bank deal, was the granting of over N800 million margin finance deal, which Rahamaniya claimed to have successfully exited, making its own solid money, until crude oil price crash caught up with them.

Our banks today are built essentially on public sector funds, which are ‘confiscated’ in there because they need to post big balance sheets.  Every month certain percentages are calculated and handed out to government officials.  If it was private money no problem, but these public sector funds are meant to be properly deployed for badly-needed infrastructure, health, schools and what have you.  This business model means that banking business in Nigeria is injurious to the economy and the society.  No wonder nemesis is catching up with the bankers, and even those of us who own shares in them (for our shares have crashed beyond redemption).  We bought those banking shares because we thought the bankers are so smart they will always make money, so their shares will never go down.  How wrong we have become.

We knew the banks were cheats and would always overcharge their customers just to look good.  We saw the bankers spend frivolously and for many of us it didn’t matter.  Most of us wanted our children to grow up and enter that profession even though it was heartless and vain.  We loved the flash, and the glitz and glamour.  Now you have it, Nemesis has crept up on us.  

In the next few months, many more revelations will be made, and many will fall from grace.  I’ve always known that there was no way we could continue like this.  The same banks who racked up awards from every phony foreign organisation (including The Banker magazine and Financial Times of London), have now been exposed as useless rogues.  1994 plays itself out again, as the serving President of the Chartered Institute of Bankers of Nigeria, again turns out to be a greedy, incompetent .

Now Nemesis will shift to the properties market, where people build and name gargantuan prices.  N200million, N500million, N1billion is all you hear, and it makes you begin to feel that the world has left you behind.  It’s all about ripping off the next person.  It surely cannot last.  Nemesis…