Today, in any case, "private banking" - as private wealth management likes to call itself - does not rely on liberal secrecy and tolerant discretion alone. In fact private banking is an important branch of the financial market, whose importance world-wide is constantly increasing. What we imagine as something like a bank book or bank account is, on the financial market, in actual fact a whole range of investment products, strategies and services, for well-to-do clients to choose from. One aspect of the boom in the financial market is diversification. The basically simple - "classic" if you will - business of money and interest is being replaced by an ever-increasing assortment of investment funds. The continuous boom in the financial market, which has been occurring since the early 90s, can be understood in this context - especially in Europe - as a popularizing of the entire industry and its "working methods" and products - a popularizing which has been widely supported by the media.
But first of all capital is unattractive, making assets boring and therefore not at all fit for marketing. In other words, the financial market, with its popularized approach - from gamblers to petty-bourgeois schemes aimed at supplementing old-age pensions with stock market investments - has long established itself as the expression and the result of a cultural trend. Following the argumentation of the running campaign to set Private Capital as new trend, we will nevertheless meet some of the most traditional arguments of a conservative discourse about society.
a) Naturalization: The Market
In principle, it isn't exactly obvious or "natural" that I need to take the money I have and earn more money with it. The necessity only becomes obvious or "natural" when used in connection with naturalizing metaphors like "growing" market, "thriving" economy and plentiful "harvests". The tradition of treating the market and its processes as if they were natural phenomena clearly dominates the entire discourse of economics. As a result of the economy's unpredictable swings of mood, even the economists are sometimes stumped. Put the other way around, from the discourse around the concept of "nature" we know how often it is used as a defense mechanism when claims of possession are being made. In this case, the flourishing branch is evidence of expertise with capital - which consists of better and further developed capital, when it is cultivated by "sapphire vitafolio" as a combination of investment and insurance.
The trend toward mixed products, where capital investment, financial management and life insurance are combined, is an especially important aspect of diversification in the financial market. These products are specially developed for consumers, "simple owners of capital" with no access to specific knowledge about investment but with a "healthy need" for security. The most suitable product for this occasion is called "Swiss Life Harvest". Pecuniary motives are charged up in the corresponding advertisement with the almost biblical kitsch image of the ripe cornfield and the promise, in the form of an incantation, that the client can "enjoy peace of mind while looking forward to a bountiful harvest". In spite of the well-worn clichés of nature philosophy it is still unpleasantly obvious that the cornfield represented has an unmistakably artificial feel. One might almost suspect that this is a case of genetic engineering — which might in fact reflect the high tech character of the product being advertised!
Deep green tropical vegetation catches the eye of the onlookers with another advertisement using the headline: "Discover the world of mutual funds". Here too one is inclined to think of a kind of chemical fertilizer - but perhaps this was deliberate on the part of the ad agency. The product - or, better, the company - is called Micropal and is an information broker in the field of financial products. And I must say, a comparison between the role that information plays in the financial market and the function of fertilizer in agro-business would reveal a very advanced form of the use of nature metaphors. The advertising copy, however, uses associations more in the direction of the "jungle of financial products" - a return to the origins of all nature concepts, to the non-orderly, uncontrolled and threatening space beyond culture.
b) Rationalizing: Dealing with the market, indexes and information
"Money management is a science all its own..." proclaims the text advertising services of the Dresdner Bank. With the jungle of all the available financial products before our eyes, it seems completely plausible that we need specialists, who can develop the appropriate formula to — at least partly - control and cultivate the complex system of the capital market. Just as nature becomes a cultural construction in the background of the development of science, the history of the capitalist economy is the history of the domestication and discursive appropriation of economic-cultural commerce. Through complex mathematical proofs, the market becomes graspable as a phenomenon - still unpredictable, but its resources can now be exhausted.
DAX, SPI or Dow Jones are the indexes, on a national level, which make the still more or less territorial fact of the 'market' visible through its effects. Other calculations are based instead on national Blue Chips on the most important names in specific industries or regions, like the newly-introduced STOXX index, which summarizes the stock market development of European industries.
However, the key to conquering or tapping new resources in the financial market lies not only in knowing the appropriate mathematical formula. The determining factor is actually access to the information necessary to do the calculations - and the ability to manipulate and distribute the data. In this way, information brokers such as NASDAQ or Dow Jones, along with associated media like Reuters or the 24-hour business channel CNBC, stay on the cutting edge of events. Decisions for or against a particular offer at a particular time are only possible on the basis of comprehensive, reliable and immediate information about all the details which might possibly be relevant to one's own business. And this occurs - as one can easily imagine - on the level of the few remaining banks, stock exchanges and information services which manage to stay in business, as a gigantic battle with information technology and software.
c) Legitimization:
Ratings, Competitiveness Reports
But then there are the watchdogs of the system of examining, publishing, distributing and analyzing the financial market's crucial data: those institutions which have appointed themselves the judges of quality. John Moody lived from 1868 to 1958. With the publication in 1900 of his "Moody's Manual of Industrial and Cooperation Securities", he laid the foundation for today's Moody's Investors Service. Moody's, Standard and Poors, or Baetge in Germany, are companies which specialize in bond rating services. The bean counters, who work for the world of capital's professional producers of believability and legitimization, examine everything which can be measured on a balance sheet: companies, cities, and entire national economies. The results are then used to assign grades according to a system of codes like AAA, AA, A, B, C. The city of Zurich, for instance, has a triple-A rating, while the UBS is currently undergoing a special examination, where it will be determined whether the billions lost through investing in a dodgy American hedge-fund are reason enough to drop the bank down to a double-A rating. For a company, such a drop in ratings would mean losing well-to-do clients. In the case of national economies, a drop in ratings could lead to the cancellation of billions in credit. The special power of the ratings services also lies in the fact that - unlike those who calculate the indexes - they not only predict trends but also set them, and can therefore dare to make predictions about the future. Moody's Investors Service puts it this way: "Because it involves a look into the future, credit rating is by nature subjective. Moreover, because long-term credit judgments involve so many factors unique to particular industries, issuers, and countries, we believe that any attempt to reduce credit rating to a formulaic methodology would be misleading and would lead to serious mistakes. That is why Moody's uses a multidisciplinary or "universal" approach to risk analysis, which aims to bring an understanding of all relevant risk factors and viewpoints to every rating." In the patriarchal setting of international finance, it is perhaps this claim to universality which triggers the reflex of blind obedience in the acting subjects of the financial world.
d) Individualization: personal products, individual investment strategies
Along the lines drawn by indexes, general information and ratings, every bank and every fund manager is free to develop their own optimum profit-making formula and to develop investment products accordingly. Individualizing is the current trend: investment strategies are discussed with each client individually and adjusted according to individual tastes. With the diversity of the financial products available, and the consulting services - by financial or investment professionals - that such diversity necessitates, investing money becomes an act of consumption. Attractive and promising, because, through my investment style and the exquisite selection of my portfolio of rare funds, stocks and other financial products, I can raise my level of prestige. In a brochure of Credit Swiss the different types of investment are described to the point. The question addresses personally the customers of private capital investment: What is your attitude - more short-term, asset-oriented, balanced, dynamic, or risky?
e) Culturalizing: Countries and regional funds
But one of the most prestigious businesses in the field of financial markets is to deal with funds. It's easy. Shares of stocks are put together to create funds by banks or other financial institutions, and the shares of these funds are sold to private customers. The specific qualities of different funds result from the companies, fields of industry and criteria represented in the specific mixture of stocks. The so-called nations and regions funds are important. These funds contain blue-chip stocks and other "pearls of the stock market" - as the advertisement for a Japanese fund called "Samurai Portfolio" describes them-covering a particular national market. What is unique about their portfolio — as suggested by the advertisement of a well-known Geneva private bank - is, in this case, the result of traditional national reputations and access to - or acquisition and participation by installments in - cultural capital. Calculations, figures and percentages have once again been suppressed, what becomes visible is a "a mysterious culture of Far East". - Perhaps this makes it a little clearer, how unattractive the whole business would be for the majority of potential investors, if it were really only about money.
Vontobel - another typical Swiss private bank - specializes in Private Banking, and the bank's regional fund focusing on Eastern Europe has been available since 1995. According to the logic of surfing, high capital gains
are not only to be expected in places - like Japan, - where a successful economy virtually guarantees them. Profit can also be made in traditionally backward places, where the only way is up. From the perspective of the financial market, the countries of Eastern Europe - the bank's newsletter calls them "Eastern Europe's Young Tigers" - are classic "emerging markets". The expected high returns are to come from the sure growth of the shares of brand-new enterprises, all of which are starting from scratch. Because the portfolio is made up of a wide range of blue chip stocks from the - according to financial and political criteria already stable - national economies of Eastern Europe, the risk is minimal. When there is danger of losses in specific industries or countries, the proportion of shares is immediately adjusted. So, for instance, within one year the fund's Russian investments went from 10% of the total portfolio, to 2.5%. Thus, Vontobel clients investing in this fund can be sure that the bank is doing everything in its power to guarantee acceptable profits.
f) Historical legitimization: a happy outcome is worth waiting for...
"A happy outcome is worth waiting for" is the title of an article which appeared recently in a local daily paper. It was followed by a diagram, showing three different leading indexes over the period of nearly a century. After the turbulent events of the last three months, the financial market desperately needs better press. Something like this article, which demonstrates - from a sort of meta-cultural and historicizing perspective - that, in spite of all the social and societal catastrophes of this century, nothing can prevent the unstoppable growth of capital. Incidentally, the index’s graphs of the Pioneer Fund were designed by Philip Carret, who was born in 1896 and in 1939 published "The Art of Speculating" - a supposed classic of stock market literature. Among the past events listed on the graph which supposedly prove this unlimited growth we find: the start of the Second World War, the Korean War, the construction of the Berlin Wall, the Iran-Iraq war, and the Gulf War. In this case, the writing of history serves first of all the interests of the profits of the chosen investment products and indexes and thus, the historical legitimization of monetary discourse around the economy. The text literally states that even the Second World War or the oil price crisis of the 1970s were just short interludes on the constant path upwards. Finance capitalism's totalitarian claim to omnipotence couldn't be more clearly expressed. What the curves actual show, is the constantly growing proportion of capital involved in the financial market, and this is exactly the background of the ongoing mobilization of private savers. This, even for big players demonstrates that profit can only be made when the way is upwards.
Peter Spillmann