Sunday, November 09, 2008

Exchange currency in a bank - an analogy

Posted at request of HS

Mr ABC is American currency expert. As there are a lot of counterfeit in the US currency, sometime money changers or even banks will ask Mr. ABC for verification.

Now, Mr ABC would like to tour Europe with his family and, being not the expert in the EURO, he decided to exchanged the EURO in the Big and reputable Bank, CAR Bank.

Soon after, Mr ABC discovered that some of the EURO are counterfeit. He went to CAR Bank and complain about it (the counterfiet EURO).

The Bank response :
1. You are a currency expert and you should know how to differentiate the counterfeit from the real !!
2. Buyer Beware - you should have checked all the pieces of the EURO before you leave the Bank, how can you just trust the bank teller.
3. No body asked you to come here and nobody put the knife over your neck to change the Euro.
Comments 2 and 3 are self explanatory, but I want to mention about comment No 1.
Being an expert in American currency does not equal to expert in currencies. So even though an investor is familiar with some financial product, no one should expect him, thus, to know all the financial product, in this case I refer to HN2, HN5, Minibond, Jubilee 3 etc.



Anonymous said...

Good analogy. Well written.
"Buyer beware" is unfair.
Expect u to be "expert" in everythings is not what a normal person with ave IQ would believe.

But this is what is happening now.
How to talk rationally?
"It is like a scholar talking to a soldier holding a gun". Head u loss, tail u also loss.

Anonymous said...

Hi HS ,

In the case of 'toxic structured products', it is clear that "Buyer beware" is unfair to majority of customers!
But so what? It has been using by the FIs to their full advantage and it is fully supported by MAS.

Any local lawyers or local legal professionals/academic or CASE S'pore dare to challenge it?

adego said...

1) u can always use credit card or travellers' check in europe

2) u can minimize risk by changing smaller amt with several different banks

3) we will 'suffer some losses' in our life, u can always treat it as a tuition fee. u don't win all the time, why so calculative?

4) if u are an expert in anti-counterfeit currency, the basics of identifying the counterfeits are generally the same. the expert can tweak very fast. I don't think there is such thing that, expert in USD and not EUR.

why think of so many 'dis-lodged' analogies? after all, why don't u focus yr energy on the more profitable matters?

Betsybug said...

HAL = IBM, then
CAR = D__ !

Anonymous said...

This is worse than communists !

Anonymous said...

Poor analogy

2 reasons.

First, 2 out of 3 are good enuf, especially they are the 2 most important ones. The first is technically irrelevant.

Second, talking about this analogy dont redeem the loss. Either the analogy itself, or the purpose for which this analogy is dreamed up to justify for.

There, THATS the Beginning and the End of all arguments on this.

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