I was about to sleep. I reminded myself that I have to enable currency trading for account tomorrow. Why ? Just like that. Not that I intend to start immediately, but I prefer to keep things 'enabled'. The day I want to do it, I shouldn't have to waste time and energy getting basic things started.

My thoughts drifted to a course I had attended in the Bombay Stock Exchange. One of the courses, introduction to derivatives, was to be taken by a certain Mr. Sanjay Ved. He had a vague resemblance to Mr. Bean, I remember. He was a smart guy and handled the module well. Somewhere in between he started reminiscing about his earlier days, and how he had once been wiped out by in one afternoon during the Harshad Mehta crash. 3-4 years of wealth had been wiped out, he said. He then went on to say how hard it was to acquire knowledge then. In a bid to get back on track and make some income somehow, he got into currency trading. He contacted experts worldwide, via snail mail ofcourse, asking for tips and advice. Slowly but surely he built his expertise in currency trading. Today, he said, he taught out of passion. His main income was from currency trading - 3-4 hours everyday.

That led me to think - in every transaction, when somebody loses, somebody also gains. When I was small, I used to always wonder, if so many people lost so much money, there must surely have been somebody who gained. Why then does the world cry so much ?

Today I realise what happens. In the Harshad Mehta case, for example, he wasn't playing with his money in the first place. In the second place, he was only pocketing most of the money, since he was controlling the markets to a great extent. As the stock markets rose, people kept entering and exiting, making profits for a good 3-4 sweet years. When the markets crashed, the investors, traders, speculators lost money. Now, who gained ? Well no one really. Rather, Harshad Mehta, his brothers and similar such people had already gained - as in, spent away the money. They were making false profits, and having enjoyed the returns, they disappeared from the scene, many behind bars.

All the other market participants, including many brokers, lost. Who else ? The innocent depositors whose money he had been playing with in the first place.

Or take the sub-prime crisis.

As I have said before, by the very principle of exchange, whenever somebody makes a huge loss, somebody else has made a windfall profit. in most scams or Ponzi schemes, it is outright apparent as to who has gained or who has lost. However,In many crises and crashes, when it appears that everybody has made a loss, it is just that the windfall profit has been chronologically displaced.

In the sub-prime crisis, first the initial set of losers came to the fore. Then there was a second wave in which many other victims slowly but surely washed to the surface. Many other bobbed up much later on. Initial not many winners were apparent. All the bank and ibanks were apparently in dire straits.

Then it was discovered that almost all the traders and i-bankers had made a lot of income and encashed obscene bonuses in the run-up to the crisis. But that itself wouldn't be able to balance out all the losses. The majority of 'winners' were all the real estate agents, subprime house owners and the American consumers - who had enjoyed for a long time - living beyond their means in a credit driven consumer economy. Ofcourse they enjoyed first and paid for it later.