A grand mission for the humble cookie

By Mark Riley on January 17th, 2012

Here’s the problem I’ve been trying to solve recently: the financial crisis. However you choose to deconstruct the crisis, there are a few common themes: the circle of bankers, lobbyists, economists, politicians and regulators.

They all thought they were playing in a straight line. Wherever you stood, it looked like a straight line. Straight lines are fine because if the guy in front falls over, I am OK. I only have to worry about the guy behind me.

Only from above, with a bird’s eye view, could you make out the gentle incline, like the curvature of the earth from the moon. It was not a straight line at all but a very large circle. Only from that lofty angle would it have been apparent that if the guy in front of me falls over, eventually, I do too.

(Clearly there is another dimension to this story we might call “ethics and morals”, but let’s not go there for now.)

Not only was this circle imperceptible, it was also self-reinforcing, self-organising and self-perpetuating. It was an oligarchic algorithm. It fed off itself, by itself, for itself.

Such an organism becomes all but impenetrable from the outside. Nothing can stop its relentless appetite for resources and status. It has to grow way beyond its natural earthly needs, not for any practical, beneficial or rational reasons, but because growth has become its religion.

The thing has morphed from a social function to a flatulent parasite. Its only metric for success is growth for growth’s sake, even when that growth means depriving others of necessities.

When asked why this was allowed to go unchecked, the answer is always: the other guy. Lack of regulation. Lack of risk management. Lack of shareholder activism.

Well, I’ve had a silly idea that may function as a roadblock in this wicked circle: the humble computer cookie. I believe it can penetrate this discredited system. I believe it can fell the mighty, just as that infinitesimal microbial infection killed off marauding Martian invaders in Orson Wells’ War Of The Worlds.


Let me explain. All money is now digital. A number on a screen. So why can’t we create cookies to watermark our money, like tracking devices? If cookies can track my entire online browsing activity, why can’t they, or something like them, be deployed as guardians of my money, like a benevolent digital custodian in the heart of the financial system?

A cookie is a very innocent text string that sits on your hard drive. It is not a program. It cannot think or do, it just sits there. But it does allow websites to learn about you and your preferences. It means you get the weather for your area, your passwords and your colour preferences.

Now, imagine if your savings account had cookie preferences stored that dictated exactly how your money could be used by your bank. Derivatives? No thanks! Highly leveraged banks? No thanks! Rehypothecated assets? No thanks!

(As you may know, rehypothecated assets are the latest bad puppies that allow investment banks to borrow against your cash, but cash that is already fully leveraged. MF Global, the failed fund, is still desperately looking for over $1.7 billion of rehypothecated assets that have disappeared into thin air.)

In practice the saver, you and me, could instruct your bank, ISA or pension fund to assign restrictive, legally enforceable “cookie settings” to your money.


Assuming this is possible, we could assign an investment profile to every pound or dollar or euro that every single one of us has in our various holdings, deposits and portfolios. That includes ISAs, pension funds, mutual funds and the rest.

We could say from the outset, for example: I don’t want my money going near investment bank x or even investment banker y. I don’t want my money going near any kind of derivative, or any bank whose average bonus is over £50,000. I don’t want my money to go near a bank that is leveraged more than 3:1.

Independent cookie-wealth managers could advise on the technical settings, but we could have consumer friendly names like “The Anti-Crunch Cookie'”, “The 99 per cent Cookie” or “The Zero-Bonus Cookie”.

Suddenly, the little guy – you and me – bypasses the layers of treacle between us and the evil, maverick quant analyst who wants to tie your money up in a one way, “risk-free” derivative trade based on the 10-year movement in Mongolian yak hair securitisation.

We get to take his train set away. You and I collectively become politician, regulator and shareholder. Can you imagine anything that would put the shits up Wall Street more?

The implications of this are significant. Deprived of hegemony over investment decision-making, the entire financial ecosystem is reinvented. The investment banking pyramid gets turned on its arse. The laws of the jungle change: power swings from the top of the food chain to the bottom.

Of course, there are caveats. For power to divulge to the masses the masses need to be educated (no mean feat) and engaged, at least once a year, and through very intuitive levers. But the internet has democratized knowledge, music, politics, media… why not finance?

And of course the source of funding can always come from elsewhere. But high risk “casino” banks would no longer be permitted to gamble with our money. They would have to use each other’s.


I can’t vouch for the quality of this idea. I had it while ploughing up and down the swimming pool and it wouldn’t go away. I am not saying that that is any indication of its validity. No one has yet correlated distance swum with profundity. And, to be fair, most of the thinking was done in the shallow end.

But it is our money being toyed with, our economy and it might just be that a re-imagining of existing technology would give us the chance to claim it back. Worth a few laps?