They spoke in a barely comprehensible ‘patois’ and adopted the trappings of consumerism, powered by new forms of technology. The forces of the law were nowhere to be found. Seeing high street institutions standing unguarded in front of them, they went in and pillaged without hindrance, prompting a mixture of anger and soul-searching among the political classes.

No, not the investment bank quant teams and credit derivative structuring desks in the run-up to the financial crisis, but the London riots last week. Surely we can’t compare the highly-educated, hard-working bankers whose creativity sparked a ‘one-in-a-hundred-year credit tsunami’ with the mindless louts who trashed parts of London.

Yet there is a connection worth making. Something that interests me intensely, and I wrote about it in my book, is how risk aversion drives decision-making. Most people hate to lose more than they love to win, which is why we won’t bet a year’s salary on the toss of a coin.

In finance, traders (and the banks that employ them) get to be comfortable taking on huge positions because of the ability to cover the downside by hedging in the derivatives market. They become ‘love to win’ types, focused on the arbitrage upside or spread they lock in on their trades.

Somehow, the London rioters lost their risk aversion too. I won’t stretch the financial analogy too far ““ you can’t buy a derivative on getting arrested (a ‘get out of jail free’ card). Perhaps it was the feeling that a burning high street was someone else’s loss rather than theirs, and the TV in their hands was a free lunch.

If carried out properly, financial regulatory reform is supposed to change the risk-reward impulses of bankers and traders, taking away free lunches that are ultimately provided by taxpayers.

Similarly, the response to the riots has to change that casual indifference to civic destruction. The downside of getting caught needs to become more probable, and painful ““ but making young people feel like stakeholders in their own neighbourhoods might work better in the long run.

Book update: last week, I was interviewed on Bloomberg TV with Citi’s Matt King on European bank funding troubles. I was also interviewed recently by Michael Lewis for an article in Vanity Fair about IKB, a story that I broke in 2004 and revisit in The Devil’s Derivatives.