In Search of the Bottom Line of the Wall Street Implosion

I have been reading a lot of opinion pages in search of the perfect insight about what’s happening on Wall Street, because it affects the world financial community and the economics of everyone globally.  This being written days after Lehman’s demise, and the morning of the AIG bailout, take-over, whatever.

John McCain and Joe Biden have both denounced Paulson’s decision re AIG. Knee-jerk reactions, and somewhat tone-deaf.

Jim Cramer says he had it right a year ago in his TV meltdown; that the worst is over, and that Paulson did the right thing because he had no choices.

Thomas Friedman calls it a bubble  and makes the case for systemic rewrite of regulations.

The Today Show led with Gordon Gekko clips—it’s all about greed.

Joe Nocera combines the bubble and greed themes and reminds us about denial—Wall Street is just Main Street, where home buyers keep hoping they can sell for more than the outrageous price they could have gotten (or, worse, bought at) two years ago. We are all Lehman.

These are all sensible–all blind men correctly sensing one part of the elephant.  But one person–I think–just flat nails it. No surprise, when you think about it—Tom Peters.

In 450 words, he cuts to all the chases. Peters is at that point in his career where his value to society is enormous. He’s seen this movie before—many times. He’s smart. He’s articulate. He’s still learning. He’s still got every one of his marbles.

And that’s what makes him wise.

His comment on greed? “Duh.”

On capitalism? “Good ideology run amok.”

On AIG? “Thank God for Paulson: it’d be worse without him.”

On hubris–he lists five deeply flawed beliefs that drove this debacle, each of them dead-on.

For a coherent view of things, just go read Tom Peters post of today.
 

4 replies
  1. Martin Dalgleish
    Martin Dalgleish says:

    I must be getting old Charlie.

    What we have and have had for a long time on Wall Street is frankly the antithesis of what you preach. I heard it over and over again when I took over the Bond portfolio at West Indian Bank. Why did you buy this piece of paper I would ask. Because I trusted the guy who was selling it to me. Why did you trust him I would ask? well he came from a big bank in New York and he made me feel good. (that translated into English means:

    1. he bought me a huge lunch at a facncy restauarant that I couldn’t afford

    2. he told me I was very smart dealing with him

    3. he wasn’t able to offer this to most of his clients because they wouldn’t understand it, but

    4. you can clearly understand what a great deal it is.

    I’d be confident that close to 100% of the people who bought the CDOs had not a clue what they were buying – it was pitched to me as AAA credit with 75 extra basis points – HOW can you go wrong? Well I said if you’re offering me 75 extra basis points and there must be 400 or 500 points in it to pay you the big bonuses so that means that somehow you’ve bamboozled the rating agencies into rating non investment grade debt as AAA.

    So Charlie I don’t think you should take a back seat on this and hand over to Tom Peters.

    Taking advantage of those who don’t understand what they are buying and  telling them they can trust you is not right. Of course caveat emptor allows them to say like so many Americans before them "I didn’t do anything illegal" but it doesn’t allow them to say I didn’t do anything wrong.

    And it is not only about trust. What you are really saying is that to sell you must believe that this is in the best interests of the client. Few (if any) Wall Streeters believes that. The only thing thing that most Wall Streeters are interested in is how big is my bonus going to be.

    Charlie maybe you are getting old. The young Charlie that I knew would be jumping on the desk at the wrongness of all this.

    The sad part is that I’ll bet many of these con men have attended your seminars and read your books.

    Someone in the Telegraph asked a couple of days ago "what is the difference between a used car salesman and a wall street banker.

    None both knows all the pitfalls of what they are selling but wears a fancy suit, talks a nice game, (buys you lunch if in the West Indies) and dumps his crappy asset on you.


    Reply
  2. Charlie (Green)
    Charlie (Green) says:

    Martin,

    When you’re right you’re right.  I’ve been thinking I’ve got to write more about con men, the abuse of trust, the downside of risk, and so forth.  So thanks for the kick in the butt. 

    Stay tuned.

    Reply

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published.