CNBC plays in the background, a running commentary on “America at the brink.” One of the partners waves his hand back and forth like a metronome. “Fear and greed, fear and greed, the Street always goes back and forth,” he says. “And we’re as close to fear as we’ve been in the past twenty years.”
He stares at the screens again: An absolute shit show.
“Just look at the Forbes’ list of billionaires—they’re all screwed,” says another partner. “Lakshmi’s net worth, cut in half. Rupert, cut in half. Cooperman from Goldman—”
“I was surprised Cooperman was on that list,” notes my friend.
From crisis comes opportunity, but the opportunities right now are heinous. So they’re waiting—waiting for stupid prices, prices where a company’s stock can trade for the cash it has on hand, prices that don’t make sense in any economic environment.
The talking heads of CNBC prattle on in the background, interspersed with video of exhausted senators walking around the halls of the Capitol. “We should take pictures of the politicians who voted against the bailout and stick them on the Internet,” declares a partner. “If they get killed, so what? Work it out.”
He picks up a dainty silver die, with the sides marked buy, sell, and hold, and throws it on the desk. Then he picks it up, gingerly. “We got buy,” he says, putting it down, with a frown.
My friend has probably socked away $10 million in the past four years, so I don’t feel too bad for him. He wouldn’t tell me how much he’s lost personally—no one will, except to make a vague reference to the percentage that their net worth is down, which doesn’t quite clue you in to their underlying liquidity. (A source of much hilarity: dinner parties where half the table insists that they got out of “everything” in January.) No one seems to be on verge of starving. “The personal cutbacks by the wealthy, at least up until now, are so comical,” says another friend. “It’s ridiculous. This is Marie Antoinette.” Scaling down from nine houses to six isn’t a hardship, as long as you have a 30-acre backcountry spread in Greenwich. But you bought a private plane, planning to lease it yourself, and now no one wants a lease. There are huge interest rates each month, and the plane is stuck on the runway. Full-time pilots must be let go … and the river flows down from the mountain …
And all these things you owned might not have been yours to begin with. Leverage was the superpower of these people. Now it’s disappearing. Was it just a figment of their imagination? “What is leverage?” says a hedgie. “Leverage is nothing but greed and ego.” Leverage says that the rules of quotidian life—I must have $2,000 in my account, to pay my rent—do not apply to you. It says that you are so right that you should place bets on whatever chip you happen to have in your hand, because you cannot fail. It makes living on the float feel good, not dirty and cheap the way it does for a supermarket clerk with fifteen credit cards. It says that whatever you currently own is irrelevant, because in the future you will have 30 times as much.
The future! The biggest heartbreak is looking toward the horizon and seeing your number recede. It might be $5 million, or maybe $10 million, but everybody has a number—the number at which you never have to work again and your family can still have everything in their dreams. In fact, you would be shocked at the number of bankers who have not even looked at their portfolios for the past month, preferring to remain in denial as long as possible. “I just need five more years,” wails a Lehman higher-up. “Or maybe seven. Hopefully five. Then I can retire to my country house.” She sighs. “On one hand, I’m happy that the company has been saved, but on the other, I just got robbed at gunpoint.” (The blame, of course, lies with Dick Fuld: “We’re talking about publicly executing him in the lobby of the building,” she says. “Or we could hang him, or hire a firing squad, or draw and quarter him.” She gives a spiteful laugh. “Or roll him on one of those barrels with the spikes in it—though for that, you really need a hill ...”)
Now the clock is reset. Everyone must try to save their own skins, and if someone else has to lose theirs, so be it. You can kiss your boss’s ass and remind him how much you contribute to his P&L, or you can try to take out the guy on the next rung above you and hope that you’ll get his job when he’s fired. “At most banks, there are no defined boundaries, and it’s always been a bit of a civil war,” says one banker. “Now, in the midst of the crisis, what we’re all really trying to do is kill each other. I arrive at work every morning worried that someone else is going to be sitting in my seat. It’s like sub-Saharan Africa, with everyone driving around in pickup trucks cutting each other’s arms off.” This week, a colleague is accusing him of mismarking his positions. “I’m going to shoot him dead,” he says, merrily.