The announcement last week that Trader Monthly magazine was ceasing publication was one of those moments when a chance arrow of history scores a perfect bull's eye on a deserving target. The current recession, brought on at least in part by Wall Street's bonus lust, has claimed countless innocent victims. But in this case it has finally delivered a comeuppance to our era's loudest, gaudiest, cockiest champion of Wall Street excess.
Those who still single out former Merrill Lynch CEO John Thain as a symbol of extravagance should take note. Yes, the man once spent over a million dollars having his office remodeled and went on to arrange questionable bonuses for the year in which Merrill lost billions and sold itself to Bank of America.
Just a few years ago, however, the bonus cognoscenti at Trader Monthly depicted Mr. Thain as something of a piker. In an article that began with the sentence, "What, did somebody forget a zero?" they sneered at Mr. Thain's "reported compensation," which they claimed was $6 million for 2006, back when he was CEO of the New York Stock Exchange.
What was $6 million in those days? Remember, 2006 was the year of "the Biggest Bulge Ever," as the magazine tastefully put it, when "the bonus pool increased to a size almost beyond comprehension." That was the year that Goldman Sachs famously distributed $16.5 billion to its employees, and if you were one of the lucky ones, Trader Monthly -- "See It, Make It, Spend It," was its slogan -- stood ready to help you figure out how to blow your share properly, conspicuously, flamboyantly.
Oh, there were cars: Lamborghinis, Bentleys, Ferraris, Maseratis, sometimes described in the magazine's characteristic tone of flippant indulgence. There were airplanes, reviewed and rated in a column specifically dedicated to that purpose.
There were Scotches, including, in the "Bonus Guide" for 2008, a $20,000 bottle of Johnnie Walker. There were watches, mechanical ones of course, and among the most desirable were the ones with transparent faces, presumably so the little gears were visible and everyone knew the timepiece was for real.
Reading through back issues of the magazine, which was published in Europe with distribution help from The Wall Street Journal Europe, one does not get the sense that its trader readers aspired to live this way because they were jolly bon vivants. Quite the opposite. At one point in its intermittent pursuit of the best possible record player, for example, Trader Monthly described what it claimed to be a $300,000 turntable as "a huge middle finger to everyone who enters your home."
If you didn't understand why someone would want to greet their guests in such a way -- and as a nation we certainly didn't -- then you didn't understand what it meant to be a trader.
But Trader Monthly did, and it limned the trader so that all might behold his glory. A trader was a sort of embodiment of the primal drama of capitalism; not just an überconsumer, but a bullying, self-maximizing, wealth-extracting he-man, a lout in full.
Traders often "craft themselves to be shocking," says Caitlin Zaloom, an anthropologist at New York University who has studied trader culture. "They try to make themselves into characters that embody the dog-eat-dog character of the market. In order to be a top speculator, you're supposed to be able to crush those around you and aspire to your self-interest."
Consider, in this connection, the Chicago Mercantile Exchange trader whom Trader Monthly inducted into its "Hall of Fame" in 2006, describing him, admiringly, as "a conqueror, physically imposing and, at times, verbally abusive. Clad in his signature white jacket, he would crush anyone who dared to cross him or tried to pick his pocket."
The magazine's panting worship of the truculent personality culminated in a bizarre spectacle it arranged in November of 2007: trader boxing. Before an audience chewing steak and guzzling luxury vodka, the furious fists of bond traders connected with the jaws of corporate vice presidents.
And to those who wondered why the nation should heap up its wealth at the feet of such pugnacious vulgarians, the magazine gave the usual answer: Traders prospered because they delivered.
"The rewards have become so astronomical that the competition for coveted entry-level trading positions has become extremely fierce," mused the magazine's founder in the gilded year 2007. "Or is it the other way around -- the talent entering the market is so substantial that it has pushed the returns and, therefore, the rewards to levels once considered unthinkable?"
Although he didn't mention it, there was also a third possibility: that much of the financial engineering, the fancy new derivatives and balance-sheet legerdemain, was part of a bubble that would one day burst. That many of these hustlers, gamblers and pugilists were helping to misallocate capital on a fantastic scale. That with or without the aid of a $300,000 stereo component, they were telling America just what they thought of it.
Thomas Frank's column, The Tilting Yard, appears every Wednesday at OpinionJournal.com
Also in Opinion Journal:
Andy Kessler: Why Markets Dissed the Geithner Plan
Review & Outlook: Geithner at the Improv
Of course it was and they were hedging (yes, also as in hedge funds) BIG TIME against the economy. Until everybody bet so big on failure, it became a self-fulfilling prophecy. (it's so easy to make money without being invested in the success of anything or building anything).
I'm really starting to think that all this upheaval is a necessary part of the "correction" that's been coming for a long time. It's just time for America to look into the abyss, that's all.
Wall Street mocked American values. You have got to be kidding me. You title should read Wall Street the perfect reflection of American values.
The bankers lined up before Congress this week are not national objects of scorn and ridicule, but admiration and adoration. No one cares what they did to earn their money, just that they have it.
Note that none have lost their jobs. And why should they have? Just look at the money they raised for their firms -- from the government, and on what great terms as well. Actually, viewed in that light, I guess they do deserve their bonuses.
We are at the fork in the road - the choice is clear.
We can have more bones for the CORPORATE EMPIRE graveyard & follow the advice of people such as Rush Limbaugh OR we can have the HOPE & PROMISE of a new country that serves WE THE PEOPLE & follow
I would suggest that a more accurate message would be: "Wall Street 'apes' American Values" (pun intended).
Hasn't competition and conquest been the norm for America, throughout most of its history? As American settlers went West ... how did they treat Native Americans? How did American Whites treat Blacks in the South, before and after the Civil War?
And for the last half century, look at American's attitude toward sports. A frenzy of fire-breathing, drooling, rabid pro sports fans shell out billions and billions of dollars so that "their team" can conquer and vanquish the opponent? And for what? Vicarious conquest. And the remuneration, though not airplanes or Bentleys, is just as depraved: a false sense of self worth and ego associated with "a winner".
Isn't this conquest and conquer mentality ingrained in little league at the age of nine, and then reinforced in a "war" mentality when the nine year old gets to be eighteen?
No, I cannot be persuaded that somehow Wall Street is an aberration of America. Wall Street is the financial soul of America, without heart, without conscience. And in a society with such total lack of morals or ethics, although painful, another Great Depression would do this country a lot of good.
Meredith Whitney, in a recent interview said:
“Compensation is the motivating factor. Wall Street attracts the best and the brightest because of its compensation structure.”
And what if you take that structure away?
“The best and brightest will still figure out a way to make money, and it may not be on Wall Street when those minds are needed the most."
The best and the brightest gave us CDO's, SIV's and credit default swaps, that Alan Greenspan said he couldn't figure out with his staff of 100 with their PHD's.
These were Wall Street's weapons of mass destruction.
So I find it so amusing that Wall Street warns us that the best and the brightest will leave if we don't pay them!
David Halberstam, was asked in an interview in 2001, how he picked the term, "the best and the brightest" for his great book on Vietnam.
His reply:
The phrase referred to President John F. Kennedy's "whiz kids" – leaders of industry and academia brought into his administration – whom Halberstam characterized as arrogantly insisting on "brilliant policies that defied common sense" in Vietnam, often against the advice of career US Department of State employees.
So how fitting is it, that Wall Street uses the term "the best and the brightest" for themselves!
Here's my own little anthropology triptych concerning the worshippers of the dog-eat-dog mentality:
1) That the competition is fierce doesn't prove that they achieve anything. The competition is fierce because everybody wants the best pound of meat. This begs the question of whether the meat on the whole was stolen or hunted for or grown in the backyard.
2) Yes of course short-termist eat what you kill compensation creates a bubble. Anytime you try it.
3) The real damage isn't the money they siphon off. The real damage is that during the bull ride they create the impression that such returns as they earn can be earned on a sustained basis. This is what blows the economy to pieces. And while I am no lawyer and no pastor, I still call this a crime and a sin.
Where did the massive amounts of money come from to pay these predators? The system has been rigged and no amount of stimulus is going to make that right. The government can't print money fast enough to prop up the auto companies, and we are all frantically trying to keep up with the bills and the payments. But the cash has gone down the rat hole. I am not optimistic about the stimulus, I expect most of the money will be embezzled and the average citizen will see none of it. We could have waste, fraud and abuse like the Iraq war, or worse. The bad guys have the upper hand in America now. I don't want to blame the Republicans exclusively, but if you want to put a face to the corruption we have...