Ramblings through Le Central Park
Those who know me knows that my short attention span coupled with a severe need for sufficient sleep makes the corporate finance arm of investment banking a non-option for me. But out of boredom (for lack of a better term), I decided to get myself a copy of Monkey Business ( supposedly a must read for those getting into that part of i-banking ) perhaps to read for myself if what they wrote about is really true about the industry. Walking through the park today on my way home, I saw this along the way:
It reminded me of the opening phrase in the book:
" A few years ago, Rolfe and I stood on the edge of what we thought was a desert. Across the desert we believe we saw a lush green oasis. The more we thought about the oasis, the more convinced we were of the untold pleasures that lay within its luxuriant borders. There was only one problem. The desert. "
The authors likened the "oasis" to the Managing Director position within an investment bank, and as associates straight out of business school, they are standing at the edge of the desert. Realistically, it's a good 8 years from associate to MD-ship. But is the "oasis" really as desirable as kids out of college imagine it to be? I rather highly doubt it.
Granted I am not in corporate finance, nor do I have any interest whatsoever to venture down that path of no return, I still find the antics of the bankers described in the book rather far fetched and at best, representation of an old school era behavior that probably will not survive the new banking world.
However I do have to say that the greed and lifestyle represented in the book is very real, and that is the golden handcuffs that locked so many young college graduates up till perhaps midway through the second quarter century of their lives.
It is perhaps this very greed that brought an end to the era of pure-play investment banks. It started with the fall of Bear Stearns, and a few months later, Lehman. In a nightmarish week the likes of which Wall Street has never seen and probably never imagined in their wildest dreams, Lehman filed the largest bankruptcy in history, Merrill who nobody expected to be sold that weekend was bought by BofA instead, and as markets tumbled on these news on Monday and Tuesday and an AIG bailout later, Morgan Stanley and probably Goldman too would have followed if the FED had not stepped in on Friday. And the weekend sees MS and GS becoming regulated banks.
Looking back, I still find it hard to believe that an institution as old as 158 years could collapse and be bankrupted over a weekend, and the picture of its CEO being mimed and scribbled on. If it is irrational, it is only as irrational as the markets' the investors' confidence that has supported them for so long. Are investment banks really to blame? Wall Street has been passing money and risks around like nobody's business since forever. But note that the key lies in that risks been taken by an end-user. And if one is willing to bat, and one is willing to receive, who is to blame when accidents happen? And what about the media who takes every little issue with these banks and blow them out of proportions? Who has been encouraging the short sellers? And why haven't the government stop them earlier? If the short selling rule that expired a week before Lehman's bankruptcy was reenacted right away, the firm would probably still be alive and kicking. I'm not saying the investment banks with their high leverage ratio has no faults, but there are so many more hedge funds/pe firms out there that are very much more leveraged - do they deserve to go bankrupt too?
If I can get over everything that happened in this two weeks, the one thing that I cannot get over is the fact that Lehman was left to die while everyone else is bailed out. I vividly remembered the outrage on the street when Bear Stearns was bought for 2 dollars, and only thereafter was the bid increased to 10 dollars.
Walking along Fifth avenue today for a little bit of window retail therapy, I saw this and was reminded of Atlas Shrugged.
This whole pseudo nationalization of the financial institutions is almost a mirror of the book. If the philosophy that Ayn Rand advocates is right, then these nationalizations can only end in disaster. And reading about the power of decision given to one single person, in this case the Treasury Secretary of US, makes me nauseous of the future of this country.
But rants aside, life has to go on. And for many US Lehman employee, that future lies in being part of another very old financial institution, one of the oldest in England. And for many Lehman employees in Europe and Asia, that future lies with another Japanese bank.
I don't think this post was ever meant to be a rant on what has happened so far, but the whole oasis thing just inspired the rest. Perhaps we are in the dryest part of the desert right now, and this too shall past, and the oasis is within reach. We shall see. In the mean time, the fact that I am still writing this much just meant that I am still rather free and bored.
Ok time to curl up and go to sleep.
It reminded me of the opening phrase in the book:
" A few years ago, Rolfe and I stood on the edge of what we thought was a desert. Across the desert we believe we saw a lush green oasis. The more we thought about the oasis, the more convinced we were of the untold pleasures that lay within its luxuriant borders. There was only one problem. The desert. "
The authors likened the "oasis" to the Managing Director position within an investment bank, and as associates straight out of business school, they are standing at the edge of the desert. Realistically, it's a good 8 years from associate to MD-ship. But is the "oasis" really as desirable as kids out of college imagine it to be? I rather highly doubt it.
Granted I am not in corporate finance, nor do I have any interest whatsoever to venture down that path of no return, I still find the antics of the bankers described in the book rather far fetched and at best, representation of an old school era behavior that probably will not survive the new banking world.
However I do have to say that the greed and lifestyle represented in the book is very real, and that is the golden handcuffs that locked so many young college graduates up till perhaps midway through the second quarter century of their lives.
It is perhaps this very greed that brought an end to the era of pure-play investment banks. It started with the fall of Bear Stearns, and a few months later, Lehman. In a nightmarish week the likes of which Wall Street has never seen and probably never imagined in their wildest dreams, Lehman filed the largest bankruptcy in history, Merrill who nobody expected to be sold that weekend was bought by BofA instead, and as markets tumbled on these news on Monday and Tuesday and an AIG bailout later, Morgan Stanley and probably Goldman too would have followed if the FED had not stepped in on Friday. And the weekend sees MS and GS becoming regulated banks.
Looking back, I still find it hard to believe that an institution as old as 158 years could collapse and be bankrupted over a weekend, and the picture of its CEO being mimed and scribbled on. If it is irrational, it is only as irrational as the markets' the investors' confidence that has supported them for so long. Are investment banks really to blame? Wall Street has been passing money and risks around like nobody's business since forever. But note that the key lies in that risks been taken by an end-user. And if one is willing to bat, and one is willing to receive, who is to blame when accidents happen? And what about the media who takes every little issue with these banks and blow them out of proportions? Who has been encouraging the short sellers? And why haven't the government stop them earlier? If the short selling rule that expired a week before Lehman's bankruptcy was reenacted right away, the firm would probably still be alive and kicking. I'm not saying the investment banks with their high leverage ratio has no faults, but there are so many more hedge funds/pe firms out there that are very much more leveraged - do they deserve to go bankrupt too?
If I can get over everything that happened in this two weeks, the one thing that I cannot get over is the fact that Lehman was left to die while everyone else is bailed out. I vividly remembered the outrage on the street when Bear Stearns was bought for 2 dollars, and only thereafter was the bid increased to 10 dollars.
Walking along Fifth avenue today for a little bit of window retail therapy, I saw this and was reminded of Atlas Shrugged.
This whole pseudo nationalization of the financial institutions is almost a mirror of the book. If the philosophy that Ayn Rand advocates is right, then these nationalizations can only end in disaster. And reading about the power of decision given to one single person, in this case the Treasury Secretary of US, makes me nauseous of the future of this country.But rants aside, life has to go on. And for many US Lehman employee, that future lies in being part of another very old financial institution, one of the oldest in England. And for many Lehman employees in Europe and Asia, that future lies with another Japanese bank.
I don't think this post was ever meant to be a rant on what has happened so far, but the whole oasis thing just inspired the rest. Perhaps we are in the dryest part of the desert right now, and this too shall past, and the oasis is within reach. We shall see. In the mean time, the fact that I am still writing this much just meant that I am still rather free and bored.
Ok time to curl up and go to sleep.
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