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CounterPunch
October
31, 2002
Anthropologists
on Wall Street
Two Recent Novels of High Finance
by ANIS SHIVANI
Moral Hazard: A Novel
by Kate Jennings
Fourth Estate, 2002. 175 pages. $21.95.
All I Could Get: A Novel
by Scott Lasser
Knopf, 2002. 244 pages. $24.
Moral hazard means not taking enough care to avoid
losses because someone else is guaranteed to bail you out, as
in certain forms of insurance. Applied to these two timely Wall
Street novels, the term also suggests the corrosion of moral
values despite the protagonists' valiant, if self-deceiving,
efforts at resistance. The recent explosive revelations of fraud
in American finance are prefigured in these books, based on the
real experiences of two writers who worked on Wall Street during
the boom years. The alert reader will draw radical conclusions
about the pervasiveness of Wall Street deception, which only
occasionally bursts into the open to shock the supposed beneficiaries
on the outside.
Jennings's is the slighter book, barely
reaching the girth of a novel; her abbreviated narrative leads
to over-reliance on the Alzheimer's metaphor, and on the protagonist
Cath's informal mentor Mike, rather than herself, as the true
center of intelligent awareness about the reality of Wall Street.
Jennings's detachment, perhaps stemming from revulsion toward
her Wall Street experience, disallows the full emotional development
of her characters. Tracking Jennings's own biography, Cath takes
a job as speechwriter at the investment banking firm of Niedecker
Benecke to help pay for the exorbitant medical expenses of her
much older husband, Bailey, suffering from Alzheimer's.
Mike, the head of the firm's risk-management
unit, serves as both Cath's conscience and temptation. He encourages
Cath to maintain an anthropologist's attitude in this cutthroat
culture. Mike is not all "quant." His irony penetrates
to the dark side of Wall Street: derivatives are like atoms,
with the same potential for mischief. Mike is always waiting
for the inevitable blow-up from trillions of dollars of unregulated
"gaming contracts." "Self-policing,"
Mike knows, will never work to restrain the stupidity of bankers:
" . . .in good times, we get greedy. We get lax."
Mike detests hedge funds, based on the gambling concept of martingales,
"which are banned in casinos because of the ease with which
gamblers can get clobbered, but not in finance." If only
more bankers could express what they know deep down: "Surely,
in their heart of hearts, they had to admit to the real nature
of the global financial markets: perilous, jerry-built, mortared
with spit and cupidity, a coat of self-serving verbiage slapped
on to tart up the surface and hide the cracks."
Alzheimer's is a metaphor for the necessary
amnesia under which the financial system operates. The larger
American correspondence with Bailey's condition is valid, but
not followed through to the end. When Bailey's pain becomes
too great, Cath minimizes intervention to let him die. The unspoken
implication about capitalism would be, Why not let this patient
die too, instead of always stepping in to the rescue? The party's
never really over for Wall Street, despite occasional
hangovers. Cath is awakened enough by the late nineties scandals
to revert to her liberalism--she claims. But in public policy
terms, there is "no follow-up" to the hedge fund collapse
(based on the 1998 Long-Term Capital Management failure and bailout)
described in the book: "As if afflicted with Alzheimer's,
the Fed remains adamant that banks can police themselves."
Even after LTCM, Alan Greenspan kept touting the virtues of
self-policing. What if the plug had been pulled on the market
in 1998, instead of letting the delusion continue? The principals
of LTCM are back in business, with barely a slap on their wrists.
Their pretense of predicting and controlling reality through
mathematics has simply taken higher flight. Wall Street must
always pretend that the latest scandal is only a "blip"
and that the "markets are efficient." Is Alzheimer's
a virtuous necessity, to carry on business as usual despite dark
foreshadowings? The stench of disease and degradation that takes
down Bailey is supposed to evoke similar emotions about Wall
Street; yet the reader cannot but be enthralled by the immensity
of the stakes on Wall Street.
Scott Lasser also seems irreparably infected
by Wall Street's energy; his empathy comes across in the lovingly
described details of high-stakes trading. Paralleling his own
experience as government-bond trader at Lehman Brothers, Lasser's
Barry Schwartz leaves an idyllic but debt-ridden life in the
mountains of Colorado to study for an M.B.A. at Wharton and work
on Wall Street for a few years to secure the financial future
for his wife Rachel and two kids.
Barry makes the phenomenal rise to desk
head from his lowly position as bill trader in just one year.
But while doing so, he systematically betrays all his friends
and benefactors, and probably irrevocably ruins his marriage.
Cozying up to Isaac Hunt, a top executive, Barry promotes himself
at the expense of his high school friend and desk head Court
Harvey, to whom he owes his job, as well as his college friend
Gretchen Barnes, the most beautiful woman at the firm. Barry
had never consummated his relationship with Gretchen at Dartmouth,
but now he not only sleeps with her but when Court starts stalking
Gretchen he figures that that's the way to push him out of the
firm. Against Gretchen's wishes, he squeals on Court's obsession
with Gretchen, pointing out to Hunt the firm's exposure to a
sexual harassment lawsuit. Gretchen is afraid that this revelation
will mean her ruin in the firm, which is exactly what happens.
To take over Court's position, Barry
betrays veteran traders Chip McCarty, Stevie Vollmer, and Tom
Carlson. He gets the coveted job of desk head, but by then his
wife Rachel is put off by his callousness. Barry's target of
financial security before the family returns to Colorado is an
ever-shifting goalpost. When Barry's older brother Ben, a vagrant
low-achiever, starts calling him after a gap of five years to
ask for money--no more than a few hundred bucks at a time--Barry
lowballs him, just as his own boss Court would at bonus, or "numbers,"
time. Barry refuses to believe that Ben has cancer. In the
middle of his intrigue to destroy Court's career, Barry leaves
it to his mother to tend to Ben's funeral. The course of all
his risk-taking is predictable: Rachel leaves him to move back
to Colorado, and Barry lasts barely a year as desk head, in the
end finding himself as bereft of security as when he got to Wall
Street.
Barry resorts to natural human envy as
the too easy explanation for his and fellow Wall Streeters' constant
raising of the bar to measure success. He is fully tainted by
Wall Street's smudge; but he pretends that he is in it only for
the money, and can pull out at any time to get back to normal
human compassion. Barry sees through Wall Street's euphemisms--"high
yield" rather than junk bonds, "emerging markets"
rather than debt-burdened third world nations. He too perceives
willful forgetfulness as essential to Wall Street's perpetual
high--"Lucky for junk-bond companies and third-world debtors
that memories in the markets are short. No one talks about the
peso crisis of '94, let alone the great Mexican bond default
back in the twenties" - but there is no sense of repugnance
at this deceit.
Where, then, is the real locus of risk?
There is always a convenient scapegoat, while the system as
a whole escapes blame. They always tell us that bailing out
the bad apples is for the good of all of us. Even those who
cost their firms large amounts of money don't really pay; they
may simply not get paid as much as they had dreamed of. When
a guy like Mike gets fired--Cath doesn't hesitate to snitch on
him to Horace, head of Investment Banking, telling him that Mike
is withholding his skepticism about the hedge-fund's weakness
- there's another, probably better, job waiting around the corner.
The traders betrayed by Barry end up landing more glamorous
jobs on Wall Street.
As long as money is the measure of happiness,
those who cause the most pain are the least likely to suffer.
Why should Bailey's medical care under catastrophic conditions
have to be paid for by private effort? Why should a small family
like Barry's find it so difficult, despite honest work, to survive?
What would happen if moral hazard were to be broadly invoked
and the carpet lifted to see what's under all of capitalism,
rather than bits and pieces of it from time to time?
Curiously, it is difficult not to be
sympathetic to Jennings's and Lasser's high-energy Wall Street
types--Hanny, Cath's manager and Reaganite free-market nut, and
Horace, the cultured Englishman, in Jennings's book; and Chip
McCarty, Colin Dancer and others in Lasser's. Their own delusion
of free-wheeling independence and the popular perception that
these are lone rangers taking risks for themselves are going
to be hardest parts of the mythology to overcome on the way to
a sensible economy.
Anis Shivani
studied economics at Harvard, and is the author of two novels,
The Age of Critics and Memoirs of a Terrorist. He welcomes comments
at: Anis_Shivani_ab92@post.harvard.edu
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