Where are the Masters of the Universe now? As the financial tsunami rolls out across the world, crushing seemingly invincible institutions in its path and threatening the livelihoods of millions, the blame game has begun.
But there's a problem. The most obvious candidates for pillorying have disappeared. Lehman Brothers and Bear Stearns have gone up in smoke. Merrill Lynch has been consumed. Morgan Stanley and Goldman Sachs have been turned into high street banks, the kind with plastic pot plants in the corner and bowls of sweets to entice the kids. In short: how can you vent your spleen at a ghost? As Bill Clinton, out on the campaign trail for Barack Obama this week, summed up the conundrum: "The Wall Street you are mad at doesn't exist anymore. It vanished." http://www.guardian.co.uk/business/2008/oct/04/useconomy.usa/print
The bravest decision he took was in 1995, following the collapse of Barings Bank, as he explained in The Prospect:
I am a 47-year-old banker - chief executive of Swiss Bank Corporation in London, to be precise - and I have just decided that I need to go back to university for two years to study mathematics. Some of my friends think I am mad, and perhaps they are right. But perhaps something strange has happened to banking too.
It is hard to imagine that there is anything really new in banking. The tools of the trade have been around and in use, pretty much unchanged, for hundreds of years. Yet within the span of my own career, the world of international finance has enjoyed a renaissance-a spurt of creativity in the 1970s and 1980s, when new techniques emerged which have transformed the conduct of many banks and bankers. These techniques-collectively known as derivatives-have spawned a new jargon (would you know what to do with a Jellyroll, or an Alligator Spread?), huge new sources of profit, and mystifying new types of risk.
Imagine devoting yourself to the study of advanced mathematics in your mid-40s from the lofty heights of CEO of a Swiss bank! I wouldn't be so noble, from more modest altitudes. http://www.rgemonitor.com/financemarkets-monitor/253763/learning_from_rudi_bogni_the_thin_space_of_financial_activity
