Fixers (31 page)

There are days when life’s no fun, no fun at all.

Usually I’m out and about on Christmas Eve, dropping in here and there on families who like to offer cheer to lost souls. This year I decided to stay in, have a few drinks and order in some Chinese, watch
A Christmas Carol
on DVD, and make an early night of it.

As I was going through a pile of mail, I happened across STST’s 2009 Christmas keepsake, an elegantly printed, deckle-edged copy of the firm’s fourteen commandments, which Lucia sent out to friends and clients. It’s clearly intended to remind the world how virtuous an enterprise the TARPworm is, despite all the terrible things people say about it. I made myself a drink and read it through, all the way from “Our Clients Come First” to #14: “Integrity and Honesty Are at the Heart of Our Business.”

It’s hard to match up what I’ve observed firsthand at STST and the values propounded in its code of conduct. But what do I know? I’m among the unconverted, while STST’s people believe themselves to be practicing a kind of religion. I wonder: before settling down to the day’s affairs, do STSTers repeat the commandments to themselves, like nuns and holy men telling their rosary beads?

I wonder what kind of precepts Strauss would write today, now that his gentler, more gentlemanly Wall Street has given way to a tough, rough, callous, rent-seeking regime driven by computers that can do the numbers in milliseconds but conspicuously lack moral conviction or judgment. A Wall Street that has no place for gentlefolk or deals done on a handshake. If anyone’s come up with an algorithm for fair play, I haven’t heard of it.

And there I think I had better let the matter rest before I start thinking bad thoughts.

Merry Christmas!

STST opened 2009 at $84 and closed the year at $168. Wonderful performance, if you own the stock, handily besting the Dow Jones, which opened the year at around 9,000, sank to a low of around 6,500, and finished at 10,548.

I must say, this past week passed pretty quickly. I’d been dreading it; after all, it’s been years since I passed New Year’s in the city, but the Berkshires interlude is
fini
, so there you are.

I had planned to spend New Year’s Eve alone, feeling sorry for myself, consoled with a special vodka and an even more special caviar a Moscow newspaper shipped over in the diplomatic pouch to Lucia, which she—generous soul!—passed on to me. But in the end the need for company prevailed, and I’m going to go along with some friends to a party that a Chelsea gallerist is throwing. He just sold a Jeff Koons “Diamond” (basically a Crackerjack favor blown up to industrial scale) for $20 million to a man who made a fortune marketing blow-dryers in Eastern Europe, so the champagne and nosh should be first-rate, and anyone who’s anyone left in the city, which may or may not include anyone worth meeting, will be there. These days, one wants to be on the lookout for possible new clients more or less 24/7.

What have I done with my week? Well, for openers, I’ve caught up on some of the new and exciting stuff that Wall Street’s getting up to now that they’re once again confident that they can get away with anything.

The big news is so-called “HFT”—high-frequency trading. This is straight out of
Flash Gordon
, or a Kubrick movie. If you’re one of those people who’ve been predicting that computers will take over the world, here’s your proof. What we’re talking about here are computers trading millions of shares per second or tiny
fractions thereof—up, down, long, short, and sideways in search of infinitesimal splinters of profit. At these speeds, it’s 100 percent algorithmic and electronic: all about beating the other guy’s software and hardware.

I gather Mankoff is steering clear of high-frequency trading, even though the big concern is that HFT may not stay away from STST, in the sense of screwing up the execution prices of big orders.

Things certainly seem to have gone back to being too good too fast. I can’t help thinking that one of these days, the computers are going to go apeshit in response to some trading asymmetry and produce a 1987-size up-or-down spike in a single session. This will represent a whole new set of opportunities for Washington to come down on Wall Street’s head and write new “reform” legislation, which will only end up leaving “lay” investors worse off once K Street gets through modifying it.

In my view, getting rid of the human element in stock trading can only lead to the retreat of the human element from investing, and this will be a very bad thing. HFT has nothing to do with judgment, or value, or how a business is run, or what its prospects are, and the people who consider such factors important—the people who have been the backbone of this business for two hundred years—are going to shy away from markets dominated by Wall Street versions of R2-D2 and look elsewhere. And then?

So much for Chauncey’s adventures in the magic world of high-finance high-tech. The New Year will bring new challenges. I expect to be more than unequal to them.

So: Happy New Year! And party on!

It seems odd to look out the window on New Year’s morning and not see snowy Berkshire fields backed by gentle forested slopes; not to be aware of the small warm sounds of a country household gradually coming to life, the smell of coffee, the dogs snuffling at my bedroom door, anxious to get going; the general quiet. For most of my life, I’ve been away from home on New Year’s Day. Every year when I was growing up, Pop would take me south after Christmas to visit his old Groton roommates in places like Hobe Sound, Florida, and Aiken, Souch Carolina, both bastions of the WASP ancien régime.

Pop was everyone’s dream houseguest: funny, up for whatever the “it” of the moment was, considerate, accepting of the house rules, good with the help, a generous tipper, always ready to make a partner at tennis or golf or the fox-trot, a fourth at bridge, an object of derision at charades. There were a lot of ways he mentored me, but none more effectively than in the business—perhaps it’s an art—of house guesting.

I had scant hope for the New Year’s Eve party to which I got myself taken last night, and my expectation was right on the money. Same old, same old. Shrill, desperate, too much to eat, too much to drink, everyone talking a quarter note too fast and a semiquaver too high, most of the company worrying about their finances.

I was home by 1:00 a.m., where I had a good old-fashioned “Lonely Guy” welcome to 2010: a taste of almost-flat champagne and a few last spoonfuls of Lucia’s caviar, and it was lights-out before 2:00 a.m. Too bad the evening was a bust, because right now, I’d like a little zip in my life. Frankly, I feel pretty lonely these days. I find myself rushing back to the apartment to get at
this diary, which itself has become a force for solitude. I thought about getting a cat (unlike dogs, they don’t have to be walked), but cats have unacceptable ideas about who’s boss.

Funny: it used to be that I couldn’t wait for tomorrow; now there are times when I turn the light out and hope the next day won’t come. Not suicidally, you understand—just in the sense that maybe it would be kind of nice if everything just went … poof.

It’s not that I don’t have a lot of friends—I do—and not that my weekends aren’t busy—if I want them to be, they are—or that I lack for social and sexual opportunities—I don’t. But something’s missing.

I need to address this hole in my life. My old man believed that every New Year should start with an unflinching personal review. A look back and a look ahead. No matter where we were, no matter how bibulous and late the evening before had been, he’d rise promptly at eight on New Year’s morning, breakfast according to the dictates of his hosts, and then carry a yellow notepad and a third cup of coffee off to some secluded part of the house he was staying in and make a list of what to deal with in the coming year. There would be stuff left over from the year just ended that needed follow-up; more importantly there would be warning signs.

He was always after me to do a review of my own. It didn’t take all that long, he’d urge, pointing out that he was invariably finished by the first Bloody Mary call and the first college bowl game on TV. But I’d resist, it just wasn’t my style—when it comes to introspection and self-examination, I prefer to work in the moment.

But for whatever reason—my guess is that it has to do with being in New York, and not in some bucolic setting far from the madding crowd and the wails of the world—I awoke this morning determined to do such a review. And so, having risen at a reasonable hour, I sat down with a cup of coffee and reread what I’ve put in this diary going back to the very first entry, almost three years
ago, when Mankoff summoned me to breakfast at Three Guys to propose that I fix the 2008 presidential election.

More and more, as time has moved on, and we enter our fourth year together, Gentle Reader, I worry that I’m starting to set down too much about how I feel, what my reactions are. Editorializing mixed in with the news, if you will. Hard to tell where one ends and the other begins. I seem to talk an awful lot about my old man. The truth is that I miss him. There are times when I wish he was still around to tell me what to do, how to react. My San Calisto chums make up for some of that, but not enough. I’m very wary of turning them into surrogate fathers; they’re just good, wise friends who happen to be old men. What’s that line at the very end of
Lear
: “We that are young shall never see so much, nor live so long”?

I must say that I’m struck by my own moral inconsistency. One day I’m this, the next I’m that: like a little kid, I don’t seem to know what I want. I worry that all the wheeling and dealing that surrounds me might be contagious. I fear I’ve turned out to be the sort of person that my father, that Groton, that Yale all tried to ensure that I would never become.

Is there such a thing as a moral vocation? If you went to Groton, you were certainly taught to think so. How much and for how long should we be bound by what we learned in the classroom or at chapel? Every day, I find it harder and harder to rationalize why I acceded so readily to Mankoff. Why I went for it so quickly, so thoughtlessly. Did I let myself get too much in the moment, as the saying goes? I realize that Mankoff casts a kind of spell on me. He was my senior at Bones; my commander in the CIA; my mentor and sponsor in the world I’ve tried to make for myself; in a way, he created the professional Chauncey. How could I have turned him down?

And yet … and yet …

I can’t get my lunch last fall with my Williamstown friend
out of my mind. When Mankoff approached me, I never really appreciated the extent of the damage this crisis would cause among ordinary people. The lure of the game was too compelling—the old CIA stuff, all that. The sort of people I care about have had their lives wrecked, while the sort I tend to despise are better off than ever. There’s something hideous and ugly about that state of affairs, and in a way I suppose I’m fractionally responsible.

So how guilty should I feel?

Not as much as many, more than some. I tell myself that most people on the Street or in Washington have euthanized the better angels of their nature, while I have merely anesthetized mine. So what happens when virtue awakes?

There’s no knowing how all of this is going to end up. Maybe things will work out; maybe there’ll be blood in the streets.

On which jolly note I’ll close.

Toward the end of the day, Lucia called to ask whether I’d be free for a New Year’s drink. We met at P.J. Clarke’s in the World Financial Center, a few blocks west of STST’s new headquarters. She sounded pretty fraught.

I figured she had office drama on her mind, probably some new Rosenweis offense she needed to vent about. At least she’s put her concerns about Mankoff aside, reporting that the boss seems in reasonably good fettle, with few reminders of the slack performance he displayed at times late last year.

This has been a tough two months for Lucia. The firm is taking fire from all quadrants and it’s her responsibility to mount both defense and counterattack, working from here and from her Washington hotel. And that’s just on the business end of her life. Who knows what’s happening on the home front? I get the definite feeling that all’s not hunky-dory on West 72nd Street.

It turned out that what’s especially driving her nuts now is a flap about aluminum warehouses for storing the stuff, not built of it.

“Aluminum warehouses?” I asked. “For a bank?”

It turns out that STST is buying a bunch of aluminum warehouses in the Midwest. Because of the way the market for the vital metal works, STST will be able to control day-to-day prices by limiting the amount of physical metal released into the market at a given time. In other words, monopoly pricing power, worthy of a Thomas Nast cartoon. Naturally, it will fall to Lucia and her people to explain to this transaction to the public, no easy task when the firm’s in an unfortunate position: anything STST does that looks like the slightest departure from “normal” lines of business is regarded as criminal.

Bad, sad news. The Warrior is dead. He was up in Vermont staying with a daughter and her family and went out alone for some cross-country skiing yesterday; bad idea when you’re coming up on 90 and it’s starting to get dark. The San Calisto consensus is that the old boy got the sort of end he would have wanted. Or, in the view of the Ancient Mariner, deserved: “The old fool! Who goes cross-country skiing at his age?”

His family is planning a memorial service in ten days—the usual: Upper East Side church, followed by a reception at a private club a couple blocks away—but if it were my call, I’d stage a Viking funeral, a flaming pyre floating down the East River.

It’s hard to escape the feeling that the Warrior’s death marks the last hurrah of another era, a whole other set of values. He would never have blown his own horn, but when he wasn’t around, the San Calisto regulars used to boast that the Warrior was the only STST partner ever known to have turned down a client who wanted to take over an Ohio steel company. It was the sort of deal that promised huge fees and a lot of publicity, but the Warrior was concerned about what it might do to the target company’s community—plants shut down, jobs eliminated. And he refused to handle. Another firm took on the assignment, booked the fat fees, and in due course the plants shut down and the jobs were eliminated, and Wall Street had claimed the life of another community. Well, he’s gone now, and in time the others in San Calisto will follow, and then who will be left to light the way back into the past?