Saturday, March 16, 2024

High finance, low spirits — insider tales from Wall Street and the City

 Theatre Dragon at its best!

It’s almost impossible to turn a play into a commercial hit. The Lehman Trilogy, about American financial intrigue performed as a family epic – now making its Australian debut at the Theatre Royal in Sydney – managed to achieve that in France, Italy, England and the United States. Can it do the same in Ville of Matras or Happyfields?


Sam Mendes's production of The Lehman Trilogy, featuring set design by Es Devlin, opens in Sydney

… The stage spins and we are taken back to 1843. It’s 11 September and newly arrived emigre Hayum “Henry” Lehman (Adrian Schiller), from Bavaria, Germany, steps ashore in New York wearing his best shoes, kept especially for that moment. After a month and a half at sea, he has lost 10 pounds (4.5 kilograms) in weight, learned to drink and play cards, and has ‘grown a beard as thick as a Rabbi’s’. Under the shadow of the Statue of Liberty, an immigration official calls him Henry, and says ‘Welcome to America’.

Book Review at its Best!

High finance, low spirits — insider tales from Wall Street and the City

Two sharp memoirs give a glimpse of the steep rewards — and downsides — of working at the summit of the financial sector

young man — the protagonist is traditionally male — goes to Wall Street to seek his fortune. He suffers a hazing ritual on a raucous trading floor. He endures this and gains the respect of other traders, then earns his first, delicious bonus. He is soon taking frightening risks, and triumphs at first. Finally, he fails and is disgraced, coming to grasp afterwards that money is a false god.

There have been many such tales over the years and publishers are eager for them. An inside glimpse of the high-pressure, high-reward, ultimately disillusioning life of traders is more tantalising than the average literary submission. Such tales also provide a satisfying shot of schadenfreude about the angst of the bonus-making classes for the rest of us.

Some concern rogue traders: I co-wrote one myself about Nick Leeson and Barings bank (All That Glitters, 1998). Perhaps the most influential and amusing portrait of raucous traders was Michael Lewis’s Liar’s Poker: Rising Through the Wreckage on Wall Street(1989), his memoir of the heyday of Salomon Brothers. Rather than getting into trouble, Lewis left to become a successful author.

Salomon Brothers was later acquired by Citigroup, but much of its culture endured. That comes across in The Trading Game, Gary Stevenson’s book about his experience of Citi’s bond trading floor at London’s Canary Wharf. Stevenson, who briefly became one of its highest paid traders following the 2008-09 financial crash, got burnt out, and has finally written this confession.
So ingrained is the image of the casino-capitalist trader and his dubious exploits that the casual observer could be forgiven for not realising that the financial centre of gravity on Wall Street and in the City has shifted. Today’s masters of the universe are often found on the “buy-side” at hedge and private equity funds, and more are now female.
It is rarer for this world to be exposed to view, and even rarer for the story to be told by a woman. So Private Equity, Carrie Sun’s memoir of her time as executive assistant to the boss of “Carbon”, a pseudonymous New York hedge fund, makes an intriguing change. Her trajectory from wonder to exhaustion and alienation is similar but the world she depicts is glossier — at least superficially.
That gloss may be one reason why the more vivid of this pair is The Trading Game. Stevenson, the son of a Post Office worker, attended the London School of Economics (like Michael Lewis) and then broke into finance by winning a recruitment trading game hosted by Citi. He possessed both a mathematical brain and an instinct for outwitting opponents.
The bank’s short-term interest rate trading desk turned out to be an accommodating home, with its “ramshackle mob” of macho traders talking in “real accents from real places”. Stevenson preferred them to other Citi bankers, such as an “unspeakably posh Englishman named Archibald Quigley”. He portrays the latter as equally feral but less candid.
Stevenson is a sharp observer, with a gift for colourful if merciless description: he describes one trader having “the muscular-verging-on-fat physique of a man who has been very well fed for many years, possibly from birth . . . It spoke of a capacity for violence.” He soon won the confidence of the denizens of the trading floor, and excelled at their machinations.
The role of Stevenson’s desk was to sell foreign exchange swaps to customers, but he makes clear that he and the others were chiefly motivated by making as much money for the bank, and by extension themselves, as possible. Since the bank’s formula was, he claims, to give its top traders a bonus of 7 per cent of revenues they made, they were acting rationally.
“If I try to put myself back into the shoes of me as a 21-year-old, all I can tell you is this: I was hungry,” Stevenson writes. Call it hunger, ambition or greed, the grinding culture and stark incentives of the trading floor induced ruthless competition and paranoia. “The only people you see here are the survivors. What you don’t see is the people who lost,” one trader observes.
This Hunger Games atmosphere did not make the victors happy but it made them money, and it offered the prospect of one day being able to walk away with their spoils. “What could I do with £2mn?” Stevenson once asked himself, fantasising about the annual bonuses he went on to make. “What couldn’t you do? You could do anything, You could retire. You could be free.” 
The ultimate exponent of that Ayn Randian mindset in Sun’s Private Equity is “Boone Prescott”, billionaire founder of Carbon (“the world’s hottest hedge fund”). Like the name of the firm, “Boone” is a pseudonym — and might not be too hard to work out. Boone is introduced as “the nicest”, but he also has a simple philosophy: “Carrie, remember, money can solve nearly everything.”
People seem to blurt out amazingly blunt things to Sun, from the doctor who told her when she was seriously ill as a teenager that “I can’t say for certain if you’ll make it through the night” to the boyfriend who asked, when she expressed interest in getting a job, “who’s going to cook dinner?” 
But everything about Boone suggests he did have deep faith in finance. Sun underwent a comically intensive interview process to be his assistant, including being screened by his executive coach, and went on to organise Boone’s life and write his speeches. But aside from some boilerplate about Carbon’s investment style, she has little to say about its moneymaking secrets. The closest we get to dirt is her description of how the firm stationed a cleaner for when its automatic toilets failed to flush.
For the most part, Carbon remains as smooth and impenetrable as the “voluminous hair with curled ends bouncing so perfectly” of one assistant. The enterprise’s first-class-lounge vibe bleeds into Sun’s writing: she reports that Carbon employed “what Boone called forward-looking decision making, which I understood as extreme future orientation”. 
This being a rise-and-fall story, the reader keeps waiting for Boone’s mask of civility to slip. It never quite does and he remains relentlessly nice — with the emphasis on relentless. While showering Sun with encouraging pep talks and expensive gifts, he continues to pile on his work demands. “From my observation, he’s been destroying you,” a friend tells Sun. 
Stevenson’s own revelation came after the 2008-09 financial crisis, when he guessed that interest rates would stay low for much longer than others thought because economies would not recover fast or easily. By 2011 “it had started to become clear to me that the market was wrong,” he writes, and he took out a large, and very rewarding, bet on what he calls “the disaster trade”.
'Why we need a wealth tax'
One common thread is that the better Stevenson and Sun performed, the more stressed and anxious they became. Stevenson’s breakdown started with trading mania — “I wanted God to reveal his truth. That’s all I wanted. Nothing else, just the markets” — and ended with his exile to the Tokyo office, pleading to be allowed to leave. His bonuses had brought him torment, not freedom.
Carbon pampered its employees to ensure they remained alert and dedicated on the job, but it damaged Sun’s health. She describes her dismay at putting on weight, having gorged on cupcakes due to anxiety, and Boone’s sympathetic yet implacable response. “The institution is never wrong, you are always wrong. You have no one to blame but yourself,” was Carbon’s message, she concludes.
Despite the genuine distress of the authors, part of me wanted to respond at the end of these accounts: well, what did you expect? Did you come to the City and Wall Street to make millions (or, in Sun’s case, the near-$300,000 she ended up being paid annually as an executive assistant) and not know it would be soulless and stressful? Did you not read the other books?
“It occurred to me that Carbon did not have any superpowers beyond the boring and total efficiency of the enterprise,” Sun writes perceptively, and that is surely the point. These highly tuned machines make money by getting intelligent, ingenious people to compete fiercely to achieve the best financial results. If you seek deeper meaning, look elsewhere.
The highest aspiration of Carbon’s assistants when they challenged a partner about their working conditions was to be given access to the firm’s prized investment funds. Even Stevenson, who left Citi to study economics and became a campaigner against inequality, finishes by reflecting, “What’s more important than winning? I don’t know. I can think of nothing.”
Maybe Boone was right: money can solve many things, particularly for the institutions giving it out. However many times the story of disenchantment and stress is written, people keep on being drawn to Wall Street and the City to make a fortune, or to try. The moral may be to find another line of work, but the effect is to reinforce the finance industry’s harsh glamour.
The Trading Game: A Confession by Gary Stevenson Allen Lane £25, 432 pages
Private Equity by Carrie Sun Bloomsbury £20/Penguin Press $29352 pages 
John Gapper is business columnist of FT Weekend
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