Friday, January 4, 2013

Tom Wolfe on How the Masters of the Universe Were Eunuched

No one does money and status like Tom Wolfe.

Wolfe has just written a great essay on how Wall Street was transformed from a competitive arena into a number cruncher’s paradise. 

Wall Street used to be the home of alpha males high on dopamine and testosterone. Now it is run by quants who are brimming over with the stress hormone, cortisol. The manliest of men have been supplanted by worrywarts. 

It is entirely appropriate that the man who gave us the "Masters of the Universe," in his book The Bonfire of the Vanities should offer up today's replacement for Sherman McCoy-- Mark Zuckerberg in a hoodie.

Things have gotten so bad, Wolfe suggests, that when it comes time for the old boy investment bankers to do their stuff… that is, to bring the Facebook IPO to market,.. them make a mess of the opportunity.

Tom Wolfe describes the scene:

The stock was to go on sale … Thursday, May 17, at 11 a.m. By then 82 million bids were primed and straining against the starting blocks. Zuckerberg had hired five old investment banks to take care of the mechanics of the IPO for him: JPMorgan Chase, Goldman Sachs, Bank of America, Barclays Capital, and the lead bank, overseeing the entire operation, Morgan Stanley, in the persons of James Gorman, the CEO, and Michael Grimes. Grimes had been named the No. 1 Wall Street “dealmaker” on the Forbes Midas List four years in a row, 2004—07. At 11 a.m. sharp—bango!—the 82 million bids hit the market. Our old-line investment bankers are agog. They have never seen anything like the hordes of buyers stampeding straight toward them bearing billions of dollars—billions!—desperate to get their hands on shares of Facebook at the IPOffering price of $38 a share before it rockets up to $76 and who knows how much higher. Unbelievable hordes of them! Our old boys panic. They slip, they slide, they flounder. Without a clue as to what they’re doing, they begin drowning this, the biggest and most publicized IPO in history, beneath wave after wave of incompetence. Flummoxed, the old boys call it a “technical error” when the onrush of bids so overwhelms them, millions of transactions are recorded at the wrong prices. The leader of the lead bank, Gorman of Morgan Stanley, blames it all on NASDAQ, the exchange handling the transactions. Under the circumstances—namely, the biggest IPO in history—it sounds like Napoleon blaming Waterloo on the quartermaster corps for not delivering freshly laundered smalls to the front lines in a timely fashion.

Wolfe’s essay is well worth a read.

No comments: