I posted a link to this story last night, which appeared on the front page of bloomberg's website. It was only up for about 4 hours, and then quietly removed. It no longer even exists in the archives on bloomberg. I think this guy stepped on some pretty big toes by telling the truth. Save a copy, because it will certainly be deleted on here too.
From Bloomberg
The Financial Criminals of the 90's
By Michael Lewis
(Michael Lewis, author of ``Liar's Poker' and ``The New New Thing,' a
forthcoming book about Silicon Valley, is a columnist for Bloomberg News.
His
opinions don't necessarily represent those of Bloomberg News.)
New York, Sept. 8 (Bloomberg) -- At the end of the 1980s, when Wall Street
big
shots went to jail, and everyone at once seemed to find sinister the
financiers
they had spent the past few years worshipping, something else changed too.
The public mood turned on a dime, and no one but Tom Wolfe ever really
bothered to try to explain why.
One idea, popular with police types, is that it simply took the cops a few
years to
catch up to the bandits. Once the bad guys on Wall Street had been
apprehended and exposed, the public changed their minds about them.
Another notion, a favorite of the B movie imagination, is that 1980s
financiers
became more sinister as they became more successful. Although honest and
sincere at the outset, they succumbed to hubris and, once they did, were
caught
and punished.
A third thought -- which was, more or less, Wolfe's argument -- is that
these
sensational bursts of animal spirits to which we Americans are prone, tend
to be
followed by only slightly less sensational bursts of guilt and retribution.
When a
glorious boom ends -- even, as in the late 1980s and early 1990s, when the
ending is false -- everyone at once wakes up from his dream of personal
prosperity, well and truly pissed off. Our new, unpleasant feeling that
someone
stole our bag of candy creates a need for characters on whom we might
plausibly blame the theft.
The demand for crooks at the end of the boom creates its own supply. The
vanities call forth their own bonfires.
Potential Targets
This is an interesting thought. Those who are currently most admired for
their
role in our economy might ponder it. For it suggests that when the 1990s
boom
ends, as one day it surely must, there will be hell to pay. Who will pay it?
Whose
reputations will be destroyed by journalists? Who will be cast as villains
in the
HBO special? Who will be hauled before U.S. Senate committees to be loathed
for behavior that, at the moment, strikes all of us as unobjectionable, or,
at least,
ignorable?
A brief list of possibilities:
1) Journalists who cover new companies. In July, the San Jose Mercury News
suspended a computer-industry gossip columnist after the Wall Street Journal
reported that she had made $9,000 from the ``friends list' of the initial
public
offering of a Silicon Valley company. The friends list allows a handful of
connected people to buy stock in a company at the initial offering price.
Any
journalist who allows himself to be put on a friends list is also allowing
himself to
be bribed.
Just Being Polite
Nevertheless, journalists who cover companies that are about to go public
often
accept such offers. I myself have been offered the chance to be on the
friends
lists of companies I intended to write about, by entrepreneurs who thought
they
were just being polite. It was the done thing. The Mercury News columnist
explained that she had told her bosses about her sweet deal. None of them
saw
anything wrong with it -- until the Wall Street Journal pointed it out.
Journalists are small change, however. They make for minor villains. Which
brings us to:
2) Wall Street analysts who follow Internet stocks. ``Analyst' is a
euphemism for
what these people now do for a living. What they do, in essence, is help
boost
the stock price of companies whose deals their firms have been paid a great
deal to underwrite. No one cares about this conflict of interest so long as
the
market rises; just as no one cares about boosterish journalism written by
journalists on the take, so long as the tips pan out.
The Tycoons
But if the market falls, people will care a lot. The only thing that will
save Wall
Street analysts from a starring role in the HBO special is that, when they
are
examined closely, they will seem almost as embarrassingly small time as
journalists. The public will demand to be shown the tycoons who, ultimately,
controlled the journalists and the analysts. Which brings us to:
3) Silicon Valley venture capitalists. The VCs are the ones who dreamed up
the
``friends list' in the first place, which they use to reward people they
want to
keep sweet. The VC's also play a big role in deciding which investment banks
will underwrite their deals -- and hence which analysts will plug their
stocks. The
VCs also have a web of interests, often internally contradictory, that can
easily
be made to seem corrupt, even if it isn't. ``No conflict, no interest,' is
a favorite
VC aphorism, which strikes one, at this prosperous moment, as amusing. Just
you wait. |
