hello seeker, we will discuss no more of the evil cult where its founder believes he can levitate. it is simply not worth our time.
just in in-tray, a speech to be made by a friend
Is your firm run by a Chuck Prince or a Jamie Dimon?
I was asked to give more of a theme presentation than talk slides. And though I will come back to a few slides prepared, I will first talk about what I see as a crisis of Capitalism and how we got into the current mess.
I worked for Citigroup, a large semi-nationalized US bank, for about 10 years, and before that a few other similar groups, some of which have not received any state aid as yet. I have always been an idealist, but Citigroup did its best to knock it out of me.
If I had stayed it would have been because I made a good politician. I spent my time writing client notes and trying to do my job as an analyst, looking for ways to make money and mitigate risk, as many analysts do.
I got somewhat famous for concluding risk & reward profiles in transport in recent years were not appealing. But what one does during a work day defines the person. And being right or wrong is part of the of the job not all of the job.
Most of the time I serviced clients, often handling between five and 10 requests a day.
And then some of the time I turned back to look at what Citi was doing. I did not like what I saw often. Budget and influence politicking. Fighting with junior analysts who wanted to make a name for themselves being bullish right before the financial meltdown of 2008.
One analyst on my team a year ago recently had a recent target price on one of their larger companies that is one-quarter the amount they had just one year ago. Enough said here. Many analysts, in my view, have been over-paid for the recommendations and service they have provided investors.
The problem I saw at Citigroup, and some companies I analyzed, is a crisis of Capitalism¡K. A crisis of leadership and management.
Before the crisis is over we may have had the opportunity to help re-invent Capitalism.
In the 19th century we had Robber Baron Capitalism. In the last part of the 20th Century till now we have had bubble capitalism, and many other versions thereof.
Bubble capitalism I associate with Greenspan. But we also have global Capitalism, which is personified by cross-border transactions, trade and capital flows; American Capitalism, which is best symbolized by Consumerism, crony Capitalism which is as much a "third world" phenomenon as it is a US debacle, as seen with Wall Street in 2008; Chinese Capitalism, which relies on state or semi-state companies as well as deflationary export growth.
The big irony is Capitalism as it exists in the country where it was believed to be the strongest - the United States - has proven to be riddled with ethically challenged events. Detroit and Wall Street have spent 2008 hanging by a thread, with Washington holding the tab on behalf of the taxpayer.
The #1 problem I found at Citigroup was over-paid senior managers. Not just a few overpaid CEOs, but hundreds of people. Many rank and file, and lifers who have put in 10, 20 years at the firm have gone about their 9-5 or 8-6 schedules, doing their functions. These are the troops. For the most part they do their job well. And some of the managers are good, just as at so many other firms. But then there are the people whose feet never touch the ground, who bicker about which of the Citi private Jets they are going to take. I kid you not. Accounts of senior managers with attitudes is not new.
At the other end of the spectrum, I once met one of my father's friends in Manhattan, an elderly gentleman worth billions, and working out of a service office.
Capitalism, like America, can have grace and strength. Or it can have zealots and prima donnas running divisions and companies.
All I can say is time is of the essence if the good guys are going to win back the field.
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