American Excess The Sickening Story of the Fed's Money Party

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I’d been working
for the bank for about five weeks when I woke up on the balcony
of a ski resort in the Swiss Alps. It was midnight and I was drunk.
One of my fellow management trainees was urinating onto the skylight
of the lobby below us; another was hurling wine glasses into the

Behind us,
someone had stolen the hotel’s shoe-polishing machine and carried
it into the room; there were a line of drunken bankers waiting to
use it. Half of them were dripping wet, having gone swimming in
all their clothes and been too drunk to remember to take them off.
It took several more weeks of this before the bank considered us
properly trained.

I didn’t fit
the typical profile of a trader. I was an English major working
on a novel at night. Almost everyone else was a maths or economics
major and had family in banking.

I’d spent a
year walking around studying flashcards with maths problems, multiplying
random licence-plate numbers in my head, just to prepare for the
interviews. I memorised The Wall Street Journal every morning. I
didn’t care what I had to do.

At Cornell
University it was known that after five years on Wall Street, you
could expect to be earning half a million a year; after 10 years
you could expect a million or more. I had 60 grand of university
debt. I needed that money.

UBS apparently
thought pretty highly of me, because despite my lack of a financial
background, they put me onto the derivatives trading desk. This
was a coveted spot – the derivatives traders were viewed as the
elite – the baddest of the bad-asses.

are financial contracts originally created to provide stability
and allocate capital to industry and small businesses and to eliminate

For 100 years,
derivatives were a sort of lubricant in the world financial machine.
But when I arrived on Wall Street in 1999, the link between derivatives
and the real world had broken down. Instead of being used to reduce
risk, 95pc of their use was speculation – a polite term for gambling.

By then The
Market had become a near-religious force in our culture. It was
pretty clear what The Market didn’t like. It didn’t like being closely
watched. It didn’t like rules. It didn’t like goods produced in
First-World countries or workers who made high wages, with the notable
exception of financial sector employees.

This last point
bothered me especially. I’d grown up in a working-class neighbourhood
in Baltimore, a place hard hit by the offshoring of heavy industries
– steel, textile, shipbuilding.

At 16 I dropped
out of school and spent five years working as a bicycle mechanic
before deciding to go to university. After three tries at applying
to the Ivy League, I got into Cornell.

My first job
out of college was on the trading floor at UBS. So when news would
hit the wire about an American company closing a domestic factory,
I felt a conflict as I watched the company’s stock price go up as
a result.

the rest of the article

11, 2009

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