American Rust: A Novel Best Price: $1.54 Buy New $40.98 (as of 01:40 UTC - Details)
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 courtyard.
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.
Derivatives are financial contracts originally created to provide stability and allocate capital to industry and small businesses and to eliminate risks.
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.
May 11, 2009