Weekend Economists Ring in the Old, Wring Out the New: Dec. 30, 2011 to Jan. 2, 2012

[Demeter]

102. The Big Lie (NOW WE'RE TALKING!)

http://www.thedailybeast.com/newsweek/2011/12/25/wall-street-has-destroyed-the-wonder-that-was-america.html?utm_medium=email&utm_source=newsletter&utm_campaign=cheatsheet_morning&cid=newsletter%3Bemail%3Bcheatsheet_morning&utm_term=Cheat%20Sheet

Wall Street has destroyed the wonder that was America...

It was in May 1961 that a series of circumstances took me from the hushed precincts of the Metropolitan Museum of Art, where I was working as a curatorial assistant in the European Paintings Department, to Lehman Brothers, to begin what for the next 30 years would be an involvement—I hesitate to call it “a career”—in investment banking. I would promote and execute deals, sit on boards, kiss ass, and lie through my teeth: the whole megillah. In consequence of which, I would wear Savile Row and carry a Hermès briefcase. I had Mme. Claude’s home number in Paris and I frequented the best clubs in a half-dozen cities. But I had a problem: I was unable to develop the anticommunitarian moral opacity that is the key to real success on Wall Street.

I had my doubts from the beginning. A few months after I started to work downtown, I ran into an old friend from college and before, a man later to become one of New York’s most esteemed writers and editors...“So,” he asked, “how do you like what you’re doing now?”

“I like it quite a lot,” I said. And this was true: these were new frontiers for me, the pace was lively, the money was good enough ($6,500 a year), and there was so much to learn. But there was one aspect of Wall Street that I found morally confusing if not distasteful: “There’s one thing that bothers me, though. It’s this: on the one hand the New York Stock Exchange has sent its president, the estimable G. Keith Funston, out into the countryside, supported by an expensive, extensive advertising campaign, to exhort the proletariat to Own your share of America! As if buying 50 shares of IBM or GM in 1961 is as much of a civic duty as buying a $100 war bond in 1943.” I then added, “But here’s the thing. At the same time as Funston’s out there doing his thing, if you ask any veteran Wall Street pro how the Street works, the first thing he’ll tell you is: The public is always wrong. Always.” I paused to let that sink in, then confessed, “I have to tell you, I have trouble squaring that circle.”

And that was back when Wall Street was basically honest, brought into line thanks in part to Ferdinand Pecora’s 1933 humiliation of the great bankers of the Jazz Age and even more so because of the communitarian exigencies forced on the nation by war...