The man observes the following pattern that occurred and is still occurring in Wall Street :
* Most of the guys from the lower third of the class who went to Wall Street had a lot of nice qualities. Most of them were pleasant enough. They made a good impression. And now we realize that by the standards that came later, they weren’t really greedy. They just wanted a nice house and a family in the suburbs.
* College was getting so expensive that people from reasonably prosperous families were graduating with huge debts. So even the smart guys went to Wall Street, maybe telling themselves that in a few years they’d have so much money they could then become professors or legal-services lawyers or whatever they’d wanted to be in the first place.
* That’s when you started reading stories about the percentage of the graduating class of Harvard College who planned to go into the financial industry or go to business school so they could then go into the financial industry. That’s when you started reading about these geniuses from M.I.T. and Caltech who instead of going to graduate school in physics went to Wall Street to calculate arbitrage odds.
* When the smart guys started this business of securitizing things that didn’t even exist in the first place, who was running the firms they worked for? Answer: The lower third of the class! Guys who didn’t have the foggiest notion of what a credit default swap was. All these guys knew was that they were getting disgustingly rich, and they had gotten to like that. All of that easy money had eaten away at their sense of enoughness.
IT TOOK A WHILE BUT THE SMART GUYS ( THOSE WITH HIGH IQ ) FINALLY DID IT -— THE COLLAPSE OF WALL STREET !!
So really, we can blame the near collapse on the Universities?! I like that idea...
I wouldn’t get my Wall Street interpretations from Calvin Trillin. It’s like listening to all these folks who intone rants about derivatives, while something in their voice as they pronounce the word “derivatives” tells you they have no clue what a derivative is. They just know they don’t like it.
There may be some truth in that analysis, but the Ivy League & MBA types started invading Wall Street during the Reagan Administration. The influx of of the college-trained was a major theme of the book “Liars Poker” which was about the commoditization of the home mortgage market.
Right there it tells you that the measurement that put them into the lower third is flawed. It exists only in the head of the author.
In any class there are "smart" guys that don't get many dates but help others with math. That is only ONE kind of being "smart." Another is to be able to handle a great deal of "soft" data from multiple sources and communicate with diverse populations of people. That is what often makes a good manager. Math and physics geniuses are particularly bad at such tasks. So, what was the measurement that puts a manager of Brown Brothers Harriman into the lower third of the class?
[ The author has committed a logical fallacy known as argumentum ad stramineus homo (arguing against a straw man), wherein one falsely attributes something to a person or situatin and then claims that the result is flawed.]
"College was getting so expensive that people from reasonably prosperous families were graduating with huge debts."
This in itself is a joke. Prosperous families have trust funds coming from GRANDparents. (Since one is permitted to gift tax-free only %10,000 per year, for many people this is an advantageous way to distribute wealth before dying. Prosperous families that do not have education trust funds are self-made (first generation). But this is NOT whom the author is talking about; he explicitly mentions parents that were also on Wall Street and have houses in Greenwich.
Yet another falsehood is plugged in thus.
In addition, the author portrays getting on Wall Street as a decision of the supposedly debt-ridden graduates. This is utter nonsense: it's the Wall Street firms that pick them; their desire is very far from sufficient. Even in the best (easiest) years competition for finance jobs, especially Mergers and Acquisitions, was EXTREMELY fierce. Just wanting to make money to offset the debt is FARE from sufficient. A graduate should've also planned that move in advance: most have taken a few finance course and some additional economics. In sum, one has to be a star, and a reasonably prepared one at that.
The author's statement is simply stupid: it's like saying "Great many people now go to acting and NFL because their student and mortgage loans have increased lately." Just plain stupid.
"When the smart guys started this business of securitizing things that didn’t even exist in the first place, who was running the firms they worked for? Answer: The lower third of the class! Guys who didn’t have the foggiest notion of what a credit default swap was. "
Yet another moronic statement that reveals the author's lack of even basic understanding of management. Is the CEO of Alcoa a physicist or chemist? Probably not. How come Gerstner came to manage IBM from Pepsi? Because a manager is practically never a specialist. What (s)he does is pose right questions to specialist in his team. That is true for Alcoa, IBM, GE or any Wall Street firm. All those managers know ENOUGH to ask the math specialists right questions.
The author is simply ignorant of what the management function is and how it is performed.
And, incidentally, CSO is a form of insurance -- that simple. Math is needed only to calculate risk --- in the same way as insurance on a house or car. Do you really believe that Wall Street managers did not have a clue? The author is a moron (a person with arrested development).
As I said in an earlier post, it is difficult to find another article, even in the NYTImes, that would so utterly devoid of content.