Читать книгу The Money Makers - Harry Bingham - Страница 45

The bears, doom-mongers of the financial markets, had predicted a crash, but no one had guessed that Japan would lead the way. The immediate cause was trivial. Yet another Japanese bank was caught handing over bribes to organised crime. Some of the individuals involved were linked to the ruling party. There was a fine, some arrests, some resignations. Nothing out of the ordinary.

The early reaction was subdued. A mild correction moved bond prices down about half a percent. The Japanese stockmarket seemed unperturbed and even rose a little. There was a holiday coming up, and, even in Japan, people’s minds wander.

But the first day was just a tremor, the earthquake had yet to come. Exactly why it came will remain a mystery. Perhaps investors were bothered by the evening news footage of disgraced dignitaries being slapped into handcuffs. Maybe it was the thundering speech of denunciation by an opposition leader. But whatever the reason, when the market opened the following day, bond prices began to tumble and the stockmarket followed suit. A slip became a landslide. By the end of the day, the bond market had fallen three percent, the stockmarket fifteen.

European investors saw the chaos in Japan and wondered if they would be affected. Trading was anxious and indecisive. If New York opened strongly, there was nothing to fear. If American investors took fright, there could be catastrophe. It was an edgy morning.

The headline in the Wall Street Journal that day read: ‘Fifteen percent fall in Nikkei index – US investors nervous’. The best-known TV pundit filmed his morning comment from a mock-up of a Wall Street window ledge. He predicted calamity, then jumped. It was only a stunt, but hardly calming.

The market opened quietly. Nobody wanted to make the first move. But then, one by one, investors decided to play safe. Playing safe means selling out, and when everyone sells, there’s no one to buy. Bit by bit, the screens glowed red. Bond market nerves tipped over into the stockmarket, which made up for lost time by falling even faster. By the end of the day, the bond market was down three percent, the stockmarket eighteen.

Soaked in sweat, traders left their desks and stumbled outside for a drink. Eighteen percent. Some traders had cause for celebration. These were the ones who had started the day ‘short’ – owing securities instead of owning them. Their debts had collapsed in value and their profit on the day looked incredible. Many more were as miserable as these traders were happy. Even careful traders were reporting huge losses. These unhappy souls watched their hard-won annual profits blown away in a single day. Their bonuses had certainly gone, their jobs in doubt. They pondered the injustice and avoided the bars where winners drifted on rivers of champagne.

And on an upper floor of a Wall Street skyscraper, a committee sat down to think. This was the Madison Market Risk Committee, chaired by Dan Kramer, Chief Executive and Lion of Wall Street.

The bank had had a bad day. It had chosen to bet on a rally in US markets. It hadn’t bet much, but even a small wrong bet produced a big loss. The bank’s computers indicated that Madison had lost around $80 million, before tax.

Nobody on the committee was too upset. Next to annual profits of way more than a billion, eighty million wasn’t much more than a blip. These things happen. But there were other things to consider. In the wake of a violent upset, business goes quiet for banks like Madison. Firms on the point of issuing bonds or equity pull out of the deal. Investors trade less. Phones fall silent.

Until nine in the evening, the committee deliberated. Madison was famed for its prompt and decisive management, and it wanted to issue a press release in time for the morning news. In the end the verdict was unanimous. A press release was quickly drafted and approved.

The key paragraphs ran as follows:

Madison reports that today’s correction in the financial markets has resulted in a pre-tax loss of approximately $80 million. The bank is confident that no further losses of any magnitude are expected and the bank continues to believe that the long-term outlook for the financial markets is positive.

Nevertheless, to ensure that costs remain firmly under control during the adjustment period, the bank intends to implement an immediate review of staffing levels throughout the firm. Significant down-sizing is anticipated. A further announcement will be released in due course.

The announcement was covered extensively in the press the next morning. It was taken as a very positive sign that Madison had publicly stated its confidence in the markets. Once again, the bank’s management was held up as a shining example of leadership and decisiveness. One of the popular papers covered the story under the caption ‘Markets breathe easy as Lion roars’. The battered markets nudged upwards once again.

On the training programme, the students were less enthusiastic. Rumour had it they would all be dismissed that very day. The American students left their desks to lobby the people they hoped to work for after the course. The foreign students hung on the phones, trying to find out the mood in Tokyo and Buenos Aires, Paris and London.

Matthew and Sophie, happily and publicly in love, dived downstairs for coffee after coffee. They talked about the news, the rumours, the gossip from home. Matthew had called Luigi Cuneberti, who sounded despondent. Matthew tried to laugh it off as Italian overreaction, but Luigi corrected him.

‘Hey, Matteo. I’m Italian-Swiss you know, and when we Swiss get depressed we really mean it. This is bad news and especially tough for you new guys. But don’t do anything dumb. If you don’t make it this time, you’ll always get another chance next year.’

Matthew didn’t have a year to spare, but he could hardly tell Luigi, let alone use it to plead with McAllister. Sophie was anxious too. The Paris office had been in the midst of a major expansion, and it looked as though all that would be put on hold. New recruits would be distinctly unwelcome.

Matthew and Sophie held hands across the table, kissed, and worried. At least they had each other.