Levine on Wall Street: Bankers' Hours
Goldman Sachs tells analysts not to boil the ocean
Ahahahahahahahahahahahahaha "Goldman Pushes Junior Investment Bankers to Take Weekends Off." "Sorry boss, I'd love to put together that pitchbook, but the junior banker task force encouraged me to go see a show this weekend." Junior investment bankers are famously useless -- they don't know anything or see clients -- but they make up for it by working like dogs and being available at all hours to make their senior bankers' lives a bit easier. (That's also how they earn their salaries, and justify them to themselves. "Well if you consider my hours I'm practically making minimum wage" is an untrue thing you sometimes hear.) If they work nine to five what is their value proposition?
Vegas bookie gets in trouble for ties to criminals
Here is just a fascinating article about Cantor Fitzgerald's push into running Las Vegas sports books. As the Wall Street Journal tells it, Cantor realized there was an opportunity to apply its bond trading risk management techniques to sports betting, which would allow it to accept bigger wagers than most casino sports books. So it did, and then something something something money laundering, it's a bit of a mess. You sometimes hear people criticizing investment banks for "just being bookies," which I've always thought was perfectly fair (but then bookie-ing seems to me like a perfectly honorable profession): The job of a bond or derivatives dealer, like that of a bookie, is to balance supply and demand so that customers get the risks they want and the dealer's/bookie's own retained risk is minimal. But I learned from this article that there is an important difference: Bond dealers are happy to take much, much bigger bets.
Have companies decided that
mergers are dumb
Andrew Ross Sorkin at Dealbook looks at another year where merger activity was supposed to rebound, and didn't, and asks:
What if the slowdown in merger activity isn't cyclical, but secular? What if corporations have learned the lessons of so many companies before them that the odds of a successful merger are no better than 50-50 and probably less?
Everyone he talks to says "hahahaha no what are you talking about," which I guess is my reaction too, but it's kind of a good question. If you read the academic literature it is hard to shake the impression that mergers as a class destroy value for shareholders, but that companies do them because hubristic CEOs want to expand their empires (and get paid more for running bigger companies) and boards and shareholders are too weak to stop them. Maybe one day activist shareholders and strong board governance and, like, people reading the academic literature will cool the M&A climate, though my guess is that economic conditions are what's cooling it now.
Latvians will miss their
Given, like, Greece, it seems to be an odd time to be joining the euro, but Latvia is doing it in January. Here is a delightful Reuters article about how some people are unhappy about that. Their reasons are a mix of good empiricism (Reuters goes to a town that is half in Latvia, which uses the lats, and half in Estonia, which uses the euro, and finds that the euro side isn't doing too much better), economic confusion ("Prices in the few shops are already being printed in euros. Because of the exchange rate, the euro figure is higher, reinforcing fears of inflation"), and the fact that Latvians are "Loyal to the Latvian maiden of their notes and coins":
"It's our own currency, different from other countries, more beautiful," Laura Cera, a 23-year-old mother of two, said on the edge of a windswept housing estate. "Jobs? I don't think it will change."
This cried out for a visit to Wikipedia, where I learned that "The standard version of 1 lats coin bears a salmon," so there is that.
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Matthew S Levine at firstname.lastname@example.org