The Money Makers

by Harry Bingham

  On the training course, the students are tense and unhappy. They don’t want bonuses. They want jobs. It is 4 March 1999. There are 862 days to go until Bernard Gradley’s deadline.

  1

  Somewhere below Wall Street, the Consolidated Edison Power Company had a problem. Even now, on the cusp of the millennium, New York’s buildings are heated by steam carried through Con-Ed’s network of underground pipes. Most of the time the system works but, as with all old things, from time to time things go wrong. Today was one of those times.

  A large vertical pipe, placed like a chimney in the street, belched forth torrents of steam. Beneath it, work­ men scurried round an open manhole.

  To the commuters emerging from the subway at the top of Wall Street, the scene was like something from the Civil War. Behind them a blackened church spoke of God and duty. Before them, in a dazzle of morning sun, clouds of steam, like gun smoke, filled the deep canyon of the street. You could just about see as far as the former Federal Reserve where old man Washington still presides, an iron statue on his stone pedestal. Beyond that, nothing but dense smoke and blinding sunlight. Amidst the clouds, here and there, a few flags flew - the Stars and Stripes by the dawn’s early light. The commuters hurrying to work could have been the defeated in flight or the victors on the rampage. Matthew moistened his lips.

  This was Wall Street. The most famous street on earth. More money moved down this short alleyway than any finance minister in the world had under his control. Here was wealth. Here was power. Here was everything.

  Matthew was ready for it all. He bought a coffee from one of the stalls lining Wall Street and walked on into Madison’s glittering skyscraper. Above his head as he entered, the Stars and Stripes fluttered in the billowing steam.

  Today was the day of the final, critical trading game: sixty-three students fighting for five jobs. Matthew was nervous but excited. He enjoyed the games and was good at them. And this time he began with an advantage, the advantage of having read and memorised the binder he’d found in Gillian McCutcheon’s office.

  If the binder was right, the game they were about to play was different from all the others they had played so far. Instead of bonds or shares, the students were to trade lottery tickets. Each student would start with a thousand tickets. Each ticket would offer the chance to compete in a lottery with a theoretical million dollar prize. Various news items, each of which had been spelled out in an appendix, would be released throughout the game. The price of the lottery tickets would, of course, go up and down as the market digested the new information.

  Every trader dreams of knowing the future. If you only knew one stupid statistic each day - say the price of the US government long bond - you could forget your big house in Long Island and go buy yourself an island someplace sunny. Give yourself time and you could trade up again, from an island to a country, from a country to a continent. Today, just for the day, Matthew knew the future.

  The binder didn’t give him the price of lottery tickets, but it gave him something just as good. In previous games there wasn’t a right answer to where prices should be; there was only the answer of the market. In this game, however, you could work out the price a lottery ticket ought to have by simple maths. For instance, if there were a million lottery tickets in circulation, competing for a single million dollar prize, each ticket was worth $1 exactly. If you could buy a ticket at 99.92 cents you were getting a bargain. If you sold a ticket at $1.002, you were making a profit.

  So, early in the mornings while Sophie slept, Matthew sat over his notes, calculating to the nearest sixteenth of a cent how prices ought to move. He made himself practise the calculations again and again. He timed himself for speed and set himself ever more complex puzzles. He was not going to allow himself to be caught out. This was his chance.

  Sophie came in and slid alongside Matthew at his desk. Usually they had breakfast together, but not today. Matthew was too preoccupied.

  ‘You look nervous, mon cher’, said Sophie.

  ‘Yeah. I do feel queasy. You look alright.’

  As ever with Sophie, this was an understatement. She wore an ash-grey suit with green trim and a brilliant white silk blouse beneath. Her skirt would have been considered conservative, almost frumpy, in the daringly dressed Paris office. Here in New York, however, she showed a length of leg that her American coursemates exposed only in the shower. Her complexion glowed with health and there wasn’t a glimmer of uncertainty in her bearing. Matthew felt bad about his secret, but he knew Sophie wouldn’t cheat with him and it was too late to confide in her now.

  Sophie kissed him.

  ‘Don’t worry, dearest. You’ll do fine. Either you win and get your precious job or you don’t win, don’t get the job, and get another one just as good next year. Either way you’ll be fine. What difference does a year make?’

  ‘More than you think,’ said Matthew grumpily.

  Sophie tugged his hair in mock rebuke.

  ‘You’re twenty-two, you imbecile. You could always go back and finish your degree, you know. I don’t much care for uneducated men.’

  ‘And if you lose?’

  ‘Que sera, sera. I’ll do something else.’

  ‘It’s alright for you. Supermodel. Movie star. Financial mogul. The world’s your oyster.’

  ‘Don’t mention oysters. They make me come over all sexy.’

  The conversation descended into lovers’ nonsense. And as the time came to move through into the big conference room where the game was due to begin, Matthew was certain of only two things. The first thing was that he desperately wanted a job at Madison. The second was that he had never felt about a woman the way he felt about Sophie.

  The students assembled. Half of them were obviously nervous. The other half were either resigned -like Princess Fareshti, who seemed on the verge of sleep already - or, like Sophie and Scott Petersen, were apparently immune to nerves. The enviable Diego Burelli, soon to take up his new job in Buenos Aires, cracked jokes in Spanish on his mobile phone as Matthew’s nerves danced the jitterbug.

  Gillian McCutcheon was already there, as were a scattering of senior traders, there to inspect the proceedings.

  ‘That’s Coniston, isn’t it? Head of the corporate fixed income desk.’

  ‘And that woman next to him. Maria Hernandez. The junk bond queen.’

  To the students trembling for their future, the ordinary­looking figures of Fred Coniston and Maria Hernandez were like gods descended to earth. Gillian McCutcheon began to outline the game.

  ‘Unlike previous games, you will not be trading financial instruments. You will be trading lottery tickets. Each of you will own a thousand lottery tickets to begin with. Each ticket gives you a one in a million chance to win a jackpot worth a million dollars.’

  She rambled on. It was exactly what Matthew had been expecting. Exact to the details of the wording. His tiny fear that his precious document would prove to be misleading vanished. He really did know the future. The game got underway, and the first news announcement went up. Lottery fraud in Wisconsin, murmured Matthew under his breath. Five thousand tickets scrapped. Sure enough, the placard announced that a counterfeit ring had been exposed in Wisconsin. Five thousand tickets were being impounded.

  Matthew knew the prices he should be quoting. He pretended to do a calculation to check, but he was quick to position himself in the middle of the throng. He sang out his prices and asked others for theirs. It was a rule of the game that everybody had to quote a price when asked and had to stick to their quote if the other person wanted to deal. That meant there was nowhere to hide. You couldn’t simply sit in a comer and keep your head down. In fact, there could hardly be a worse strategy. You might as well string a balloon round your neck saying ‘I’m a sucker - please take advantage’. Everyone would cluster round you, ask you for your prices and hit your bid every time you offered to buy high or sell low.

  Matthew liked to be asked for his prices. He knew his prices included a profi
t margin whether he was buying or selling, and the more trades he did, the more money he made. But he was even happier when he was able to ask others for their prices. He sought out the least able students, asked their prices and bought or sold in bulk whenever he spotted an opportunity. He dived around the room seeking out ignorance and profiting.

  Then at his shoulder a familiar voice whispered, ‘Bonjour, Monsieur Gradley. Your prices, please?’

  He turned and found himself looking into Sophie’s ever-beautiful face.

  ‘To anyone else, I’d sell at eighty-eight, buy at eighty­seven,’ he said. ‘But you, my dear, can have all the lottery tickets in the world for a dollar and a kiss.’

  Matthew tore out a trading ticket for her. He signed it and left the rest for her to fill in. It was a blank cheque. If she wanted to buy all of Matthew’s tickets for a penny, she only had to fill out the ticket. His signature would authenticate the trade beyond dispute.

  Sophie raised her eyebrows and filled the ticket out with mock seriousness:

  Trader’s name: Matthew Gradley

  Type of deal: Sell

  Buyer/seller: Sophie Clemenceau

  Number of units: 10,000

  Price per unit: $0.01

  Total deal value: $100

  Deal time: 09.46

  The ticket stated that Matthew was selling Sophie ten thousand tickets at one cent each. If Sophie chose to enforce the deal, Matthew would be bankrupted out of the game, dead in the water. Not even Fareshti Al Shahrani would be able to lose that much money.

  ‘Voila,’ said Sophie. ‘That should put paid to your ambition.’ So saying she stepped close to Matthew, where no one but they could see what happened next. She threaded the ticket between the buttons at the front of her shirt, and tucked the ticket into her bra. It was a snug fit. ‘You can take it back, if you wish,’ she murmured.

  Matthew smiled. He stepped even closer to her and felt for the ticket with his fingers.

  ‘Fais attention! You’re only allowed the ticket, you know.’

  ‘Maybe I’ll leave the ticket for now and see what else I can find.’

  But Matthew was impatient. He’d have as much time as he wanted to explore the contents of Sophie’s shirt front on other occasions. He pulled away, gave Sophie a perfunctory kiss and dived back into the throng. She shook her head. She tried to withdraw the ticket from its resting place, but it had made itself at home and resisted disturbance. She left it and got on with her own trading.

  Matthew watched his rivals to see how they fared. Scott Petersen stood head and shoulders taller than a throng of Japanese around him. Tickets flashed to and fro as the frenzy continued. He heard Petersen’s voice calling out prices. Damn the man. His prices were spot on. Exactly the same as those Matthew was offering. He checked out Karen Onsley and Heinz Schiffer. Both of them were busy. Both of them were dealing at the correct prices.

  Damn! Matthew knew that he wasn’t as mentally agile as either Petersen or Schiffer. He certainly wasn’t as smart as Sophie, whose own trading was doubtless impeccable. The whole advantage he had obtained from the illicit notes amounted to this: he’d been able to bring himself up to the level that Petersen and the others reached by their own merit. And Petersen, in particular, looked very busy with trades, as did Karen Onsley. Matthew wasn’t especially popular on the course, as he was well aware. He had no time for popularity for its own sake and divided his energies equally between work and Sophie. But now, while he had to yank people away from whatever they were doing to get a trade done, Petersen just stood and watched customers stream towards him.

  Double damn!

  He left the melee for a few minutes to update his accounts and to grab a cup of coffee. He sat with his back to the wall and worked quickly. The table he sat at was draped with a floor-length baize cloth. Sophie saw him leave the throng and slipped over towards him.

  She sat down beside him and, in the shelter of the green baize, moved her hand down to his trousers, tucking a slip of paper neatly into his underpants. ‘My tum to return the compliment, Monsieur. lf you need help in removing it, please don’t hesitate to ask.’

  She kissed him and moved off. Matthew heard her, calling out accurate prices to all who asked. Sophie was popular too. People moved towards her when they saw her. They moved away from him. Triple damn!

  Matthew took the piece of paper from his trousers. It was a blank trading ticket, signed by Sophie. He smiled, but his mind was elsewhere.

  2

  Amy-Lou Mazowiecki wasn’t built to run fast, but she was doing a good job of it now. They ran from the taxi to the check-in counter, Zack arriving narrowly in front.

  ‘Can you get us on the London flight? No bags.’

  ‘Take-off in twenty minutes.’ The SAS check-in attendant was dubious. ‘I’ll call the gate.’

  She dialled the gate and said something in Swedish.

  Her face registered neither pleasure nor displeasure at the answer. She replaced the handset.

  ‘OK. Please show your tickets at the gate and collect your boarding passes there. But you’ll need to run.’

  They ran. There was no wait at passport control, no line at security. At the gate, twenty or thirty people were still waiting to board. Seeing them, Mazowiecki stopped.

  ‘Heaps of time. I wish they wouldn’t tell you to run when the plane’s not even full.’

  If everyone in the world lined up according to their consumption of fossil fuel, at the very head of the queue, jostling rudely for position, would stand the world’s corporate financiers. It’s perfectly common for London-based bankers to take a hundred and fifty flights a year or more, many of them intercontinental, many of them just for a single meeting. In his brief career, Zack had already flown to Houston for a meeting, to Dubai for a day-trip, and to Tokyo for no reason at all that he could remember. Distance is no barrier to business. Airplane seats are beds, jet lag a way of life. To such people - and Mazowiecki had long since stopped collecting air miles for holidays she rarely took - the idea of stepping on to a plane more than a couple of minutes before take-off is anathema.

  They ambled on to the plane. Zack had some documents to read, while Mazowiecki had come in from New York the day before and intended to catch up on her sleep. But before settling down, she said, ‘Zack, we should have a quick chat about the firm and your future and stuff. I should have done it when you joined, but I guess we’ve been kind of busy.’

  ‘Busy? Call this busy?’ said Zack. This was his nineteenth working day in a row.

  Mazowiecki smiled feebly. Humour is one of the first things to go when a bunch of highly able and competitive people work together for eighty hours a week.

  ‘OK. Here’s the beef. What is Weinstein Lukes? Well, it’s an investment bank, but it’s something else as well. It’s a partnership. Not metaphorically, literally. At Weinstein Lukes there are about a hundred partners currently employed. There are a few hundred more retired partners. Between them, these guys own the firm. When we make a billion and a half dollars in profit, those guys get to share it. The ones who are still employed get most of it, of course, but the retirees still get a cut. If you stay at Weinstein Lukes and make it to partner, you will be very wealthy indeed. Last year, the worst paid partner took home around four and a half million bucks. The highest paid partners - well, they find enough for their heating bills.

  ‘And that’s it. That’s the secret. That’s how come we can work people so hard. That’s how come people put up with the job insecurity, the absence of a social life, the relentless pressure. We stick it, Zack, you and me both stick it because one day we hope to make it to partner.’

  ‘You ever think of quitting?’

  ‘Sure I do. Everyone does. I get called by headhunters maybe six times a year with real offers. Nice ones. Less work, more money. But I’m a senior vice president. Either I make it to partner in the next year or two, or the firm tells me ever so gently that they don’t need me. If I’m not wanted, I can go and work in an easier
firm. Enjoy the money, the respect, see if I can patch together my wreck of a personal life. But if I’m invited to partner, then I’ve got it made, financially at least.’

  ‘And the pressure eases, right?’

  Mazowiecki laughed out loud. ‘No way. The pressure never eases. Listen.’ She snatched a napkin from the tray in front of her and scribbled on it, drawing a rough triangle. ‘This is how the firm works. At the bottom we have analysts. They work eighteen-hour days, six-day weeks, for two, maybe three years. After that, we fire most of them. We keep about one in three. Those who make it go on to the next level, associate. Our associates are the engine room of the firm, the slave drivers for the analysts. After associate comes vice presidents, like you. It’s a big-sounding title, but the firm has over a thousand VPs. The main difference between you guys and the associates is that you actually have to market the firm’s services. You have to be able to meet a chief executive old enough to be your father, and convince that guy that he needs - needs - to hire you for what could be one of the most important events in his company’s life. An awful lot of our associates can’t make the transition and we lose a lot of associates and VPs because of it. But that’s fine.’ Her pen jabbed again at the scrawled triangle on the napkin. ‘We need to lose people to keep our pyramid structure. We need to be thin at the top, fat on the bottom if we’re going to pay our top people as we do.

  ‘As a first-year vice president, Zack, you need to bring in revenues of six million dollars for the firm. Next year, it’ll be eight. The year after that, twelve. If you miss your targets, we’ll hear you out. Sometimes even good deals go wrong. We’ll be sympathetic. But if you get in the habit of missing targets, you’ll soon be looking for a job elsewhere. Remember the pyramid. As a senior vice president, I face the same challenge but my targets are higher. Quite soon I need to be convincing people I’m good enough to make partner, or again, I’ll be out on the street.’