WALL STREET BOSSES DON'T KNOW EVERYTHING

Good article by Michael Lewis (BT 27 Mar)- my summary

Bear Sterns was closely scrutinised as a public corp by shrewd analysts and at least one billionaire investor who has the means and power to know (he was long Bears at US$107 per share).
On Mar 11 an analyst has listed the stock as a "buy" at US$62. On CNBC he advised "Bear Sterns is fine! Do not take your money out of Bear".Over the following weekend when the market was closed JP Morgan was negotiating to buy at US$2 (Now they are talking about US$10).
Not that the bosses didn't care when their firms are about to collapse, they "DIDN'T KNOW". These Wall Street bosses don't fully unerstand what their traders are doing. Here I must say I empathise with them. When I was a corporate treasurer I was shown lots of derivative structures by bankers. When the explanations failed to enlighten me despite several attempts, these fellas would give you that look which tells their patience is being tested; whilst you wonder whether they think you are so dumb.Of course when a CEO demands a clear explanation of what the traders are doing, he will get a full explanation as long as he cares to have it, without any fear of being branded dumb by his subordinates. Or is that really so? Sometimes I wonder about CEO and bosses whether they fear that their subordinates think they are "actually quite blur" if they ask for too much clarification. Hmm...maybe they do. That may explain (from my past experience) why I got fewer questions when the subject got more technical and in depth whilst easier lay-man topics got hell a lot of queries.

Anyway back to Wall Street bosses, apparently Charles Prince is not fully aware of the impact of Citibank's exposure to "liquidity puts" (research yourself if you really want to understand). Apparently Rubin the guy who took over said he never heard of "liquidity puts". Actually come to think of it, those fellas who came and market these products didnt really understand themselves, huh.

Anyway the article concluded that the CEOs are neither lazy or stupid, they are just trapped because if they interfered with the latest thingy dreamed out by the bright young things which are making huge sums of money, they may lose them to other big firms. "He's a hostage of his cleverest employees".

My further comment is - stupid or not the CEOs have made enough for themselves.