I once asked Tom Wolfe how he wrote The Electric Kool-Aid Acid Test, his narrative of life with Ken Kesey and the Merry Pranksters, remarkable for its amazingly realistic use of dialogue. He told me that he took some notes, discreetly, and transcribed them at the end of the day, no matter how tired he might be, because delaying meant forgetting a lot that happened.
It's true. The best reporters tend to take almost exactly the right amount of notes when they're working on a story, and transcribe them later on. Their notebooks are unremarkable but also untidy, as life is untidy, and there is always some material that is not used, and that would make for interesting reading. Thus I give you the leavings from the notebook I used at the recent conference of the National Association of State Treasurers in New Hampshire, withholding only the lists of things to do, various scraps of fiction, and scrawls I just could not make out.
Holders of N.Y.C. bonds, selling opportunity. Financial oblivion. Emperor wears no clothes. One-shots. I'm the only bear? Rockefeller Center puts -- deal of the decade.
This was said by a New York investment banker before a big barbecue one night. The banker, who couldn't believe he was one of the few bears on New York City bonds, said the city was in very bad shape, despite the euphoria of recent days, and that the state was in perhaps even worse shape, with its dependence on one-shot revenue raisers. Nor was the sanguine about MAC bailing the city out. "Who sits on MAC?" he asked. "The governor, the mayor..."
He pointed out that Citibank had been unable, so far, to get the $250 million it asked for one of its buildings in the city, and that the top bid, in fact, was $100 million. "Who's right?" he asked. "The guys with the money, that's who." He noted that the deal with Mitsubishi to buy another 20% of Rockefeller Center, upping its stake to 80%, was "the deal of the decade. It wasn't done because Mitsubishi wanted it, but because Rockefeller Center had a put they exercised on Mitsubishi.
"The city wants to raise taxes still further. They haven't cut the payroll. There are empty stores on every block. And this is cause for optimism? I see this as a tremendous bond-selling opportunity."
Salomon. I've been had.
One well-known investment banker, speaking at the same barbecue, said ruefully of the trading scandal at Salomon Brothers, "I feel like I've been had. Here i"ve been spending the last few years going to Washington to gain credibility for the Street, and this happens. It sets the whole effort back."
Marshall Bennett still gets calls on those 5s of '38.
Marshall Bennett, the state treasurer of Mississippi, chated with a pair of reporters dusty from the trail over a few beers the Sunday night before the conference began. He asked about The Bond Buyer's centennial, and then added, in a historical vein, "I still get calls from investors on those 5% bonds of 1838. I tell them that they're beautiful pieces of work, and to hang 'em on the wall. We're not paying them. I have 500 of them in our vault. In fact, I'm thinking of auctioning them to collectors."
Breslin of Wall Street? Day in the life of someone canned.
Not a bad idea. One New England banker, who likened the "Spectator" to the Jimmy Breslin of Wall Street, said a column with a lot of impact would be one following a banker or trader who's just been laid off. I like this one, and just may tackle it down the road.
An Old Chestnut
Why negotiate deals Aa and up. "There's real value added. We're there for them getting their stories told to the rating agencies." Market timing.
You can imagine my surprise when, in the midst of a swig of lager, a young banker came up and began berating me for my column "Why negotiate Deals Rated Aa and Higher?" She tried her damnedest to convince me that it was a good idea, that bankers brought a lot to the table for their clients. Why shouldn't the bond counsel, or the financial advisers, tell the issuers' stories? I asked her. Why slice the pie further and futher, and keep dishing out fees? She was adamant.
So was I. As for market timing, I recalled the crusty Michigander who looked goggle-eyed at the banker who mentioned market timing as a good excuse to negotiate, and then roared. "That's like saying you can call interest rates! You can, can you?"
When volatility goes up, the opportunity to make lots of money in fixed-income derivatives will compel issuers to make more immediate secondary market disclosure.
This one is surprisingly complete, and needs no translation.
Vermont: The only state not to have a constitutional requirement to balance its budget.
I believe this was said by Gov. Howard Dean of Vermont. I include it here as no more than a curious piece of public finance trivia.
Kids driving moose. Courage to raise taxes.
Gov. Dean again. Here he was praising the quality of life in Vermont, apparently linking that with how he could take his children out on a short drive, and they'd be able to see a moose on the loose, or on the range, or however mooses travel -- on the hoof. He praised his predecessor, the late Gov. Richard Snelling, for his "courage to raise taxes." When you hear this kind of talk, it's always wise to hold on to your wallet.
Wilder. "And when I leave here, that will still be the case."
Gov. Douglas Wilder of Virginia stopped by and gave the treasurers what to all appearances looke like a stump speech on his vision for the federal government. I asked him after he spoke. "Governor, your speech seemed mighty presidential. There is, so far, only one declared Democratic presidential candidate." To which he replied as above.