Ban on Gay Marriage Leads in California

Wall Street Journal
NOVEMBER 5, 2008, 10:28 A.M. ET

California Votes for Prop 8

By TAMARA AUDI, JUSTIN SCHECK and CHRISTOPHER LAWTON

California voters overturned same-sex marriage rights in a vote that stands to affect how the issue plays out elsewhere in the nation.

Ban on Gay Marriage Leads in California

2:00

A ban to overturn gay marriage in California was leading in returns but was too close to call even hours after the polls closed, as were several other ballot initiatives in the state. Stacey Delo reports. (Nov. 4)

Proposition 8, which would establish marriage as a union between a man and a woman, passed with 52.1% of the vote, against 47.9% opposed, with 94.6% of precincts reporting. The approval marks a stunning upset in a $70 million campaign that just weeks ago looked to be running in favor of preserving gay marriage rights.

The passage of Prop 8, as it is known, would be a major victory for religious conservatives seeking to ban gay marriage in other states, and a crippling setback for the gay rights movement nationwide.

"This is a critical vote,'' said Carrie Gordon Earll, spokeswoman for Focus on the Family, a conservative group that supported the proposition.

The proposition seeks to reverse a ruling from the California Supreme Court, which earlier this year declared that banning same-sex marriage was discriminatory. The proposition would change the state constitution to define marriage as only between a man and a woman.

Related

• Massachusetts Votes to Maintain Income Tax

Even amid a heated presidential election, the contest over Prop 8 emerged as one of the dominant political issues in the state this year, and was a big driver of voter turnout. Observers believe the losing side will suffer a serious blow in the national debate over gay-marriage rights. The winning side will have the momentum and also be able to claim a popular mandate as judges and voters across the country are poised to weigh the issue in other states.

Same-sex marriage is legal in Massachusetts and Connecticut. But California's vote on the issue is expected to have a far greater impact on how same-sex marriage will be received elsewhere.

"No one can underestimate the impact of the largest state in the nation treating all of its citizens equally," said Lorri Jean, head of the Los Angeles Gay & Lesbian Center and a leader of the campaign to protect gay marriage rights, speaking before the polls closed. On the other hand, she said, the losing side would be "seriously wounded."

Getty Images

Supporters of Proposition 8, which would outlaw same-sex marriage throughout California, rally during at St. Frances X Cabrini Church on October 24, 2008.

Jeff Flint, the campaign manager for the effort to ban gay marriage, predicted that the result in California would show that both Democrats and Republicans support Prop 8. "I think the message will be very clear in a state that even Barack Obama looks to win by a large margin that the importance of marriage is still very strong,'' he said Tuesday, while voting was still under way.

Prop 8 supporters were relying Republican voters in rural areas, but also urban African-American voters like Christopher Miracle of Oakland, a 19-year student at nearby California State University Hayward. Mr. Miracle voted for Barack Obama, but voted to support Prop 8. "Look at the bible." he said. "It's not a man and a man."

The issue has become a rallying cry nationally for both causes, with tens of millions of dollars pouring into the campaign from outside of California.

The amount of money raised-- $38 million to support gay marriage and more than $32 million to ban it -- has fueled a fierce campaign marked by rallies, boycotts, celebrity endorsements and a constant rotation of television ads on both sides.

Many religious leaders implored their congregants to support Prop 8. Cash has poured in from church members. The global head of the Church of Jesus Christ of Latter-day Saints, or the Mormon Church, issued a letter in June calling on followers to "do all you can" to back the measure, and Mormons have emerged as some of the biggest Prop 8 fundraisers.

Meanwhile, gay rights activists boycotted the businesses of Prop 8 donors, and trumpeted support from celebrities like Brad Pitt and Samuel L. Jackson.

As voters headed to the polls Tuesday, few appeared to be on the fence about how they would vote.

"Marriage is between a man and a woman," said 67-year-old Marie Barbagelata from Linden, a farming town about 100 miles inland from San Francisco. She voted in favor of Proposition 8, but added she's not opposed to same-sex civil unions.

A few miles away in Stockton, 41-year-old David Qualls said he plans to vote against Proposition 8, saying, "It doesn't affect my marriage."

Gay rights activists have cast their campaign to defeat Prop 8 as a civil rights battle, making comparisons to the fight for racial equality. Conservatives have said it is not a matter of equal rights, since gays and lesbians could still have domestic partnerships.

Prop 8 advocates have warned in ads that schools would be required to teach gay marriage to young children -- a position gay marriage advocates have dismissed as a scare tactic.

If Prop 8 passes, as early results seem to augur, it is unclear what would happen to the status of gay marriages performed in California in the last several months. Thousands of same-sex couples rushed to alter this summer to take advantage of the few months leading up to the vote when gay marriage's legal status was not in question.

The state attorney general, Jerry Brown, has said those marriages would remain valid. But gay rights activists said they fear lawsuits could be filed to dissolve them.

Ms. Jean, who married her partner of 17 years in September, when same-sex marriage was legal, said she would remind supporters that all civil rights struggles face setbacks. "We've got to pick ourselves up and go on. We'll be bloodied for sure but unbowed."

Mr. Flint, the manager of the Prop 8 campaign, said that he hoped Tuesday's outcome would end the debate in California with a decisive victory. But if the proposition were to lose narrowly, he said, "We would consider revisiting the issue."

Redistricting Proposition Gains Ground

A ballot proposition to overhaul California's redistricting practices looked likely to win approval from the majority of state voters, with 54.6% of votes cast in favor of the measure, with 12.6 percent of the vote reporting.

Proposition 11, also known as the Voters First Act, was designed to overhaul a California law that lets the state legislature determine the boundaries of political districts. That law has been the subject of increased criticism, as political organizations accuse legislators of mapping districts to their political advantage.

The proposition was opposed by many state legislators and backed by Gov. Schwarzenegger. Under the plan, redistricting will be decided by a 14-member independent committee. The next redistricting will occur in 2011, according to current state laws.

The ballot initiative received particular attention in the wake of a three-month-long battle between California's Democratic-led legislature and Republican Gov. Schwarzenegger over the $104.3 billion state budget. Many blamed the budget gridlock on entrenched incumbents who had little incentive to compromise with one another.

Polls indicated the measure was gaining support amongst voters. According to a poll earlier this month from the Public Policy Institute of California, 41% of Californians favor the proposition, with 34% against and 25% undecided. That compares with 38% in favor and 33% against in September.

Days before the election, supporters had expressed concern that a large number of voters polled were still undecided on the measure, indicating that they had not done a good enough job of explaining the Voters First Act and why it mattered. At the same time, the proposition was overshadowed by more contentious battles such as Proposition 8, which would ban gay marriage.

Voters on the ground also indicated that they didn't know much about Proposition 11 putting it low on their list of voting priorities.

Shannon Miller, a 24 year old assistant front desk manager at a San Francisco hotel, abstained from voting for Proposition 11, because she says she didn't know enough about it to make an educated choice and thought there were other more important issues to vote on.

"Redistricting. We need to do more immediate things," she said.

Separately, California has set many a social trend. Now voters in the Golden State may start setting trends in a new area: animal care. A ballot measure called Proposition 2, which would prohibit ranchers from keeping chickens, veal calves and breeding pigs in pens or cages that are too small for the animal to move, was approved with 60.9% of the vote cast in favor of the measure with 100% of the vote reported.

—Bobby White and the Associated Press contributed to this article

Write to Tamara Audi at tammy.audi@wsj.com, Justin Scheck at justin.scheck@wsj.com and Christopher Lawton at christopher.lawton@wsj.com

Eight Weeks of Financial Turmoil

September 27, 2008

Eight Weeks of Financial Turmoil

Multimedia graphic with sound, photos, and video

Stocks Rally as Americans Vote

New York Times
November 5, 2008

By SHARON OTTERMAN

Wall Street built on recent gains Tuesday as reduced volatility and easing in the credit markets helped give stocks their strongest Election Day rally in 24 years.

The Standard & Poor’s 500-stock index closed above 1,000 for the first time since Oct. 13, gaining 4 percent, and the technology-heavy Nasdaq had its sixth consecutive daily rise. At the close, the Dow Jones industrial average was up 3.2 percent, or 305.45 points, to 9,625.28. The broader S. & P. 500-stock index was up 39.45 points, to 1,005.75, and the Nasdaq was up 3 percent, to 1,780.12.

Crude oil settled at $70.44 a barrel, up $6.53 in New York trading on speculation that the world’s largest oil exporter, Saudi Arabia, had cut supplies to some buyers.

The euro rose about 3 cents Tuesday, to $1.29. The dollar lost ground to the yen, the pound and other currencies as well.

Historically, Wall Street has enjoyed a bounce in the fourth quarter after a presidential election as investors breathe a sigh of relief that the long election cycle, with its accompanying uncertainty, has ended. Some analysts said investors seemed to be trying to get a jump on the expected rally by buying on Election Day.

“We don’t know if it’s the end of the bear market yet, but it looks as though the bear has taken a nap,” said Sam Stovall, chief investment strategist at Standard & Poor’s equity research. “So investors are thinking, let’s enjoy a bit of a relief, both from the market’s lows and from the endless pre-election rhetoric.”

Other analysts said they believed the elections only had a peripheral effect on the market, as there had been no major surprises. More important to the rally, they said, were a continuing round of coordinated interest rate cuts worldwide, the continuing thaw in the credit markets and the increasing resiliency of the markets to the daily drumbeat of bad economic news. The extreme volatility of recent weeks has calmed, though trading volume remained light.

The Chicago Board Options Exchange’s volatility index — or VIX — dipped below 50 for the first time since Oct. 14. Wall Street has rallied 18.3 percent since the close on Oct. 27, including the 10.8 percent gain on Oct. 28.

“Investors are starting to look ahead of some of these numbers to 2009, and they are starting to see a bit of recovery,” said Ryan Larson, head equity trader at Voyageur Asset Management. “Some of the volatility is coming out of the marketplace.”

Underlying the market’s new-found stability, the stock markets showed little reaction as the government reported that new orders for manufactured goods in September dropped $11.2 billion, or 2.5 percent, to $432 billion, a larger-than-expected loss. This followed a 4.3 percent August decrease.

It was the second negative manufacturing report in two days. On Monday, the Institute for Supply Management’s index of manufacturing activity in the United States fell to 38.9 in October, from 43.5 in September, the worst reading since September 1982. The markets also seemed to take that news in stride, spending the day trading in a narrow range before eventually ending the day flat, indicating that much of the bad news had been already priced into stock prices.

The rally that unfolded on Wall Street was broad-based. All industry sectors in the S.& P. index rose, led by telecommunications and energy stocks. Among the 30 blue-chip stocks that make up the Dow, General Electric, Verizon Communications and Caterpillar were among the strongest performers.

The stock exchange first opened for trading on Election Day in 1984. That year, the Dow rose 1.2 percent, a gain not topped since, as Ronald Reagan was re-elected.

Shares in MasterCard, the world’s second-biggest credit card company after Visa, jumped 18 percent after the company said that higher overseas revenue had helped bolster profit.

Still, the company warned that the economic slowdown would affect profit in the near term.

Archer Daniels Midland, the world’s largest grain processor, was up 15 percent as earnings more than doubled on rising commodity prices.

Building on a trend from the last several days, the credit markets eased further on Tuesday, with interbank and corporate borrowing rates declining significantly. The London interbank offered rate, or Libor, a benchmark that banks charge one another, fell to 0.375 percent.

The Treasury’s 10-year bill rose 1- 17/32, to 102- 7/32, and the yield, which moves in the opposite direction from the price, was at 3.72 percent, down from 3.91 percent late Monday.

The rate corporations pay for short-term loans known as commercial paper, a part of the market that had seized up in recent weeks, making it hard for businesses to borrow, dropped to 2.88 percent for three-month loans, down from 3.31 percent on Monday. It was the lowest the rate has been since mid-September.

Last week, the Federal Reserve began lending directly to corporations through commercial paper. Those efforts and many others from central banks around the world appear to be helping restore a degree of normalcy to the debt market after weeks of tumult.

Still, in some important parts of the market, conditions remain far from normal. Yields on mortgage securities, which determine mortgage interest rates, remain at elevated levels though they have fallen somewhat in the last couple of days. Last week, the average interest rate on 30-year fixed-rate mortgages was 6.46 percent, up from 6.04 a week earlier, according to Freddie Mac.

Excluding transportation like aircraft and autos, demand for manufactured goods decreased 3.7 percent in September, the largest decrease since the start of record-keeping in 1992.

Still, the news remained in line with weeks of economic data indicating that the economy took a sharp downturn beginning in the third quarter as ripples from the subprime mortgage crisis began to constrain access to credit severely. Stock markets were also higher in Europe and Asia. The Dow Jones Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 5.5 percent, while the FTSE 100 index in London rose 4.4 percent. The CAC 40 in Paris gained 4.6 percent, and the DAX in Frankfurt was up 5 percent.

In Tokyo, the Nikkei 225 stock average jumped 6.3 percent, as investors returned from a holiday Monday. The Hang Seng index in Hong Kong rose 0.3 percent.

In Sydney, the S.& P./ASX 200 index closed 0.2 percent lower, after the Australian central bank surprised the markets on Tuesday with a larger-than-expected interest rate cut. The bank cut its main interest rate target by three-quarters of a percentage point, to 5.25 percent, rather than by the half-point that had been widely expected.

“International economic data have continued to point to significant weakness in the major industrial economies, and there have been further signs that China and other parts of the developing world are slowing as well,” the Reserve Bank of Australia said in a statement.

Policy makers worldwide are racing to prop up banks, calm volatile stock markets and inject steam into their flagging economies by trying aggressively to reduce the cost of borrowing.

The Federal Reserve Board in Washington last week lowered its benchmark interest rate by half a percentage point, to 1 percent, its second big rate cut this month. The Bank of Japan last week cut its main rate target to 0.3 percent from 0.5 percent. The European Central Bank and the Bank of England are expected to cut rates on Thursday.

Following are the results of yesterday’s Treasury auction of 238-day cash management bills and four-week bills:

David Jolly, Bettina Wassener and Vikas Bajaj contributed reporting.

So long, suckers. Millionaire hedge fund boss thanks 'idiot' traders and retires at 37

So long, suckers. Millionaire hedge fund boss thanks 'idiot' traders and retires at 37

• Andrew Clark in New York
• The Guardian,
• Saturday October 18 2008
• Article history

The boss of a successful US hedge fund has quit the industry with an extraordinary farewell letter dismissing his rivals as over-privileged "idiots" and thanking "stupid" traders for making him rich.

Andrew Lahde's $80m Los Angeles-based firm Lahde Capital Management in Los Angeles made a huge return last year by betting against subprime mortgages.

Yesterday the 37-year-old told his clients that he had hated the business and had only been in it for the money. And after declaring he would no longer manage money for other people, because he had enough of his own, Lahde said that instead he intended to repair his stress-damaged health; he made it clear he would not miss the financial world.

"The low-hanging fruit, ie idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking," he wrote. "These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government," he said.

"All of this behaviour supporting the aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America."

Lahde became one of the biggest names in the investment industry when one of his funds produced a return of 866% last year, largely by forecasting the US home loans industry would collapse.

In his farewell letter, which concluded with an appeal for the legalisation of marijuana, Lahde said he was happy with his rewards and did not envy those who had made even more money.

"I will let others try to amass nine, 10 or 11 figure net worths. Meanwhile, their lives suck," he wrote, citing a life of back-to-back business appointments relieved only by a two-week annual holiday in which financiers are still "glued to their Blackberries".

Lahde's retirement came amid an implosion among the hedge fund industry - some 350 of the funds have liquidated this year, according to Hedge Fund Research.

His final words of advice? "Throw the Blackberry away and enjoy life."

Oil up one day, down the next, up again! Commodies trading riding second wave of Wall Street tsunami

Crude Oil Drops After $25 Gain on Final Day of October Contract
Bloomberg
By Margot Habiby

Sept. 23 (Bloomberg) -- Crude oil for November delivery fell as the dollar rebounded from a one-month low and after the October contract climbed more than $25 a barrel in its final trading day yesterday, a record one-day gain.

Oil rose to its highest since Aug. 21 yesterday as traders scrambled to unwind positions on the October contract, the dollar declined the most against the euro since January 2001 and on speculation a proposed $700 billion U.S. bailout package for the finance industry may bolster the economy and shore up demand.

``The dollar will be the focal variable in the coming days because the Treasury proposition and the bailout plan could have a significant impact on the dollar,'' said Christopher Edmonds, the managing principal of FIG Partners Energy Research & Capital Group in Atlanta.

Crude oil for November delivery fell 74 cents, or 0.7 percent, to $108.63 a barrel at 9:13 a.m. Sydney time on the New York Mercantile Exchange. Yesterday, the contract rose $6.62, or 6.4 percent, to $109.37 a barrel.

Oil has risen 20 percent since Sept. 16 as lawmakers pledged fast consideration of the Treasury's plan to buy devalued mortgage-related securities.

The October contract rose $16.37, or 17 percent, to expire at $120.92 a barrel yesterday on the Nymex. It touched $130 in intraday trading, as traders who sold the October contract last week, when oil dipped close to $90, had to buy the futures back.

Traders `Squeezed'

In a squeeze, a trader has gone short by selling contracts betting that the price will decline. In the last days before the contract expires the trader must buy back the same number of futures or be forced to deliver the underlying oil.

The Commodity Futures Trading Commission is ``closely monitoring'' yesterday's gain in oil prices on Nymex for potential manipulation, the agency's acting chairman said.

``We are working closely with Nymex compliance staff to ensure that no one is taking advantage of the current stresses facing our financial marketplace for their own manipulative gain,'' Acting Chairman Walter Lukken said in a statement.

The dollar was little changed at $1.4793 per euro at 8:35 a.m. Sydney time, from $1.4774 yesterday. It has rebounded since dropping 2.1 percent yesterday to $1.4866, the weakest level since Aug. 22, on concern the U.S. bailout package, which would buy assets from financial firms, would inflate the budget deficit.

``Traders are trying to figure out what this bailout and stimulus package is and what it means,'' Edmonds said. ``To say that it means the consumer is alive and well and energy demand is going to pick up to pre-dip levels is way, way premature. At some point in the not-too-distant future, this package has to be paid for, and the economic repercussions are pretty significant for the taxpayer.''

`Economic Slowdown'

Crude oil prices are ``too high'' because the global economic slowdown may spread and cut consumption, the International Energy Agency's deputy executive director said yesterday.

``The economic slowdown in the U.S., Europe hasn't gotten into China, India much, but at some point you have to presume it will,'' William Ramsay said in an interview in Bangkok yesterday.

The Paris-based IEA, which advises 27 developed nations on energy policy, was set up in 1974 in response to the Arab oil embargo.

Brent crude oil for November settlement rose $6.43, or 6.5 percent, to settle at $106.04 a barrel on London's ICE Futures Europe exchange yesterday.

Gasoline for October delivery fell 0.38 cent to $2.70 a gallon in New York. Yesterday, it increased 10.41 cents, or 4 percent, to settle at $2.7038 a gallon in New York. Regular gasoline, averaged nationwide, declined 1.8 cents to $3.739 a gallon, AAA, the nation's largest motorist organization, said today on its Web site. Pump prices reached a record $4.114 a gallon on July 17.

To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.

The Rage of the Previously Rich

A Lehman trader copes with the sudden onset of income shrinkage.

New York Magazine
By Gabriel Sherman Published Sep 21, 2008

The ’97 Barbaresco was not supposed to be opened for this. Stashed under a desk on the third floor of Lehman Brothers’ Seventh Avenue headquarters, the bottle awaited an appropriate victory. Like food, wine pairs well with vast sums of money.

But on Friday, September 12, as Lehman’s stock flatlined at $3.65 per share, the Trader knew it was time to uncork the Santo Stefano. He was in his late thirties, at the prime of his earning potential, a standout in one of Lehman’s profitable trading divisions. When the stock price had fallen below $20 a share in July, the Trader knew things were bad but took solace in the prospect of one more bonus cycle. Things are bad; things will be bad for a while. We’ll hunker down and survive, he had thought then.

But the fact that the Trader’s desk met its targets in August meant nothing at Lehman, where cascading losses from a few epic bets on commercial real estate triggered a firmwide meltdown. As one recently laid-off Lehman staffer said, in characteristic Wall Street vernacular, “These assholes on another floor completely dropped our pants.”

Around 5:30 p.m. on Friday, as the reality sank in, the Trader assembled his staff. With the weekend looming, this would likely be the last time they would gather at Lehman as a team. The eight colleagues, friends really, stood around glowing Bloomberg terminals as the $700 Barbaresco was poured into paper cups. A crowd formed. Champagne was brought out. What they didn’t know was that upstairs, Lehman lawyers and bankers were negotiating with counterparts at Barclays, Bank of America, and the Fed, piecing together a deal. After a few minutes, the Trader was called over to open the books for the counterparties. He brushed his teeth, scrubbing the scent of wine from his breath. Leaving work at nine that evening, the Trader knew that Lehman Brothers, as he’d known it, was at an end. The culture would change, inevitably. But at that moment, he couldn’t conceive of the firm’s actually going bankrupt.

The Trader had come to Lehman only a year ago, after being recruited from a rival firm. He’d studied physics as a grad student, then come to Wall Street as the tech bubble and the aggressive gentrification of the Giuliani years remade Manhattan into a banker’s playground, a place where a $2 million salary could seem like the norm.

Like many on Wall Street, the Trader’s career was moving along briskly. By 2006, he had settled into a new $2 million house in Connecticut with a pool, and kept a pied-à-terre in Manhattan. With two young children, he had private-school tuition to cover. He had recently completed a home renovation, and now there was talk of a new porch with a built-in stainless-steel barbecue. The Trader estimated that he was two years from making enough money to retire and never have to work again.

But by Saturday, September 13, Lehman Brothers teetered on the precipice of bankruptcy after Barclays and Bank of America walked away from a deal. The Trader was certain of little, except that he was a lot poorer. The unvested stock from his previous year’s bonus, once worth $3 million, was now reduced to a scant $6,000. And on Wall Street, self-worth and net worth can amount to the same thing. “The hardest thing in my mind is to have your compensation cut,” a veteran Wall Street executive says. “It’s almost like you’re a bad person.”

At a dinner party in Darien that evening, the conversation was a mix of denial and panic. An executive from UBS lamented what the Lehman meltdown would mean for Wall Street. “This is going to be a disaster,” the executive said. The executive’s wife nervously tried to steer the topic toward lighter subjects. She kept talking about summer vacation. And then she turned to the Trader and asked, “What do you do?”

The collapse of the world’s most powerful wealth-creating engine required everyone to take stock of their financials. One Lehman executive in Rye Brook, fretting about paying off a Hamptons summer house and a ski chalet in Vermont, panicked on Monday morning and laid off her nanny, who had been with the Westchester family for nine years. “The nanny called me crying,” says Marla Sanders, who runs Advance Nannies and staffs Lehman homes. “One of the children she had brought home from the hospital.” Sanders knows more cuts for her clients are on the way. “They’re going to have to sell homes. The question is, will the homes sell? They’re cutting some of the children’s activities out, dance class, acting class. Are they going to have flowers delivered every day to their homes? I don’t think so!”

Of course, this is one of the meanings of moral hazard, that term that’s been used so much in recent months. At this level, it’s not a tragedy so much as the end of a specific vision of the American good life, one that’s helped to define the city and its suburbs for more than a decade.

Pain was relative. “One of my managers, he’s a guy who is a little bit older,” one low-level Lehman staffer said on September 16. “He has an $800,000 mortgage, a wife who can’t work, and two kids. That gives you a little perspective.”

On Friday, September 12, the Wall Street Journal reported that Lehman’s former president, Joe Gregory, who was demoted along with former CFO Erin Callan in a management shake-up in June, was listing his Bridgehampton house on Surfside Drive for $32.5 million. The collapse of Lehman’s stock is a blow to Gregory’s lifestyle. He reportedly used to travel by helicopter to midtown from his $3.5 million mansion in Huntington, which was recently renovated, according to a Sotheby’s broker. According to one source, Gregory’s financial adviser was in negotiations with Lehman’s attorneys at Simpson Thacher & Bartlett, working to avert his filing for bankruptcy, after he borrowed money against his Lehman stock to pay for the renovation. “He owes a lot of money for it. They called the margin loan” late last week, the source said. (Gregory and attorneys didn’t return calls for comment.)

And some around the city met the crisis with a kind of glee. “What do you think just happened to the lifestyles of all the guys who girls want to meet?” one hedge-fund analyst wondered. “This is the best time ever to maintain ten girlfriends. You could be an African tribal leader!”

“Wall Street is like the auto industry in the seventies, which had a product that exploded on impact.”

In the days after the fall of Lehman, Craigslist attracted several posts from people who said they were Lehman employees, becoming a kind of clearinghouse for the detritus of the Wall Street male ego. On September 17, one banker put his East 91st Street apartment up for rent and with it, his bachelorhood. (“I can no longer afford my apartment seeing as Lehman Brothers felt the need to steal my money and my soul … I am moving in with my girlfriend.”) Another headline read, “Should I leave my fiancé? … I guess I already know the answer. My boyfriend … rather fiancé, is/was employed by Lehman Brothers,” the posting stated. “In less than a week we went from being millionaires to just having a couple of 100K … I suppose this means it’s over. I am who I am. I personally blame all this on [Lehman CEO] Dick Fuld. I blame him for ruining my happiness.”

Riding the Metro-North into Grand Central on Monday morning, September 15, the Trader stood out in his jeans and T-shirt among the rows of suits. A few passengers on the early-morning banker train were similarly dressed, and it was clear to all the commuters to what office guys in jeans, but reading the Journal, were headed.

Like Bear Stearns, Lehman’s culture was built on fierce loyalty to the firm. Senior staffers were granted bonuses that would be paid with 50 percent or more in Lehman stock, which they couldn’t unload for five years. In July, Dick Fuld approved a move to guarantee staffers a part of their bonuses midyear. But the plan backfired when staffers learned that they’d be assured only 20 percent of their previous year’s bonus and would receive restricted stock at $21 per share (“Great, so you basically shorted my own compensation,” one Lehman staffer groused).

At the Seventh Avenue headquarters, the Trader watched it all unfold like a nightmare. Managers instructed the staff not to trade. The company blocked outgoing e-mails with attachments. A colleague frantically called human resources to find out if his wife, who was due to give birth any day now, would be covered by Lehman’s benefits plan. With no instructions from the top, the Trader took his colleagues down to a lunch at Pastis. The next day at around 3:30 in the afternoon, Bart McDade, Lehman’s president and COO, roamed the trading floor with Barclays president Robert Diamond, who traveled from London to inspect his new prize. The men told staffers they had agreed to a deal for Barclays to acquire Lehman. They had set aside a bonus pool for this year, and it would be paid 75 percent in cash.

Even if the Barclays deal would save many jobs, staffers were outraged at Fuld. Since Friday, September 12, Fuld’s domineering presence had all but disappeared from Lehman’s headquarters, and he was assigned a security detail. “They are sneaking him in and out of this place,” a senior Lehman staffer said. “They wouldn’t let him near this deal. It was for his own safety.” Asked what Fuld could do at this point to make it up to his company, the Trader said, “Stand naked in Times Square while I Tase you.”

Lehman staffers in London felt particularly stung. Barclays acquisition includes only Lehman’s New York operations, meaning that the employees at Canary Wharf are going to be jettisoned. On the morning of September 17, one London managing director sent a terse e-mail to Lehman’s president, and cc’d the entire London office. The message—subject line: “To Tom, Michael and Bart: The Email that Never Came”—complained bitterly that New York never expressed gratitude for London’s efforts even while they were thrown under the bus.

Then, just before 10 p.m. on September 16, Fuld finally sent a memo to the staff. “I know that this has been very painful on all of you both personally and financially,” he wrote. “For this, I feel horrible.”

It was the apology the staffers had sought for days.

On September 17, word filtered through the office that Barclays would keep people on for only several months as they figured out whom they wanted to retain. One staffer remarked that he was glad he had decided not to enroll his kid in private school. “It’s sinking in how much money people have and what they can afford going forward,” the Trader said.

On Saturday, September 13, the Trader took his 8-year-old son to his first Yankees game, against Tampa Bay. “My 8-year-old is asking me questions about the economy. And I’m thinking, You should really think about baseball,” the Trader said.

The Trader paid for great seats. They sat fieldside in the languid summer afternoon, six rows from the Yankees dugout. When the Yankees took the field, the Trader’s son erupted in cheers.

“Jeter! Jeter! Jeter!” he yelled, but the players jogged out to the field, with scarcely a glance toward the stands.

“Daddy, why doesn’t he answer?” the son asked.

And suddenly, the Trader boiled with anger. He had done his part, put in the sixteen-hour days to buy his kid the best seats in the stadium. Lehman, and the career he signed up for, was disappearing in front of his eyes. Yet the Yankees were losing, and Derek Jeter was still going to take home his $21 million, and he couldn’t even bother to show some gratitude. It was a fantasy world, out of touch.

“Those guys have the easiest job,” the Trader thought, “when it’s clear they don’t care. Fuck, in my next life I want to be a baseball player.”

Transcript from David Foster Wallace's 2005 commencement speech at Kenyon College

(If anybody feels like perspiring [cough], I'd advise you to go ahead, because I'm sure going to. In fact I'm gonna [mumbles while pulling up his gown and taking out a handkerchief from his pocket].) Greetings ["parents"?] and congratulations to Kenyon's graduating class of 2005. There are these two young fish swimming along and they happen to meet an older fish swimming the other way, who nods at them and says "Morning, boys. How's the water?" And the two young fish swim on for a bit, and then eventually one of them looks over at the other and goes "What the hell is water?"

This is a standard requirement of US commencement speeches, the deployment of didactic little parable-ish stories. The story ["thing"] turns out to be one of the better, less bullshitty conventions of the genre, but if you're worried that I plan to present myself here as the wise, older fish explaining what water is to you younger fish, please don't be. I am not the wise old fish. The point of the fish story is merely that the most obvious, important realities are often the ones that are hardest to see and talk about. Stated as an English sentence, of course, this is just a banal platitude, but the fact is that in the day to day trenches of adult existence, banal platitudes can have a life or death importance, or so I wish to suggest to you on this dry and lovely morning.

Of course the main requirement of speeches like this is that I'm supposed to talk about your liberal arts education's meaning, to try to explain why the degree you are about to receive has actual human value instead of just a material payoff. So let's talk about the single most pervasive cliché in the commencement speech genre, which is that a liberal arts education is not so much about filling you up with knowledge as it is about quote teaching you how to think. If you're like me as a student, you've never liked hearing this, and you tend to feel a bit insulted by the claim that you needed anybody to teach you how to think, since the fact that you even got admitted to a college this good seems like proof that you already know how to think. But I'm going to posit to you that the liberal arts cliché turns out not to be insulting at all, because the really significant education in thinking that we're supposed to get in a place like this isn't really about the capacity to think, but rather about the choice of what to think about. If your total freedom of choice regarding what to think about seems too obvious to waste time discussing, I'd ask you to think about fish and water, and to bracket for just a few minutes your skepticism about the value of the totally obvious.

Here's another didactic little story. There are these two guys sitting together in a bar in the remote Alaskan wilderness. One of the guys is religious, the other is an atheist, and the two are arguing about the existence of God with that special intensity that comes after about the fourth beer. And the atheist says: "Look, it's not like I don't have actual reasons for not believing in God. It's not like I haven't ever experimented with the whole God and prayer thing. Just last month I got caught away from the camp in that terrible blizzard, and I was totally lost and I couldn't see a thing, and it was fifty below, and so I tried it: I fell to my knees in the snow and cried out 'Oh, God, if there is a God, I'm lost in this blizzard, and I'm gonna die if you don't help me.'" And now, in the bar, the religious guy looks at the atheist all puzzled. "Well then you must believe now," he says, "After all, here you are, alive." The atheist just rolls his eyes. "No, man, all that was was a couple Eskimos happened to come wandering by and showed me the way back to camp."

It's easy to run this story through kind of a standard liberal arts analysis: the exact same experience can mean two totally different things to two different people, given those people's two different belief templates and two different ways of constructing meaning from experience. Because we prize tolerance and diversity of belief, nowhere in our liberal arts analysis do we want to claim that one guy's interpretation is true and the other guy's is false or bad. Which is fine, except we also never end up talking about just where these individual templates and beliefs come from. Meaning, where they come from INSIDE the two guys. As if a person's most basic orientation toward the world, and the meaning of his experience were somehow just hard-wired, like height or shoe-size; or automatically absorbed from the culture, like language. As if how we construct meaning were not actually a matter of personal, intentional choice. Plus, there's the whole matter of arrogance. The nonreligious guy is so totally certain in his dismissal of the possibility that the passing Eskimos had anything to do with his prayer for help. True, there are plenty of religious people who seem arrogant and certain of their own interpretations, too. They're probably even more repulsive than atheists, at least to most of us. But religious dogmatists' problem is exactly the same as the story's unbeliever: blind certainty, a close-mindedness that amounts to an imprisonment so total that the prisoner doesn't even know he's locked up.

The point here is that I think this is one part of what teaching me how to think is really supposed to mean. To be just a little less arrogant. To have just a little critical awareness about myself and my certainties. Because a huge percentage of the stuff that I tend to be automatically certain of is, it turns out, totally wrong and deluded. I have learned this the hard way, as I predict you graduates will, too.

Here is just one example of the total wrongness of something I tend to be automatically sure of: everything in my own immediate experience supports my deep belief that I am the absolute center of the universe; the realest, most vivid and important person in existence. We rarely think about this sort of natural, basic self-centeredness because it's so socially repulsive. But it's pretty much the same for all of us. It is our default setting, hard-wired into our boards at birth. Think about it: there is no experience you have had that you are not the absolute center of. The world as you experience it is there in front of YOU or behind YOU, to the left or right of YOU, on YOUR TV or YOUR monitor. And so on. Other people's thoughts and feelings have to be communicated to you somehow, but your own are so immediate, urgent, real.

Please don't worry that I'm getting ready to lecture you about compassion or other-directedness or all the so-called virtues. This is not a matter of virtue. It's a matter of my choosing to do the work of somehow altering or getting free of my natural, hard-wired default setting which is to be deeply and literally self-centered and to see and interpret everything through this lens of self. People who can adjust their natural default setting this way are often described as being "well-adjusted", which I suggest to you is not an accidental term.

Given the triumphant academic setting here, an obvious question is how much of this work of adjusting our default setting involves actual knowledge or intellect. This question gets very tricky. Probably the most dangerous thing about an academic education -- least in my own case -- is that it enables my tendency to over-intellectualize stuff, to get lost in abstract argument inside my head, instead of simply paying attention to what is going on right in front of me, paying attention to what is going on inside me.

As I'm sure you guys know by now, it is extremely difficult to stay alert and attentive, instead of getting hypnotized by the constant monologue inside your own head (may be happening right now). Twenty years after my own graduation, I have come gradually to understand that the liberal arts cliché about teaching you how to think is actually shorthand for a much deeper, more serious idea: learning how to think really means learning how to exercise some control over how and what you think. It means being conscious and aware enough to choose what you pay attention to and to choose how you construct meaning from experience. Because if you cannot exercise this kind of choice in adult life, you will be totally hosed. Think of the old cliché about quote the mind being an excellent servant but a terrible master.

This, like many clichés, so lame and unexciting on the surface, actually expresses a great and terrible truth. It is not the least bit coincidental that adults who commit suicide with firearms almost always shoot themselves in: the head. They shoot the terrible master. And the truth is that most of these suicides are actually dead long before they pull the trigger.

And I submit that this is what the real, no bullshit value of your liberal arts education is supposed to be about: how to keep from going through your comfortable, prosperous, respectable adult life dead, unconscious, a slave to your head and to your natural default setting of being uniquely, completely, imperially alone day in and day out. That may sound like hyperbole, or abstract nonsense. Let's get concrete. The plain fact is that you graduating seniors do not yet have any clue what "day in day out" really means. There happen to be whole, large parts of adult American life that nobody talks about in commencement speeches. One such part involves boredom, routine, and petty frustration. The parents and older folks here will know all too well what I'm talking about.

By way of example, let's say it's an average adult day, and you get up in the morning, go to your challenging, white-collar, college-graduate job, and you work hard for eight or ten hours, and at the end of the day you're tired and somewhat stressed and all you want is to go home and have a good supper and maybe unwind for an hour, and then hit the sack early because, of course, you have to get up the next day and do it all again. But then you remember there's no food at home. You haven't had time to shop this week because of your challenging job, and so now after work you have to get in your car and drive to the supermarket. It's the end of the work day and the traffic is apt to be: very bad. So getting to the store takes way longer than it should, and when you finally get there, the supermarket is very crowded, because of course it's the time of day when all the other people with jobs also try to squeeze in some grocery shopping. And the store is hideously lit and infused with soul-killing muzak or corporate pop and it's pretty much the last place you want to be but you can't just get in and quickly out; you have to wander all over the huge, over-lit store's confusing aisles to find the stuff you want and you have to maneuver your junky cart through all these other tired, hurried people with carts (et cetera, et cetera, cutting stuff out because this is a long ceremony) and eventually you get all your supper supplies, except now it turns out there aren't enough check-out lanes open even though it's the end-of-the-day rush. So the checkout line is incredibly long, which is stupid and infuriating. But you can't take your frustration out on the frantic lady working the register, who is overworked at a job whose daily tedium and meaninglessness surpasses the imagination of any of us here at a prestigious college.

But anyway, you finally get to the checkout line's front, and you pay for your food, and you get told to "Have a nice day" in a voice that is the absolute voice of death. Then you have to take your creepy, flimsy, plastic bags of groceries in your cart with the one crazy wheel that pulls maddeningly to the left, all the way out through the crowded, bumpy, littery parking lot, and then you have to drive all the way home through slow, heavy, SUV-intensive, rush-hour traffic, et cetera et cetera.

Everyone here has done this, of course. But it hasn't yet been part of you graduates' actual life routine, day after week after month after year.

But it will be. And many more dreary, annoying, seemingly meaningless routines besides. But that is not the point. The point is that petty, frustrating crap like this is exactly where the work of choosing is gonna come in. Because the traffic jams and crowded aisles and long checkout lines give me time to think, and if I don't make a conscious decision about how to think and what to pay attention to, I'm gonna be pissed and miserable every time I have to shop. Because my natural default setting is the certainty that situations like this are really all about me. About MY hungriness and MY fatigue and MY desire to just get home, and it's going to seem for all the world like everybody else is just in my way. And who are all these people in my way? And look at how repulsive most of them are, and how stupid and cow-like and dead-eyed and nonhuman they seem in the checkout line, or at how annoying and rude it is that people are talking loudly on cell phones in the middle of the line. And look at how deeply and personally unfair this is.

Or, of course, if I'm in a more socially conscious liberal arts form of my default setting, I can spend time in the end-of-the-day traffic being disgusted about all the huge, stupid, lane-blocking SUV's and Hummers and V-12 pickup trucks, burning their wasteful, selfish, forty-gallon tanks of gas, and I can dwell on the fact that the patriotic or religious bumper-stickers always seem to be on the biggest, most disgustingly selfish vehicles, driven by the ugliest [responding here to loud applause] (this is an example of how NOT to think, though) most disgustingly selfish vehicles, driven by the ugliest, most inconsiderate and aggressive drivers. And I can think about how our children's children will despise us for wasting all the future's fuel, and probably screwing up the climate, and how spoiled and stupid and selfish and disgusting we all are, and how modern consumer society just sucks, and so forth and so on.

You get the idea.

If I choose to think this way in a store and on the freeway, fine. Lots of us do. Except thinking this way tends to be so easy and automatic that it doesn't have to be a choice. It is my natural default setting. It's the automatic way that I experience the boring, frustrating, crowded parts of adult life when I'm operating on the automatic, unconscious belief that I am the center of the world, and that my immediate needs and feelings are what should determine the world's priorities.

The thing is that, of course, there are totally different ways to think about these kinds of situations. In this traffic, all these vehicles stopped and idling in my way, it's not impossible that some of these people in SUV's have been in horrible auto accidents in the past, and now find driving so terrifying that their therapist has all but ordered them to get a huge, heavy SUV so they can feel safe enough to drive. Or that the Hummer that just cut me off is maybe being driven by a father whose little child is hurt or sick in the seat next to him, and he's trying to get this kid to the hospital, and he's in a bigger, more legitimate hurry than I am: it is actually I who am in HIS way.

Or I can choose to force myself to consider the likelihood that everyone else in the supermarket's checkout line is just as bored and frustrated as I am, and that some of these people probably have harder, more tedious and painful lives than I do.

Again, please don't think that I'm giving you moral advice, or that I'm saying you are supposed to think this way, or that anyone expects you to just automatically do it. Because it's hard. It takes will and effort, and if you are like me, some days you won't be able to do it, or you just flat out won't want to.

But most days, if you're aware enough to give yourself a choice, you can choose to look differently at this fat, dead-eyed, over-made-up lady who just screamed at her kid in the checkout line. Maybe she's not usually like this. Maybe she's been up three straight nights holding the hand of a husband who is dying of bone cancer. Or maybe this very lady is the low-wage clerk at the motor vehicle department, who just yesterday helped your spouse resolve a horrific, infuriating, red-tape problem through some small act of bureaucratic kindness. Of course, none of this is likely, but it's also not impossible. It just depends what you what to consider. If you're automatically sure that you know what reality is, and you are operating on your default setting, then you, like me, probably won't consider possibilities that aren't annoying and miserable. But if you really learn how to pay attention, then you will know there are other options. It will actually be within your power to experience a crowded, hot, slow, consumer-hell type situation as not only meaningful, but sacred, on fire with the same force that made the stars: love, fellowship, the mystical oneness of all things deep down.

Not that that mystical stuff is necessarily true. The only thing that's capital-T True is that you get to decide how you're gonna try to see it.

This, I submit, is the freedom of a real education, of learning how to be well-adjusted. You get to consciously decide what has meaning and what doesn't. You get to decide what to worship.

Because here's something else that's weird but true: in the day-to day trenches of adult life, there is actually no such thing as atheism. There is no such thing as not worshipping. Everybody worships. The only choice we get is what to worship. And the compelling reason for maybe choosing some sort of god or spiritual-type thing to worship -- be it JC or Allah, bet it YHWH or the Wiccan Mother Goddess, or the Four Noble Truths, or some inviolable set of ethical principles -- is that pretty much anything else you worship will eat you alive. If you worship money and things, if they are where you tap real meaning in life, then you will never have enough, never feel you have enough. It's the truth. Worship your body and beauty and sexual allure and you will always feel ugly. And when time and age start showing, you will die a million deaths before they finally grieve you. On one level, we all know this stuff already. It's been codified as myths, proverbs, clichés, epigrams, parables; the skeleton of every great story. The whole trick is keeping the truth up front in daily consciousness.

Worship power, you will end up feeling weak and afraid, and you will need ever more power over others to numb you to your own fear. Worship your intellect, being seen as smart, you will end up feeling stupid, a fraud, always on the verge of being found out. But the insidious thing about these forms of worship is not that they're evil or sinful, it's that they're unconscious. They are default settings.

They're the kind of worship you just gradually slip into, day after day, getting more and more selective about what you see and how you measure value without ever being fully aware that that's what you're doing.

And the so-called real world will not discourage you from operating on your default settings, because the so-called real world of men and money and power hums merrily along in a pool of fear and anger and frustration and craving and worship of self. Our own present culture has harnessed these forces in ways that have yielded extraordinary wealth and comfort and personal freedom. The freedom all to be lords of our tiny skull-sized kingdoms, alone at the center of all creation. This kind of freedom has much to recommend it. But of course there are all different kinds of freedom, and the kind that is most precious you will not hear much talk about much in the great outside world of wanting and achieving and [unintelligible -- sounds like "displayal"]. The really important kind of freedom involves attention and awareness and discipline, and being able truly to care about other people and to sacrifice for them over and over in myriad petty, unsexy ways every day.

That is real freedom. That is being educated, and understanding how to think. The alternative is unconsciousness, the default setting, the rat race, the constant gnawing sense of having had, and lost, some infinite thing.

I know that this stuff probably doesn't sound fun and breezy or grandly inspirational the way a commencement speech is supposed to sound. What it is, as far as I can see, is the capital-T Truth, with a whole lot of rhetorical niceties stripped away. You are, of course, free to think of it whatever you wish. But please don't just dismiss it as just some finger-wagging Dr. Laura sermon. None of this stuff is really about morality or religion or dogma or big fancy questions of life after death.

The capital-T Truth is about life BEFORE death.

It is about the real value of a real education, which has almost nothing to do with knowledge, and everything to do with simple awareness; awareness of what is so real and essential, so hidden in plain sight all around us, all the time, that we have to keep reminding ourselves over and over:

"This is water."

"This is water."

It is unimaginably hard to do this, to stay conscious and alive in the adult world day in and day out. Which means yet another grand cliché turns out to be true: your education really IS the job of a lifetime. And it commences: now.

I wish you way more than luck.