Tuesday, October 7, 2008

Wall Street is a Living Museum

Wall Street is a metaphor for a historical past. It doesn’t exist anymore; indeed, it barely existed prior to the recent financial meltdown.

Most of the major investment banking firms left lower Manhattan decades ago. 9/11 drove others away. Goldman Sachs and the recently expired Bear Stearns and Lehman Brothers were in midtown.

Merrill Lynch, Pierce, Fenner & Smith was once the brokerage firm for the little investor. That role is now served by Charles Schwab in San Francisco - Montgomery Street not Wall Street.

Goldman Sachs and GE have turned to the sage of Omaha, Warren Buffet, for financing in these perilous times while Morgan Stanley beseeched a Japanese Bank.

Municipal bonds are dominated by PIMCO in Newport Beach, California. Fidelity, the mutual fund kingpin, is in Boston.

Two of the three remaining large banks in America are based in San Francisco and Charlotte.

Hedge funds are based everywhere today, but many are soon to be nowhere.

The legendary giants of investment banking have no modern equivalents with the exception of Feliz Rohaytn at Lazard Freres, but his prime was decades ago. J. P. Morgan, Jay Cooke, Charles Merrill, Jacob Schiff, Andre Meyer, Robert Lehman and Stanley Weinberg are historical figures. Michael Milken was a financial genius, bankrolling the telecom revolution, the cable industry, and Vegas, but the King of Junk Bonds pled guilty to 6 felonies in 1989.

The Wall Street Bull is but a historical sculpture since Merrill Lynch suddenly turned bearish and sold out to the Bank of America, a Charlotte, North Carolina bank.

The Exchange’s trading floor could just as easily be in Peoria or Omaha or anywhere on the internet. Most trading is computerized. Indeed, the New York Stock Exchange merged last year with Euronext, the European concern that owned the Paris, Brussels, and Amsterdam exchanges. The key to the merger is that Euronext is an EFT only exchange. The result is that the NYSE is moving away from the floor trader for its transactions. He too will be an historical anachronism.

Wall Street is the exemplar of Joseph Schumpeter’s theory of the creative destruction of capitalism. Old ways of doing business are replaced by new.

Wall Street has a Tiffany and BMW dealership where investment bankers once transacted business.

23 Wall Street, the fabled House of Morgan directly across from the Exchange, will become a store anchored to a condo development, if financing can be procured. 37 Wall Street, the home of Trust Company of America, is now apartments with small studios going for $2,000 per month. 55 Wall Street, the old Merchants Exchange, is a hotel, and 63 Wall Street, Brown Brothers Harriman’s former haunt, is now residential. 16 Wall Street is a health club. AIG moved its headquarters to near Wall Street, but AIG itself may soon be history.

The major firms have all merged, dissolved, or been acquired by German, Swiss, and Japanese banks. Only Goldman Sachs and Morgan Stanley remain, and that may be temporal.

We have great living museums in this country: Colonial Williamsburg, The Henry Ford & Greenfield Village, Old Sturbridge Village, Plimoth Plantation, LBJ’s ranch on the Pedernales, the Polynesian Cultural Center, and now Wall Street. We still have a few small orange groves here in Orange County. We put up a plaque and call them a museum.

Why not add the New York Stock Exchange, still on Wall Street, to the list. It’s a real time, living museum – more exciting than any Hollywood reality show. Have actors pretend to be floor traders. Have Disney design an audio-animatronic J.P Morgan, explaining the cost of his yacht. Bring back the ticker tape.

Exhibits shall include:

A tombstone notice

A debenture

A prospectus

A proxy statement

A tender offer

One classic share of Playboy stock with its centerfold artwork

A classic share of an old blue chip stock with its seminude Greek or Roman Goddess

Copies of historic financial publications

Business Week

Financial Times



Wall Street Journal

Bawl Street Journal

Extant stock pages, such as the Los Angeles Times

A separate room will highlight traditional examples of securities fraud. A focus could be on the well-publicized activities of Joe Kennedy prior to the Great Crash.

Yet another room would be on the Roaring Twenties, followed by Black Thursday, Black Monday, and Black Tuesday. A picture of a broker jumping off a building would be a wonderful addition, even if is an urban myth.

The legal room will include

The Delaware Corporate Code

The Securities Exchange Act of 1933

The Securities Exchange Act of 1934

The Williams Act



Texas Gulf Sulphur & insider trading

Somewhere in this exhibit should be a description of the exploits of Tommy “the Cork” Corcoran.

All legal documents shall be accompanied by The Idiot’s Guide to that document

The final hall will commemorate the end of Wall Street, including samples of:

Adjustable rate mortgages (ARM)

Sub-prime mortgages

Collateralized debt obligations

Credit default swaps

Mark to mark regulations

Lehman Brother’s last Annual Report and Form 10K

The final exhibit on the exit from the museum will be a copy of Lehman Bothers bankruptcy petition, which signifies both the largest bankruptcy in American history, and the formal demise of Wall Street.

Let the NYSE join the Lower East Side Tenement Museum and the South Street Seaport as the major museum representative of Manhattan’s past at the foot of the island.

New York needs Wall Street, but Wall Street doesn’t need New York.

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