The Giddy Age of Ambivalence

New York was weird, even surreal on March 20, as it turned from winter to spring right in the middle

New York was weird, even surreal on March 20, as it turned from winter to spring right in the middle of the morning. It was warm, it was cold; it was sunny, it was cloudy; it was calm, it was windy. Uptown, online brokers opened up their offices on Park Avenue; downtown, former Internet analysts unlocked their art studios. And for a younger generation yet to witness a bear market, the party went on.

They waited. Would Alan Greenspan feed the beast? He did. But still the beast growled back. His .50-basis-point decrease was not what those expecting .75 and even 1.00 were expecting. Slowly, the realization was sinking in even among the gullible: There is only so much that Alan Greenspan can do. For the damsels on the railroad tracks, he’s no longer Dudley Do-Right; he is just another seventysomething Washington-based technocrat with no more of an answer to what ails us than all those other guys.

Just over a year ago, it was inflation he feared, and he raised rates. Now it’s a recession and a disintegrating Nasdaq, and he pushes down rates. But it is not just Mr. Greenspan who seems more and more like the Wizard of Oz after Toto pulled back the curtain.

And still the party went on.

How can an up-turn and a down-turn take place at the same time?

Well, let’s drop in at 300 Park Avenue last Tuesday morning, March 13, as CSFB- direct, Credit Suisse First Boston’s online investing arm, was having its grand opening. The midtown Park Avenue office space is prime: TV screens hung like expensive art on the freshly painted sky-blue walls, breakfast was being catered by men in white coats, and a small platoon of dark-suited bankers and publicists swarmed around, trying to seem busy. Sleek, toy-like terminals in discreet cubicles stood ready for the first click. This is it: online investing for the Upper East Side, brought to you by CSFB, the tech investment bank.

So up to the balloon-bedecked podium stepped CSFB’s ebullient, Bruce Springsteen-loving, ever-bullish strategist, Tom Galvin. “I think we are in the ballpark for a nice rally,” he intoned to a thin crowd of about four wire-service reporters and four times as many CSFB employees. “There is light at the end of the tunnel. My target for the Nasdaq is 3,000 by the year end.”

There was not a lot of pep to Mr. Galvin’s presentation. His voice was scratchy, his face pale. Maybe it was that page-one Wall Street Journal story the week before that had poked considerable fun at his relentless optimism and missed forecasts in the face of so much blood-letting. Or maybe it was just the prospect of another Nasdaq ass-kicking that seemed to flatten his voice and dull his vigor. It sure looked as if he wished he were somewhere else.

Who really could blame him? As far as grand openings go, this was a weird one. Morgan Stanley, Goldman Sachs, Bear Stearns–one by one, the major investment banks had announced cost-cutting and retrenchment measures. The Nasdaq was in free fall, down 65 percent from its year-ago high; investors were avoiding tech like the squeamish with old Kleenex, and when was the last time you heard someone– anyone –talk about investing online? For a Park Avenue breakfast, the time just did not seem propitious.

And indeed, it was not. Two days later, the news came over the wires: CSFB-direct had to cut 150 jobs–10 percent of its U.S. work force–and closed a New Jersey-based call center. There was a lot of screaming about the Great Crash of 2001–if it is indeed that.

And CSFB still seemed to be trying to figure it out–expand? cut back? online? off- line?–and so did the rest of New York. Yes, personal portfolios, I.R.A.’s and 401K’s were getting whacked; some–even beyond dot-com land–were being sent out to the sidewalk; yes, that first hint of fear, bile-like, had crept into our throats.

But denial is powerful stuff. Could it really be over, this Technicolor dream of riches, greed and virility? It had made us feel so strong, vital, alive. New eras, new economies, new horizons, new paradigms. We had been reborn and revitalized.

“Tech was indeed wonderful,” says notable curmudgeon Jim Grant, editor of Grant’s Interest Rate Observer . “People felt rich. But it is important to remember: Technology was no more invented in the 90’s than sex was in the 60’s. We have been in a tech upswing for more than a century.”

Investment banks, bloated from a decade of fat, easy profits, seemed still to be in a state of half-denial: The river of fees from I.P.O.’s and mergers and acquisitions had become a trickle, and now they had to decide what to do with their thousands of bankers raking in top-of-the-market salaries.

The money flowed, and just about everyone got their share. All you needed was a good sense of timing and some honed marketing skills. Then fame (through CNBC) and fortune would be yours. The stories of Merrill Lynch’s Henry Blodget and Morgan Stanley’s Mary Meeker became little myths; by aggressively pushing Amazon, AOL and Yahoo, they came out of nowhere to become mini-celebrities.

But there were others too that were caught up–and spit out–in the swirl of Wall Street’s star-making machine.

Scott Ehrens was a comparative-literature major at Princeton. Then he was an artist with his own studio in Chelsea. But in the 10 intervening years, he achieved his own very small measure of fame and wealth as an Internet analyst.

In the early 1990’s, he had no real aim of becoming a Wall Street analyst. Directing music videos was his thing. But a junior-level job at Goldman Sachs soon led him to a job as the Internet analyst for Oppenheimer & Co. Before he knew it, he had been poached by Bear Stearns.

“When I first started out as an Internet analyst,” he said, “I remember asking someone: ‘So what is an Internet analyst? I mean, there is no way this job will be around four years from now,'” he said, before sipping a Diet Coke in a diner next to his art studio. Thirty-two years old and slightly built, Mr. Ehrens’ sentences rushed forth with the zip and verve of the Wall Street persuader that he once was. “I never expected to work on Wall Street,” he said, “but it was certainly my pleasure to do so. They were heady times; I mean, you really felt that these companies were going to change the world.”

While at Bear Stearns from 1997 to early 2000, Mr. Ehrens was a regular on CNBC, touting Yahoo and Amazon, among others. He commanded a yearly salary of over $4 million. This made him one of the more highly paid research analysts at Bear Stearns.

In the early spring of 2000, the inevitable call came from a San Francisco tech-banking start-up called Epoch Partners: Come join us and get really rich. Off he went. “I had dreams of great riches through stock and cash,” Mr. Ehrens said ruefully. The day he agreed to join, though, in early April of 2000, was the first day of the Nasdaq’s fall from grace. Eight months later, as the prospects for Epoch’s business plan no longer seemed plausible, Mr. Ehrens quit. Now he’s an artist, albeit one with a renovated apartment in Chelsea and a BMW convertible.

“In retrospect, it was a really bad trade,” Mr. Ehrens said with a smile and shake of his head. But he remains philosophical. “Hey, I knew I was born on third base. And I know I didn’t hit a triple to get there. After Epoch, the job I had before [as an Internet analyst] didn’t exist anymore. It was a good time to sit on the sideline.”

But here’s the thing: You don’t have to feel sorry for Mr. Ehrens. He socked away his earnings, all of which were invested in tax-free bonds. He may not have planned it this way, but for an exit strategy, it’s not half bad: from music videos to CNBC fame to retirement–for now–at age 32. One can’t help but smile at the weirdness of it all. This may be a recession, but it’s a smiling recession.

And speaking of the smiling recession, let’s visit George W. Bush. After the Dow’s 4 percent drop last week, Mr. Bush did something surprising. Instead of doing the Presidential cheerleading thing (see: Reagan, Clinton, etc.), he gave voice, like one of us, to our growing sense of confusion and dislocation. Just your average George. “I’m concerned that a lot of Americans’ portfolios have been affected,” he said last week in New Jersey. “People that put aside money in the stock market are now seeing their asset base decline. But I’ve got great faith in our economy.”

He furrowed his brow.

Since before the election, he and his troupe of dark princes had talked of a swirling, sputtering, flagging economy in dire need of his tax-cut elixir: Sorry about your portfolios, but don’t give up the faith. Now he is becoming more of an ambivalent figure for an ambivalent moment. Ambivalence, as in moving in two directions–up and down, east and west. The more mixed the message gets, the more it seems to capture the disjointed mood. The markets have cratered, yet we are not yet poor. We are scared, yet jobs are still to be found and people want to … buy lots of things.

This could well have been Mr. Bush’s Herbert Hoover moment. After all, President Hoover was inaugurated in March 1929, and only seven months later– whap! Hoover’s reaction was to talk it up, go on about the resilience of the American economy, play the Wall Street booster–defiantly–and go down with the ship.

But President Bush didn’t. Instead, he exshpressed his concerrrn . About diminished assets, ravaged portfolios–and the best of the American spirit. Standing there in his crisp white shirt, visiting the New Jersey Republicans–his brow furrowed, full of cautious, concerned confidence–Mr. Bush looked like a member of that breed made extinct in the online era: your friendly stockbroker. Remember him? And he seemed to be saying what the strategists don’t: Some things just cannot be explained.

That very night, at Irving Plaza, the Robin Hood Foundation–Wall Street’s favorite charity–had a benefit for its younger generation of supporters. The crowd was a strange mix: Gwyneth Paltrow, Conan O’Brien, Jerry Levin, Rupert and Lachlan Murdoch, Chris Rock, Henry Kravis and the bouncing, sweaty, half-naked Red Hot Chili Peppers were there. So were Travis Knight and Felton Spencer–the tail end of the New York Knicks bench.

It was an excellent cause, and New York’s finest young things reveled in the good–tickets were $250 per head–that they were doing to alleviate poverty in New York. Were they worried? Just a little bit?

“I’ve never been happier,” screamed Mattie Caldwell, 33, an independent television correspondent, above the screech and throb of the Chili Peppers. “I liked Intel when it was high, and I like it now that is low and am buying more of it. These things are cyclical. If you hang on long enough, the good times will return.”

Meanwhile, in the V.I.P. section, Mr. Knight of the Knicks, 26 years old, was shaking his seven-foot, lily-white, somewhat spindly behind to the music and chugging a beer while casually dressed, late-middle-aged guys Gerry Levin and Rupert Murdoch listened with more restraint.

“Man, I love the Peppers,” said Mr. Knight. So what about the market, Mr. Knight–any worries?

“Nah,” he said, “I’m not stressed, although I know a lot of guys that are–like my broker, for one!” He gave a little bit of a hoot. “Right now, I’m looking to go international or mid-cap, though the mid-caps are getting hit now.” Mr. Knight seemed decidedly carefree. So what if he logs only a minute or two–on a good night–of playing time for the Knicks these days? He was in the N.B.A., in the fourth year of a seven-year, $22 million contract–proof positive that Internet analysts were not the only souls to hit the jackpot during the boom.

Mr. Knight saw the recent correction as a good buying opportunity. “I don’t know what the forces in the market are right now, but I do know it’s going to go up sometime,” he said.

This happened in the 1920’s, as you know–only instead of New York society girls and N.B.A. bench-warmers talking the talk of retail brokers, they were chorus girls and baseball players. But this was different: their portfolios may be down, but not their belief that this market had done something special for them. It has given them a greater sense of worth. So why should they give it up? It had become part of who they are.

And who was to say that buying Intel or mid-caps right now was the wrong move? After all, buying the dips has made true believers rich over the past decade. No irony was needed: just faith, an all-encompassing faith born in personal-finance glossies, colorful TV ads for online brokers, and the rooting and hyping from the chortling bench-coaches on CNBC.

Still, trillions of dollars have disappeared. What was to be said about this gush of new money spewed forth from a new economy, and the new attitudes left in its wake?

Louis Auchincloss, the retired Wall Street lawyer and author of over 50 works of fiction, has been an arch observer of the New York social and financial scene for over 50 years. He has shown, in The Rector of Justin , The Embezzler and Diary of a Yuppie , how amusing the thirst for money and status can be. He remembered a recent lunch party he attended in the Hamptons.

“There was a smart, middle-aged movie producer, just made of money, and his third or fourth wife,” he said. “They could have come right out of a Tom Wolfe novel.” Mr. Auchincloss, still spry, was sitting in the living room of his prewar Park Avenue apartment. “I mean, she was the lemon tart. She used the word ‘fucking’ attached to every single noun. At the table she said, ‘Pass me the fucking salt.’ The table started to laugh, but she didn’t get it at all. Thirty years ago, no one would have dared to bring her to lunch–but they are there.”

Perhaps some of them still are, but others have disappeared from the scene. Candice Carpenter of iVillage, Priceline’s Jay Walker, now Yahoo’s Tim Koogle–gate-crashers all–have become persona non grata . There was a cartoon quality both to them and the funny money that was so briefly theirs. They came out of nowhere and that is where they have returned. But we are still in our moment; Fitzgerald wrote The Great Gatsby well before the game was up, but he was able to see it all. We’re not sure if the game is up now: There is pain out there, but we don’t really seem to be feeling it much. That may be because nobody drinks gin anymore, and hangovers hurt less. Or it may be because the game isn’t yet done. “The stock market is causing worries,” said Mr. Bush in his radio address last week. But there was a smile in his voice. It’s the happiest crash ever.

The Giddy Age of Ambivalence