The Derivative Wrangler
This took place at a major Western financial house, circa 2007, in the capital of a certain key Eastern European country that eats Western sanctions for breakfast. The office where Tom Lavrakas happened to be spreading his talents happened to be something of a snake pit.
His boss, by the name of Alex, was a tough bantam – and wise. Still is. At the bank, managers were extraordinarily busy every second of the day, but that day Alex had received a pressing job from his chief, a dorsal-finned sort of guy. Uncharacteristically, Alex was stressed.
The math boffins had created a new derivative – a financial instrument so complex they couldn’t really explain it. Alex, truth be told, couldn’t really understand it. He was a numbers guy, but this was beyond his ken. He passed it to Dr. Peter Westin, a PhD in Economics, but he couldn’t explain it, either. What to do, they pondered? Give it to Tom Lavrakas. He can write things.
Now, Tom didn’t have an MBA – that was half the office – or a CFA – that was Alex – or a PhD – that was Peter. All Tom had was withering perception, logic, and the great blue calm of the Mediterranean Sea. Still does, I can tell you.
Why me?, he thought. We suppose they were thinking: Why not him? This new derivative product will either drown us or crown us. And Tom? He'll either sink or swim.
Tom read the raw material from Alex. It included two-thirds of a page he'd written, the opaque musings of the derivative's creators, and a couple of online articles discussing the specific species of derivative. Hmm.
As they say, it was better than nothing, but as it was, it wasn't good enough to yield anything great.
There was other work to do, so Tom did it. When he next had free time, after 45 minutes of not thinking about the problem, he said to himself: endaxi. That’s Greek, means ‘OK’ or ‘cool it’. His grandfather, you see, had taught him a few things.
Typing was begun and a couple of pages produced. Tom gave it to Dr. Peter, and he said, "This is great!"
A jot of emotion from a Swede, Tom thought. A quantum of solace. "But is it correct?" Tom asked. After all, logical and reasonable does not necessarily mean correctamundo.
Tom showed it to Alex, who grudgingly accepted that it was right and it was good. Alex knew it was good to be the king; hated not being the king.
Alex’s boss read the note at a special press conference. The global chief, the big shining gemstone of the outfit, watched via video link from London. It was a big deal for the firm, which generally thought of itself that way.
Tom followed on some newswire or another, and the comment from the bigwigs was, verbatim, this: “This is the most cogent explanation of a complex financial instrument we’ve ever heard.”
Alex and Peter returned from the press conference, Masters of the Universe trailing star dust; the department was sheathed in gauzy glory for the rest of the day. Alex’s boss was the hero, so Alex was the hero.
“Aww, man... I got credit for all your good work,” he said.
“I endeavor to give satisfaction," Tom replied, quoting Jeeves.
“Huh?” Alex knew all about it, but literature wasn’t on his mind just then.
“Eminence gris – that's me,” said Tom.
Alex, an Anglophile, was no Francophone. We think he got Tom's point, though.
”As long as I see the reward at bonus time, I’m happy,” Tom said – or thought.
“You will,” Alex said – or thought.
When bonus time came around... there were no bonuses to be had, because there was a global financial crisis going around, but that's the story of a different kind of derivative, isn't it?