A Review of Diary of a Very Bad Year Confessions of an Anonymous Hedge Fund Manager

Keith Gessen’s preface to this book acknowledges a problem: that, while providing a clearly expressed overview of the financial crisis from a knowledgeable participant who seems to share some cultural characteristics with the interviewer and broader audience at n+1 (humanities major, thoughtful and analytic, likely Harvard graduate, doesn’t own a tv, etc.) and who also is as neoliberal as they come, the Anonymous Hedge Fund Manager is not pressed hard enough on his answers. I would have loved to have read Doug Henwood interviewing AHFM, for example (or Benjamin Kunkel from the n+1 editorial staff).

AHFM resents taxes and is suspicious of the government creating new entitlements (and of Keynesian economics—he doesn’t seem to think that the events he’s discussing undermine the monetarist doctrine in any way, which would put him to the right of Greenspan). He was not an Obama supporter, which surprised me somewhat, as I would imagine that his wing of the business party would generally prove more pleasing and pliant to the hedge-fund managing classes. (The alternative, that he supported another Democrat’s presidential bid, doesn’t seem that likely from other remarks, but I could be wrong about this.) I wonder what Walter Benn Michaels would make of the footnoted remark about Harvard students having to go without a hot breakfast due to endowment losses, when a good portion of them are rich enough for their personal chefs to have personal chefs.

AHFM believes that the SEC’s focused too much on insider trading, which he seems to imply is a relatively innocuous thing (108-09). He would instead more carefully regulate information-sharing between the investment and trading branches of large banks and by predatory marketing of interest-rate-swaps and other derivatives to foreign companies and municipalities unsophisticated enough to understand them. (I remember seeing a Sixty Minutes show about some town going broke this way in the mid-90s.) I’ve always thought there was something gleefully utopian about derivatives, particularly as they become so complex that no one seems to understand their consequences. An economy where attempts at risk management scoff at the pride of their devisers and periodically destroy everything is somewhat aesthetically appealing, but for the unfortunate fact that those traders will remain almost always immune from the disasters they’ve caused. AHFM seems to hedge on this a bit, worrying at some points about what he interestingly calls the criminalization of failure and also wondering why there don’t seem to be any consequences in the financial world for colossal, epoch-shattering failures. (Prison’s clearly not an option, but some type of disgrace seems to be.)

He worries in one interesting segment, after being modestly reminded that capitalism hasn’t existed for ten thousand years, about the effects of demographics in advanced industrial societies on the universal desire for consumption, an “axiom of economics.” This reminded me somewhat of one of Chomsky’s remarks on a standard economics textbook, which suggested that the ideal ordering of society for economic actors is for everyone else to be their slave. AHFM seems committed to an equally pathological version of homo economicus, while at the same time, by the book’s end, appearing to want to retreat from it and take up the contemplative life in Austin.