Friday, July 24, 2009
Media / News Bites Playing bridge to nowhere
Posted by Michael Miner on 07.24.09 at 01:49 PM
As surely as the byline "O. Henry" one-hundred-and-some years ago guaranteed a short story with a twist at the end, the byline "Malcolm Gladwell" today promises a Different Way of Looking at Things. Gladwell's latest effort is the New Yorker piece "Cocksure," which wonders if "the roots of Wall Street's crisis were not structural or cognitive so much as they were psychological."
Gladwell compares the crisis to the oft-compared-to invasion of Gallipoli in 1915, which turned into a disaster, Gladwell notes, because in both the planning and the execution the British did everything wrong. Why? "A failure to adapt -- " says Gladwell, "a failure to take into account how reality did not conform to their expectations."
Gladwell's focus in the present financial debacle is Jimmy Cayne, pugnacious chairman and CEO of Bear Stearns, the investment bank that colllapsed in 2008. What happened, according to Gladwell's account, is that J.P. Morgan and the Fed extended Bear Stearns a multibillion-dollar line of credit, which convinced Wall Street that the bank must be in far worse shape than it actually was, and that's why clients and lenders alike bailed out and Bears Stearn sank like a stone.
Cayne's problem, according to Gladwell, was that he "wasn't overconfident enough." If Gladwell's article scanned I could explain what he means by that, but it doesn't so I can't. But he observes:
"Winners know how to bluff. And who bluffs the best? The person who, instead of pretending to be stronger than he is, actually believes himself to be stronger than he is."
We read Gladwell for insights such as this one. But it sheds no light on either Gallipoli or Bear Stearns. The British, according to Gladwell's account, truly and deeply believed in their superiority over the Turks. By the same account, Cayne had an unshakable "belief in his own infallibility."
Cayne considered himself (and is) a terrific bridge player. Gladwell makes a lot of this. He points out that as the bank was collapsing, Cayne last July was playing in a bridge tournament in Nashville. "It makes sense that there should be an affinity between bridge and the business of Wall Street," Gladwell writes. "Winning [in bridge] requires knowledge of the cards, an accurate sense of probabilities, steely nerves, and the ability to assess an opponent's psychology. Bridge is Wall Street in miniature..." He goes on, "Cayne must have come back from the Spingold bridge tournament fortified in his belief in his own infallibility."
Gladwell's description of bridge sounds, to me, more like poker. In bridge your opponents include other teams playing the same hands at other tables. And bridge teaches that optimism and pessimism aren't simply personality traits — they are logical tools. There are bids that seem sure to fail but can be made if the bidder assumes an unlikely distribution of cards and plays accordingly. There are other bids that seem sure to succeed but will fail unless the bidder fears the worst and takes precautions.
In short, bridge is a game that helps a mind become more subtle and discriminating, not more delusional. Cayne didn't even win the tournament.
Comments (2)
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Gladwell is a lightweight, particularly compared to some of the other New Yorker writers. He comes up with a thesis he likes, then spends a ton of words on anecdotal tidbits and asides to distract the reader from the fact that his thesis doesn't actually, in the end, have any real evidence behind it.
But he makes for an compelling press photo, and is clearly skilled at self-promotion.
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I'm going to use this forum to point out another "I get paid for writing my prejudices and crotchets" think piece from John McCarron.
He tells us today that he's opposed to high speed rail because what we really need is a train that can get him from his house to US Cellular in under 80 minutes.
Never mind that the el stop he cites is a couple blocks from the Metra station, and that taking it, he COULD get there in less than 80 minutes. Likewise, many evenings, the Purple Line to Red could do it for him. But never mind that. Even if that weren't true, why would we want to spend to create a system that got people from the far, far north to the south side rapidly - there just aren't that many people making that trip, and those who do it consistently would be better served by moving.
How often does McCarron even go to Sox games? And how can the Trib afford to keep paying him. His departure would be one of the great pleasures of the bankruptcy.
