KEY POINTS:
If there is one thing the financial crisis has taught me it is that I need to be gloomier. That might sound counterintuitive, but I want to be like Meredith Whitney, the goth of the business world. She is the little-known analyst with Oppenheimer & Co who on
October 31 last year made the audacious prediction that Citigroup would be forced to cut its dividend to plug up its leaky balance sheet.
That was when everyone else thought things were tickety-boo. Now she is the rock star of Wall Street.
"By the end of the trading day, a woman whom basically no one had ever heard of had shaved $369 billion off the value of financial firms in the market. Four days later, Citigroup's CEO Chuck Prince resigned. In January Citigroup slashed its dividend," writes Michael Lewis, former Wall Street banker and author of an expose of Salomon Brothers, Liar's Poker.
"This woman wasn't saying that Wall Street bankers were corrupt. She was saying they were stupid."
That's power. Whitney went on to forecast losses and writedowns at Bank of America, Lehman Brothers and UBS, as well as picking how the implosion of the bond insurers would threaten banks' bottom lines. Yep, right again.
"Sometimes she seems steps ahead of management," wrote Fortune magazine in August. "On a Merrill Lynch conference call in mid-July, she asked CEO John Thain why the company wasn't unloading damaged assets and boosting capital. Thain demurred, but less than two weeks later, Merrill did just that."
Last year Whitney was listed as the second best investor by Forbes as well as being named one of the 50 Most Powerful Women in NYC by the New York Post. She is married to professional wrestler John Bradshaw Layfield, who has a ring persona based on JR Ewing from Dallas.
Not sure about her taste in men, but when it comes to work Meredith Whitney puts us journalists all to shame. Why did we not see how completely buggered the entire financial sector was?
The secret to Meredith Whitney's success lies partly in the unrelenting grimness of her world view. She is closer to the excellent kind of journalist, described by biographer John Stewart Collis, who finds "almost everything you are told, almost everything which people take for granted, turns out to be the exact opposite of the truth".
There were not many journalists who evinced that level of skepticism. I certainly didn't. In 2002 I wrote about related party transactions at finance companies. But all I could do was bemoan that I couldn't understand such complex financial products.
I was fobbed off because I assumed the people who were flogging them were cleverer than I was. If I had adopted a more misanthropic view of human nature I would have realised most people are actually quite thick and greedy. See how gloominess pays off?
In March this year I wrote how in New Zealand we are a bunch of financial yokels who don't have the nous to sort out the original idea from smoke and mirrors. We thought if we didn't understand something it must be smart. But it wasn't us, it was them. Meredith Whitney figured that out. If only we had.
deborah@coneandco.com
