Debt of Honor - Tom Clancy [185]
When brokers returned to their desks from lunch, what had been a fairly calm Friday was something else entirely. Every office had a news board that gave shorthand announcements of national and international events, because such things had effects on the market. The notification that the Fed had jacked up its benchmark rate by a full point shocked most trading rooms to a full fifteen or thirty seconds of silence, punctuated by not a few Holy shits.
Technical traders modeling on their computer terminals saw that the market was already reacting. A rise in the discount rate was a sure harbinger of a brief dip in the Dow, like dark clouds were of rain. This storm would not be a pleasant one.
The big houses, Merrill Lynch, Lehman Brothers, Prudential-Bache, and all the rest, were highly automated, and all were organized along similar lines. In almost every case there was a single large room with banks of computer terminals. The size of the room was invariably dictated by the configuration of the building, and the highly paid technicians were crowded in almost as densely as a Japanese corporate office, except that in the American business centers people weren't allowed to smoke. Few of the men wore their suit jackets, and most of the women wore sneakers.
They were all very bright, though their educational backgrounds might have surprised the casual visitor. Once peopled with products of the Harvard or Wharton business schools, the new crop of "rocket scientists" were just that—largely holders of science degrees, especially mathematics and physics. MIT was the current school of choice, along with a handful of others. The reason was that the trading houses all used computers, and the computers used highly complex mathematical models both to analyze and predict what the market was doing. The models were based on painstaking historical research that covered the NYSE all the way back to when it was a place under the shade of a buttonwood tree. Teams of historians and mathematicians had plotted every move in the market. These records had been analyzed, compared with all identifiable outside factors, and given their own mathematically drawn measure of reality, and the result was a series of very precise and inhumanly intricate models for how the market had worked, did work, and would work. All of this data, however, was dedicated to the idea that dice did have a memory, a concept beloved of casino owners, but false.
You needed to be a mathematical genius, everyone said (especially the mathematical geniuses), to understand how this thing operated. The older hands kept out of the way for the most part. People who had learned business in business schools, or even people who had started as clerks and made their way up the ladder through sheer effort and savvy, had made way for the new generation—not really regretting it. The half-life of a computer jockey was eight years or so. The pace on the floor was killing, and you had to be young and stupid, in addition to being young and brilliant, to survive out there. The older hands who had worked their way up the hard way let the youngsters do the computer-driving, since they themselves had only a passing familiarization with the equipment, and took on the role of supervising, marking trends, setting corporate policy, and generally being the kindly uncle to the youngsters, who regarded the supervisory personnel as old farts to whom you ran in time of trouble.
The result was that nobody was really in charge of anything—except, perhaps, the computer models, and everyone used the same model. They came in slightly different flavors, since the consultants who had generated them had been directed by each trading house to come up with something special, and the result was prosperity for the consultants, who did essentially the same work for each customer but billed each for what they claimed was a unique product.
The result, in military terms, was an operational doctrine both identical and inflexible across the industry. Moreover, it was an operational philosophy that everyone knew