Exodus - "Movement of the People"

As in any recession, there is typically a re-aligning of people who lose their jobs and move to new ones. The interesting part of this exodus is the mass amount of people who move from / within the financial services industry. If I'm at all right about the this (which I think I am) - you'll see the lower "expendable" grunts get the can by the higher up personnel who've made a name for themselves.

The potential problem and opportunitiy with this is - the expendables have probably been slaving away and working hard and watching the higher up personnel in their recent progression to folly. Basically - the bench players have practiced with and seen all the "professionals" playbook and know all the flaws. This makes them better able to write the next chapter where profit will be made.

Its not that the power players don't have talent - its that they lack some degree of detail during the good times. The guy in the back room making all the models for the big wigs probably included the cautionary statements...do you think the big wigs included those cautionary statements in their pitches? Hell no - thats not how you get to be a big wig.

So what you get is - talent at the bottom, rolodex at the top. The issue now is - with the amount of money being lost by big money players - how much of everyone's rolodex has been shredded? How much are the "big wigs" worth in the long run versus the up-coming little people who actually know how the whole thing happened and can avoid it next time around?

I'm not saying bottom vs. top or the opposite - I'm just saying that CEO's know nothing about the potential details of Value at risk calculations. They don't know where the next punch is coming from to "cold cock" them...and neither do their direct reports. This is simply because too many layers of management separate the knowledge from the decision...and this says to me that flatter and smaller is the new new thing.

So - if you're trying to build another Goldman or Merrill - look for the middle guys and put the hard questions to them - they're free of their employer and ready to tell you how it is - if you ask them to tell you. This could be the best defense going forward we all could ask for....it surely isn't Robert Rubin.