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Jul. 7 2009 - 3:24 pm | 18 views | 2 recommendations | 3 comments

How Harvard’s Suffering Is Your Suffering Too


So, Choire: I was totally going to point out that the AIG story was not the most interesting/infuriating crisis piece in the August issue of Vanity Fair but then you beat me to it, and we agree the distinction goes to the story about how Harvard lost possibly half its thirty seven billion dollar endowment. The upshot of the Harvard piece is of course: Larry Summers’ stupid “sophisticated” derivative interest rate swap is responsible for at least a billion dollars of that loss. “But that’s too easy: the real story of Harvard’s financial catastrophe, and of Larry Summers, is far more nuanced,” Nina Munk says, because Conde Nast still pays writers by the word.

Typically, the story ignores (or remains oblivious to, whatev) the sad hilarious irony of Harvard finally falling victim to the hubris of the “meritocracy” Harvard and the Ivy League have been peddling all these years, erecting quarterbillion dollar luxury gyms and other monuments to lifestyleism where kids learned to juice their already bloated senses of self-regard side-by-side in a mutual masturbation fest with their hallowed institutions in just one of so many creepy shows of late capitalistic symbiosis packaged as a lie called “synergy.” No, instead Munk spends a lot of time talking about what a “touchy subject” pay cuts are for administrators and how Harvard doesn’t have the ability to “spin on a dime” or somesuch business school banality because it is so creaky and bureaucratic and not part of the fucking hallowed private sector…ummmm hello!!!!! Hundreds of much less prestigious public sector institution and pension funds with a lot less money to burn have found themselves in much much direr financial straits due to ill-advised investment schemes and more disastrous interest rate swap investments THANKS TO THE FUCKING GENIUS IDEAS BROUGHT TO YOU BY THE PRIVATE SECTOR.

But at least they — the hospitals and school districts and small town treasurers that also got conned by Wall Street’s arb happy leverage junkie quantalogists — had a decent alibi. They were just hospitals and school districts and stuff, what did they know about managing money compared to the geniuses with their Harvard degrees spreading the gospel of sophisticated interest rate swaptions? For Harvard itself to lose the fucking GDP of Panama* under the management of a bunch of genius Goldman alums “settling” for seven figure salaries — and only in exchange for a guaranteed nine figure investments from the Harvard endowment in the hedge funds they started when they left — well, that would have been like if Goldman Sachs had actually lost billions of dollars on the toxic synthetic subprime mortgage-backed CDOs that caused this crisis. Unlike Harvard, Goldman knew enough to hedge its exposure to its own genius.** And look, now Goldman is among the elite league of banks on the winning side of Harvard’s “sophisticated” billion dollar derivatives mistake!

*Okay, approximately the GDP of Panama in 2006, and definitely not in PPP terms, but the “GDP of Yemen” sounded less impressive.
**Also, the Harvard Management Company invested half a billion dollars in Vikram Pandit’s stupid hedge fund right AFTER Bob Rubin drove away its supposedly genius manager Jack Meyer, who took all his favorite people with him to start his own hedge fund. Now Bob Rubin and Larry Summers are running the economy they fucked while Pandit runs the bank Bob Rubin fucked. God, what will Harvard DO without these guys?


3 Total Comments
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  1. collapse expand

    Gotta love this, from the Bloomberg story you cite:

    “As a result of its mishaps, Harvard wound up enabling Princeton University, with an identical AAA rating, to obtain better terms from investors in January… The Harvard bonds will pay $150 million more in interest over 30 years than if it had matched Princeton’s spread over Treasury yields, according to data compiled by Bloomberg.”

    The horror! I love that the context for the magnitude of Harvard’s mistake reads like a typical Ivy League pissing contest.

  2. collapse expand

    Okay, I think you just activated my “defend the base ship” protocol in my Cylon brain.

    The VF story is only “ironic” if you bought into Harvard (and places like it) are institutions based on a meritocracy in the first place. I’ve never bought into that and I know a lot of people there who don’t buy into that either.

    Of course Harvard is run by the same petty desires the rule most institutions and nearly all men. I cite the famous exchange between Homer and Burns:
    HOMER: Mr. Burns, you’re the richest man I know.
    BURNS: Yes. But I’d give it all up for just a little bit more.

    I don’t think Harvard ever claimed to be above greed. Money trumps merit more often than not, and Harvard is the archetype of that, as opposed to the outlier.

    Of course, don’t get me wrong. It is pretty funny. Hilarious in fact. Nobody should feel bad for it, least of all its students who spend years trying to pay off their big crimson bookie.

    But I don’t see the hypocrisy in it. Sometimes people from Harvard are shockingly dumb. You don’t need a $15 billion screw up to see that coming.

    • collapse expand

      Meritocracy or not, my question has always been how on Earth do they hook their graduates up so well in the workforce? Or perhaps more simply, how do they maintain such an intense network of hooks ups? Harvard grad never seem to have any trouble landing something decent, no matter what the economic clime.

      In response to another comment. See in context »
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    About Me

    I am a fiscally-challenged financial writer living in New York. I co-founded the blog Jezebel and used to write for Gawker. I should have learned my lesson but ever since they allowed smoking in my apartment I have had problems leaving it. I do not know how to change the name of my blog from "Moe Tkacik's page" but when I do I will probably name it something gay like "Mark Foley's page."

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