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?