MADELEINE BRAND, host:
OK. That's if you're an ordinary investor. What if you are one of those so-called, "Masters Of The Universe"? The man who coined that term, Tom Wolfe is here now. Author of the acclaimed, "Bonfire Of The Vanities." Welcome to the program.
Mr. TOM WOLFE (Author, "Bonfire Of The Vanities"): Oh, thank you very much, Madeleine.
BRAND: Well, what is happening to those Masters of the Universe?
Mr. WOLFE: I hate to disappoint people who are looking forward to some shot by the - or gloating over the demise of the Masters Of The Universe. But that has not happened. It may - it could happen. But it hasn't happened yet because the problems over the last week have been centered in investment banks. And that's where the 'masters of the universe' as I call them, these young men almost no women - these young men making millions every year in performance bonuses, not just at the top, but middle level people even. We're all working in investment banks.
About six years ago, the best of them, the hottest, the most ambitious began to leave investment banks(unintelligible)) of their rising leadership and also their biggest young producers. People always asking me today, well, where does that leave the Masters of the Universe? Oh, I leave them in Greenwich, Connecticut. I mean, Greenwich, Connecticut is the great center in America of - and the world I guess of hedge funds.
BRAND: Now, I guess we need to explain what hedge funds are.
Mr. WOLFE: Hedge funds are investment vehicles usually for very wealthy people. In fact, in the first paragraph of every hedge perspective it says, this must not be money that you need for living. This is money that you want to risk - this is a roll of the dice. The hedge funds have very few restrictions of the sort that ordinary brokers have.
BRAND: So even though Wall Street seems to be blowing up or it did yesterday, the hedge funds are doing just fine. And these Masters of the Universe are ensconced happily in their Greenwich, Connecticut mansions?
Mr. WOLFE: Well, right now, they are swimming the tightest defensive positions they can. They're like turtles pulling themselves back into their shell just trying to wait this thing out. They could be hurt badly. In fact, today is one of the four times a year that people can take money out of hedge funds. Usually there's a certain fixed percentage that they can take out at any one time. That's for the protection of the fund itself. But still, there could be enough taken out today to seriously hurt a lot of hedge funds.
But the point I want to make is, it hasn't happened yet. These Masters of the Universe are very bright, I mean, they're smart. And they're much smarter than the people they left behind at the investment banks. And investment banks now are - it's a closed chapter in American history. When Goldman Sachs now has to become a bank, who with - not Masters of the Universe, but a lot of young female tellers sitting at windows with packets of red dye to give to the robbers when they come in to take money out of the place.
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Mr. WOLFE: That's quite a big change. Now either at this point people just think the Master of the Universe have all crashed, but they haven't, they haven't yet.
BRAND: And I'm sure they'll figure out a way to survive and thrive.
Mr. WOLFE: I'm not - I don't - I'm not asking for anybody - tears for them because nobody is going to - a lot of these people have already put away the necessary nut, they call it. That is an amount of money that you've salted away in weather proof investments, that will yield enough interest for you to live a very high life in a place like Greenwich. I would say though that today, that nut has to be at least $40 million. If interest rates on bonds sink low enough, you might need 50 million. But I think it wouldn't hurt to live a little more simply, you know.
BRAND: Tom Wolfe, he's the author of "Bonfire Of The Vanities". Thank you very much.
Mr. WOLFE: Well, thank you very much for having me.
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BRAND: Well, I think I could survive on 50 million. Stay with us, NPR's Day to Day continues.
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