Markets dont drop 6 percent while you are on a five

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few times a year. Markets don’t drop 6 percent while you are on a five-minute conversation. This was panic. The Dow Jones Industrial Average dropped 777.68 points that day—its single largest point drop in history. When I got to the gate, I had to turn off my phone, which, in one respect, was a good thing (since I could now spend three and a half hours unplugged from the anxiety), but in another respect, was bad (since I could think about little else). When I landed in Dallas, I checked on the markets, which had since closed. Blood in the streets. I got on a train to Nadine’s parents’ house, in the Dallas suburbs. As I stared out the window at the unfamiliar landscape, my phone rang. I jumped, then smiled when I heard the voice of my best friend Lex on the other end. After Stanford, my path and Lex’s had diverged: while I had gone to Goldman Sachs, Lex had stayed in Palo Alto, worked for and founded various start-ups, and done well for himself as an entrepreneur. Despite the fact that he was an atheist, he always called me on Rosh Hashanah, to wish me Shanah Tovah —Happy New Year. And while this Rosh Hashanah was anything but happy, I was comforted to hear from him. Ever since the financial world had started coming unglued, I’d been getting a lot of texts and e- mails from friends wanting to make sure I was okay. “I hope you’re surviving,” one friend had texted me the day before. Everybody knew I was in the center of the storm, sitting in the front row. After acknowledging the holiday, Lex asked the same question. I told him I was hanging in there. Then the conversation took a turn. Instead of saying what I wanted to hear from him in the brief time we had to chat—which was basically “I hope everything turns out okay with Goldman and that things calm down”—Lex started firing questions at me. “Do you think TARP is justified?” he asked. “After all, wasn’t it the banks who took such irresponsible risk and got us into this mess?” “Yes, Lex, but that isn’t us. Goldman Sachs didn’t have the same kind of toxic assets on our books.
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We made smarter decisions.” I was looking for someone to be on my side, not for questions. “What about the people whose 401(k)s are getting decimated? Where’s their bailout coming from?” “I don’t know, Lex. I’m right in the middle of this thing.” Now, Lex is one of the most decent, moral people I know. But he is also a very analytical guy— hence the atheism. So at the moment, Lex was just being Lex. He always likes to try to find a counterargument to every argument. Later he admitted that, to a certain extent, he was playing devil’s advocate. His questions were good ones, but not necessarily the best questions from your best friend at that moment. “And what about Lehman Brothers?” he said. “What were they up to?” “Lehman Brothers went down because there was a witch hunt,” I told him. “People were speculating that Lehman was running out of cash, therefore it became reality. People started pulling their money out; it became a run on the bank. That’s all it was.” “Well, was this a run on the bank or was Lehman Brothers taking bad risks? I read that they had
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