Wall Street often borrows terminology from the military. Such terms include dry powder, bullet loan, bullet trade and so on. Additionally, traders and bankers share "war stories" about being "in the trenches" and toss around terms like morale. Some of these phrases might resonate with Carl von Clausewitz, the 19th century Prussian military theorist who coined the term "fog of war," which is exactly where Wall Street stands today. The hysteria on Wall Street has created a cloudy future for some of the biggest institutions on the Street -- a fog so deep, that bankers have very little feel for where they're at or where they're going. Their solution is a strategy that would be familiar to von Clausewitz, who helped battle Napoleon's France through pan-European alliances.
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Already, John Thain has partnered Merrill Lynch & Co. with Bank of America Corp. Now there is chatter that Morgan Stanley is in "advanced talks" to partner with Wachovia Corp., whatever that means. As the fog begins to recede, its fast coming clear that Bank of America and Wachovia will join Citigroup Inc. and J.P. Morgan Chase & Co. as the new denizens of a sort of universal bank bulge bracket.
Goldman, Sachs & Co.'s future remains murky. If Wachovia is off the table, what's left for Goldman? Will Goldman CEO Lloyd Blankfein partner with Wells Fargo & Co. to complete the top five? There aren't any other large national franchises left -- barring the ailing Washington Mutual Inc., which Goldman is tasked with selling. Would he turn to a foreign bank like HSBC Holdings plc? Would he buck the trend altogether and remain independent?
One thing is certain, and that's the markets right now don't want Goldman to remain a pure investment bank -- even as some argue, as Portfolio's Felix Salmon illustrated in "Investment banks, RIP" that Goldman isn't a pure investment bank anyway, but rather a hybrid. Goldman's problem: Apparently, a large retail deposit base. Will Goldman complete the sweep and grab a depository institution before its stock gets hammered down too far? Or does he build defenses and hope the storm clears? The answers to these questions, of course, remain unclear, but that's life in the fog of war. - Matthew Wurtzel
Comments
Your writer needs to read his history. Fog of War describes something more sinister on the part of the generals who conduct strategem without out being properly grounded on a rational or moral grid but to gain advantage.
On second thought.....