22 mins readDavid Biem in 1999 taught the Corporate Finance core course, International Banking and the Emerging Financial Market elective at the Business School. This interview was originally published in Columbia Business School’s MBA student magazine Bottomline. I met him when he graded my Corporate Finance exemption exam before the first term started at the business school and told me that I had just barely made it past the eligibility requirement to exempt from the course and take an elective. Sixty Minutes with David BiemOn an average he scores a 6.9 in his course evaluations. You can tell he is an investment banker by the sharp way he dresses. And you haven’t seen a case discussion until you see him in action.\u00a0 He practices the art of managing a case to perfection.\u00a0 You can’t deflect him with chip shots.\u00a0 You can’t stop him with boring details. If you have a plan you better be prepared to defend it. He has sworn to get all the pertinent facts out before 11:20 and if you get in his way, you better have one of them ready.His name is David Biem. Wall Street, Washington, Europe, First Boston, EXIM Bank, Bankers Trust, Dillion Read & now room number 141 where he teaches International Banking and Emerging Financial Markets.Q: Let’s start with the very beginning. How did it all happen? Why investment banking and why academics?I’ve always been an academic at heart. My wife will tell you that when we got married 35 years ago she thought she was marrying a college professor. I was seduced by Wall Street along the way but I came back to something that is much more closer to me. She and I met at graduate school in England. I was at Oxford, she was at LSE. It was very much in a University setting that we first met and started thinking about life and what it meant for us.Around that time, for a number of reasons, I became interested in a wider set of work opportunities. I spoke to a number of people about what life held in store and what opportunities were out there in the real world. One of the more interesting pieces of advice I got was from a man who lived his life between Washington and New York. He said that when you put yourself out into the middle of traffic, in the business world, and if you are good enough, at some point you are likely to be invited to do something in public service, if you show any inclination in that direction. And for him that had been a very satisfying way of life. I then asked him what professions involved being in the middle of the traffic in that sense, and he said, ‘Law and Investment Banking.’At that point Law would have involved three more years of graduate school which was not something that I looked forward to, so I asked him ‘What is Investment Banking?’\u00a0 He explained to me what he thought Investment Banking was and said that he will introduce me to an Investment Banker.The Investment Banker he called and gave my name to was named Mark. Mark was Swiss.\u00a0 He had been at First Boston Corporation and then had become Assistant Secretary of Commerce. I met him in Washington after spending the entire weekend reading up on Investment Banking at the Library of Congress. (Very different from career services & resources today!)\u00a0Having learned as much as I could, I met Mark on Monday morning. We talked for about half an hour and I asked him about the Investment Banking profession. As in what kind of life it was, whether he enjoyed it and so on. He asked me about myself. On my resume I had mentioned that I spoke French and German, and Mark being Swiss broke into German. So we switched to German for five minutes and then to French for another five (seemed like five hours). At the end of that he must have been satisfied because he said that he was going to call the President of First Boston. He picked up the phone and called Paul Miller. He told Paul that he had someone in his office that he wanted him to meet. Well later that week I had lunch with Paul Miller and he hired me.Q: From your profile I see that ten years later you switched to the public sector and then went back again to Wall Street. How did that happen?A: What happened was exactly what my friend Carl, had, predicted. I stood in the middle of the traffic as a young Investment Banker for ten years in Europe and the US at First Boston. I had recently started a project finance group at First Boston and one day my secretary told me that the White House was on the line.\u00a0 It turned out that they were looking for an Executive Vice President at the Export Import Bank (EXIM).\u00a0 Bill Casey, later of CIA, then the Chairman of EXIM Bank wanted an Investment Banker with international and project finance experience.\u00a0 I fit his specifications very closely. I was younger than what he had in mind (35 at that time) but Investment Bankers tend to be on the young side anyway.It was never intended that I would be there for more than a couple of years. The average tenure in a Washington Executive job is about 18 months. Sometimes people go through a few rotations but it is rare for someone to stay more than a few years. That is the way the system works. People are drawn into Government from the high ranks of business and then recycled.This was the Ford administration. It was 1974 and he had just come in after the Watergate scandal that had driven Nixon out. It was a very interesting time to be in Washington. But it was also clear that Ford was not necessarily a long term President.\u00a0 I thought that opportunities like this don’t come very often. It was a great chance to experience Washington and still maintain a banker like career. If it was doing something very different like welfare reform then it would have been far removed from my work and a much harder transition to make. But this was a banking job – Export Import Bank was a bank. Some of the our projects were projects I was already familiar with from my project finance group at First Boston. So it wasn’t really a very large leap. It was a very comfortable move. And I enjoyed it for a couple of years and then come back to the Private sector.I consider myself privileged to have experienced Washington and not get sucked in.\u00a0 There’s a tremendous temptation to stay.\u00a0 I can get the next job if I tug the sleeves of five important senators. There’s a sort of frantic cycle of continual job search.\u00a0\u00a0 I just said to myself that I don’t want to get drawn into that. I never really sought a longer term life in Washington. I am not a politician at heart at all and we all know how political Washington is!. So I did a good job, had lots of fun and came back home.Q: Then you came back to First Boston?Yes, I would’ve gone back to First Boston. When I first spoke to them about Washington they said, well fine go do it but then when you finish come back.\u00a0 I definitely was expected to return to the firm.\u00a0 But during my interim years, First Boston experienced a lot of problems and most of my good friends were either gone or going by the time I got back. Which is why I started looking more broadly and talked to some of the commercial banks.At EXIM bank I had built up a relationship with commercial banks mainly because EXIM bank works very closely with commercial banks. I got over some of my Investment Banker’s prejudice about commercial bankers. I discovered that some of them were in fact quite intelligent and interesting.I spoke to four banks but I talked in greater depth with Bank of America and Banker’s Trust. I was finally impressed by what I saw in Banker’s Trust, which was the opportunity to start and run an Investment Banking business. Here was a bank that was very determined to enter the Investment Banking business, not as an adjunct or as an additional thing but as a venture absolutely central to their strategy.\u00a0 They were prepared to sell all their branches and convert themselves to a wholesale security-oriented bank. Which was essentiale to the clientele they wanted to hold on to.It was an exciting opportunity. This was 1977 and they were willing to make me part of their senior management. I joined and built the Investment Banking department from nothing to about 250 professionals. By the time I left we were about 10% of the bottom line of the bank and a much larger fraction of the publicity it was getting. I was there for 10 years and left after Charlie Sanford took charge. Q:Is this around or before they started the Derivative practice?I started the Derivative practice. I sat down and explained to the Chairman of the bank what a swap was. I diagrammed the cash flows involved and told him that we would like to do some of these. He’d never seen one before and he was absolutely fascinated. He said\u00a0 ‘But David you’re extending credit risk’. I said ‘Well I know but not by very much’. Then I showed him what the credit risk component really was which was a relatively modest fraction of the notional principal. He gave the go ahead and I hired a guy named Alan Wheat, who is now the Chairman of CS First Boston. He became my principal lieutenant at BT. He was the head of my capital markets group and was basically responsible for swaps.When I left in 1987 many of my people also left.\u00a0 Alan left.\u00a0 I even talked to Alan about where he would go because he felt that he would not be able to stay. I recommended First Boston to him \u2013\u00a0 theirs was a firm that really needed derivatives. He ended up at CS First Boston and took a team of 25 people with him. It was huge blow for Banker’s Trust. Then my leasing group broke off and formed their own firm.The new Chairman of the bank moved all of that business under the control of the traders and changed the character from more of a relational business to a transactional business. And much of the trouble came from that. It came from people who were much more exploitative and more shorter term oriented.The culture of Banker’s Trust changed dramatically. I sometimes tell students that what I see in Wall Street are two different types of cultures. There is the Hunting culture and the Farming culture. The farmers nurture their rows of corn and they fertilize and trim and harvest in the longer term whereas the hunters gallop over the landscape and kill anything that moves.\u00a0 Goldman Sachs, JP Morgan and Morgan Stanley are farmers while Soloman Brothers, Drexell Burnham are hunters.\u00a0 What happened to Banker’s Trust was that it changed from a total farming culture to a total hunter’s culture in about 15 years. I was there for part of that transition but I’m glad I wasn’t there towards the end of it. They really got taken over by the trading mentality which wasn’t my world at all. Q:\u00a0 How do you feel about the life styles? The 60’s as an Investment Banker, The 70’s in Washington and the 80’s at Wall Street? Did you prefer any over the others?I think I’ve really been privileged to have experienced a large fraction of what life has to offer. I’ve spread myself very broadly and I’ve taken certain risk in doing that.\u00a0 In most areas the right way to success is to concentrate in one thing and get to be a really world class expert in that field. This is\u00a0 true in academics, business, or sports. But I opted for breadth. Besides, business, government and academics, I am also the chairman of two non-profit organizations which take quite a large chunk of my time.\u00a0I have managed to delve around quite a few areas and frankly I’m glad for all of them. Right now at this stage in my life it is a joy to be a professor. The pace is more moderate and I appreciate that in this stage of my life, not to be racing all over the globe chasing business opportunities\u2026\u2026. I’ve done that. I like working with young people, I like teaching – it is a joy. I love learning and it’s a chance for me to go back and learn and get back in touch with my own academic past.For me this is a perfect spot. But I’m glad that I’ve also done the other pieces along the way. I’ve been lucky. I’ve really managed to have some measure of success in a couple of different areas which is not always easy to do. In my case I have said above, I was doing the right thing at the right place and the right time. Q:You did your Mphill from Oxford. But before that you spent some years in Vienna. What was that like? When you think of Vienna you think of the bridge between two very different societies during the cold war, you think of espionage, spies, John Le Carre! What was it really like?We were a little past that period. The cold war was certainly still going on but the time when Vienna was such a hot bed was while it was a divided city. It was a divided city like Berlin with four sectors. The third man, an Orson Wells classic is set in Vienna around that period. Four parts, four sectors, four armies.\u00a0 This was immediately post-war 1945-46. I was there a good 15 years later and so it had settled down a more comfortable life.It had reconciled itself to being a small country. I would say Vienna was pleasant, communicative, easygoing, not a place that seemed bound into the world of intrigue from my perspective. Maybe there were spies sneaking around but none of them talked to me.The main impression I got was of a people who had struggled through very hard times during the depression and the two World Wars and were relieved to have all of that over. They no longer wanted to be important actors on the world stage and just wanted to enjoy the good life. It had some of the pleasures of Italy or Southern France, of good food and wine and great music. Wonderful city for music!\u00a0 Herbert Von Carrion was the director of the Vienna Opera and you could go hear Von Carrion for as little as a one dollar ticket (heavily subsidized by the state. You can safely say that I frequently visited the Opera and soaked up the good life in Vienna.I just wanted to get away from America for a little while and experience Europe. Vienna was a deeply European city quite far from American influences. If I had gone to Paris or London I would have been much closer to the circle where all Americans go.\u00a0 But in Vienna I was off the beaten track and more deeply in the center of Europe which is what I was looking for. Q:Is that where you picked up German and French?I had actually studied them in my boarding school days. I have always loved languages. They have always been fun for me. I started both French and German in my boarding school days and continued them while I was at Stanford and then used them while I was a young Investment Banker. They became part of my life and living in Europe greatly helped refine my German. By the end of that period in Vienna I was really comfortable with German.Q:How did the Oxford experience differ from your days at Stanford?Oxford was a really agreeable place to live. I think as an educational institution I learned more at Stanford but what Oxford taught me had something more to do with life;\u00a0 With the larger picture of what is important and not important in life. It was\u00a0 more of a philosophical turn of mind, more towards the\u00a0 inclination to ask the big question. Which is good.When you are in that stage of life you ought to be asking the big question. It was\u00a0 that kind of an intellectual experience when you ask why things were as they are, what is important and why people behave as they do.\u00a0 More than learning functional detail and specific domains, it was reflection.Q:What really amazes me is that you have had a very non-quantitative education and yet had a very successful Wall street career?In those days you didn’t have to have an MBA to join Wall Street.\u00a0 Investment Banking was a tiny business, really tiny. When I started in the middle 60’s no one had ever heard of Investment Banking. I’d never heard of Investment Banking. I called up my father who was a businessman in Minneapolis and asked him what was Investment Banking?\u00a0 He said ‘Gosh, I’m not quite sure. I think it is something like being a stock broker’.Today its very visible and everybody wants to be an Investment Banker but not then.\u00a0 Further more you didn’t have to go to business school. Infact around that time no one actually did go to business school. Business schools were much smaller.\u00a0 They were nothing like the thousands of people we see coming to business school today. It was almost by an accident that I found out about Investment Banking and I turned out to be very well adapted to it because I have a quantitative mind.There’s a very quantitative element to Investment Banking. But if you can see something of a big picture, if you have an almost political quality where you’re dealing with the larger strategic issues and have to think in a larger frame work (than just solving numerical problems). You have to have both micro and macro aspects. Plus the languages were very useful to me while working in Europe.\u00a0 My background was fine for Investment Banking\u2026. But I never did an MBA! I first noticed you in your Ethics seminar during orientation! Is that a personal or an academic interest?It is not a research interest at all.No.\u00a0 It is an interest that comes very much out of my work at Wall Street especially the Street in1980s.\u00a0 I think I’ve seen some of these issues in play. I have also noticed that on the faculty, some of the people who have strong passions for ethical issues are people who have had that kind of experience. It is not academics or theory. It comes from having seen the war and seeing people get shot.Q: What do you think is the best approach for teaching ethics at the school?My approach to ethics is not academic. It is possible to approach ethics theoretically and I think some business schools have faculty who do that. Wharton for example has on their faculty a moral philosopher, well versed in Aristotle and the traditional framework. They use that to frame decisions between right and wrong.I don’t use any of that. Nor do I think that this is what MBA students need the most in thinking about these issues. My approach to ethics is the one that I gave in the orientation, which is very simple and very straight forward. You do not need Aristotle to tell you what is right and wrong. You know it. You’ve known it since you were two years old. It is common knowledge and common humanity.The problem is not deciding what is right and wrong. If you have any doubt about it give yourself a newspaper test. Would I like to see my actions reported in the front page of a paper? If you don’t mind being reported then it’s fine. If you very worried about being reported then you know you’ve done something you\u00a0 shouldn’t have.\u00a0 Simple test but very effective.I think the problem of distinguishing right from wrong is not the issue. It is possible that you may have exclusive dilemmas where you have choices of two things both of which have a mixture of good and evil in them. Hard to make choices in environments like that but you can have a discussion about it.But that’s not what I do either.\u00a0 I think the issue is rather what to do about the fact that, far too often in business people violate the truth and the obvious rules. It is\u00a0 an enforcement problem because it is a problem of what to do when people break rules that are universally agreed on and about which there is no real ambiguity.I’ve had this discussion with others in the University.\u00a0 I’ve talked with representatives of others schools and their approaches to ethics and they are very different. The medical school has very real ethical issues to worry about. They have to seriously ask the question “Am I doing something right or wrong”. Is an abortion right or wrong? Is Euthanasia right or wrong? These are huge, heavy moral issues. None of that in business. Business is simpler and cleaner. And as a medical person said to me “I’m not even sure that you’ve got an ethical problem in business except enforcement”. He said ‘Why don’t you get a lot of policemen?’All you really have to do is enforce rules that are perfectly obvious and widely known. They are – Don’t cheat, Don’t steal, Don’t lie and so forth. Because the main problems are just that –\u00a0 Bribery or embezzlement or forging numbers or stock manipulation is just that. Then the question is what do you need to say to students about that. There is nothing theoretical about that. These things happen and will keep on happening.It is what I call the existential problem which is “What does a young person do when they find themselves in an environment where they’re under pressure to achieve some goal, make some numbers by the end of the quarter?”\u00a0 There is an obvious invitation to do something wrong, with which they feel uncomfortable.\u00a0\u00a0 I spend a lot of my time thinking about that question. It is not a theoretical question!\u00a0\u00a0 It is an extremely practical question for anyone with any kind of conscience!\u00a0\u00a0 Now if you have no conscience then you’re not bothered by it. You just go ahead and\u00a0 do what ever you have to do. If you the sort of person who has scruples about that sort of thing then it is a problem.\u00a0 You need to think how am I going to handle this problem when I get into a situation that conflicts with some thing inside me. What do I do about it? I’m in-conflict with my organization? Do I quit?\u00a0 Do I go to the press?\u00a0 Do I raise a fuss?\u00a0 What do I do? So you see there is a packet of question and they’re not theoretical in the least. Q: But what about situations or cultures where you thought what you were doing was acceptable?I wonder if that is really true. I wonder if there isn’t wider spread agreement than that about what is right and wrong.\u00a0 This is interesting because this can get you cross threaded with multi-culturalism and multi-culturalism is very much in the air these days. Everybody is very respectful of everybody else’s culture and does not wishes to\u00a0 impose on each other’s values. Which is one of the things that makes it hard to talk about.Maybe that is why I particularly enjoy raising it in this setting because I think it does make people think twice. I often use the little mini-case of bribery to bring it out and when we talk about that some students in the group will inevitably say, well its part of that culture. If you didn’t want it done that way then you shouldn’t have gone there in the first place. You should’ve known that that’s how they do business and if you didn’t like that then go do business in another country cause that’s okay down there.But when you examine that it doesn’t quite hold up. First of all, bribery happens everywhere, it’s universal. It’s in the USA, it’s rampant in New York. There’s corruption everywhere and developing countries do not have a monopoly on it.\u00a0 But its wrong everywhere. There’s nobody who thinks its right. I think I even said this during my orientation that President Collor in Brazil was elected on an anti-corruption platform. That wouldn’t have been very effective if everybody had said, “No wait a minute. We like corruption done here.” Nobody said that. Every body wanted to get rid of corruption.\u00a0 It turned out that he was more corrupt than anybody and he paid the price? (He was impeached) Why did he pay the price if it is part of their culture and if it is perfectly okay\u2026 It’s not perfectly okay. It is not perfectly okay anymore in Brazil than it is anywhere else. It is stealing.\u00a0 It is stealing in Brazil and it is stealing in NY.\u00a0 And nobody thinks stealing is right. Show me the person who thinks stealing is ethically fine. I’ve never seen such a culture at any time.I think if you reduce business ethics to simple, universal truths it is not hard to distinguish between what is right and wrong.\u00a0 It is even not hard to look at some action and say\u00a0 “that’s wrong!”\u00a0\u00a0 Nevertheless wrong things happen in the world. Bribery happens in the world. So what do we do when we get into a situation where bribery is going on and you know the law says it is not right\u2026. What do you do then?\u00a0 That is what I call the existential problem. That’s strikes me as much more interesting than being touchy feely over whether some people might think that bribery is right. I mean, nobody thinks its right, really.The broadly held view is that a business would be better off if you think long term.\u00a0 Thinking ethically is part of thinking long term.\u00a0 Companies that think short term in any number of senses are likely to have a long term problem\u2026 Look at Banker’s Trust. Look at Drexel Burnham. Look at Solomon Brothers. These are companies that were thinking short term.\u00a0 They were trading oriented companies that were driven by short term gains. Did not pay attention to reputation, did not pay attention to relationships, did not pay attention to risk of that behavior and they got slaughtered.In the long run hunters often kill themselves. There is a different way to live that has more staying power.\u00a0 I think that it is not wrong to realise that.\u00a0 When I talk, I don’t ask only\u00a0 “if\u00a0 this is right and that is wrong” but “Isn’t this smarter in the long run for the business?”\u00a0 Isn’t there a very big overlap in doing what is right and what is needed to ensure longer term survival.\u00a0 I think so. I think it makes it easier to talk about because you can then make it converge with the business goal.Q: Given your background with derivatives what do you think of the two opposing camps on Derivatives? One thinks they are too risky and quotes Barings, P&G & Orange County as examples.\u00a0 The other thinks they are a necessity. What is your take on that?First of all let’s take a close look at the Barings collapse. One trader in the futures market crashed the Bank.\u00a0 Futures are very simple instruments. He could have been a bond trader and done something very similar.\u00a0 The instrument that he was trading was nearly not as important as the fact that he discovered a way to\u00a0 take risks so that he stood to make an awful lot of money if he was right and the bank got the turn if he was wrong. You can do that just as well as a trader of bonds.\u00a0 For instance there was a bond trader at Daiwa Bank who basically did the same with bonds and got away with it for a very long time.\u00a0 Which suggests that a great deal of his management knew what was going on. His scheme lasted over 10 years. There were no derivatives in Drexel Burnam’s case but they also went for high risk in a different way using the bond market.Derivatives can be used very safely or they can be used very dangerously. Like an automobile. You can either drive recklessly or you can drive it safely .You wouldn’t want to ban automobiles because people get killed by them. Many people get killed by them. But nobody suggests banning automobiles because when used carefully they give good service and I think derivatives are like that. Most of the derivative transactions are not only safe but very appropriate in today’s volatile world.Yes you can also derive derivatives recklessly. Just as you can drive bonds foreign exchange or real estate recklessly. It is silly to take a general anti-derivative position. A few people I know did that at the time of the great collapses.\u00a0 It is probably also true that during late 80s & early 90s people were using derivatives in an unscrupulous way, especially exploiting the complexity of certain instruments. There were some really odd derivatives around that did not serve any valid purpose. For instance Banker’s Trust was selling swaps of LIBOR squared against a fixed rate. There is no natural risk that is hedged against a fixed rate of LIBOR squared.\u00a0 All that is, is an exaggerated play on interest rate movement – its total speculation.\u00a0 That kind of derivative I think the market place has driven out.Granted P&G sued Banker’s Trust and got a big settlement, they also fired the treasurer as they should have because the guy knew perfectly well what he was doing\u2026 he was no country bumpkin. He knew exactly what he was doing which was taking speculative risk and Banker’s Trust willingly sold him instruments that helped him do that. Now the board may not have known but the treasurer knew.\u00a0 Since these events happened corporate treasurers have been chastised and probably will have very little interest in swaps of fixed rate versus LIBOR squared or any other exotic leveraged bets.Q: Then in what class do Credit derivatives come in? Are they speculative or they safe?Credit derivatives may be a wonderful invention but you must remember that they come in two categories. There are swaps against default risk and swaps against total return. Swaps against default risk are probably a great way to diversify a portfolio and for banks to exchange portfolio risks without having to do complex asset transaction. One can take half of one’s risk and the other half of the other’s risk.The only trouble with credit derivatives is that you can only do them if the under lying credit are well known. So there’s a limit on how far they can go to solving the main problem of banks \u2013 that being private information, asymmetric information, relationships, companies that I know that no one else knows.If a bank builds its reputation based on private information and relationships for a bunch of little companies that no one else knows, how can you be sure that when that bank sells you a credit derivative they are not selling you all their lemons.. Rationally they should. How can you be sure they’re not. It is not easy and nobody has cracked that. There’s a limit to credit derivatives and I think they stop at the point of public information.Q:Again give your background do you think Hedge funds are here to stay or is the great hedge fund boom over?There are hundreds of so called Hedge Funds in the world and they are all very different from each other. They all play different kinds of games. Hedge Funds is a very catch-all sort of a name. Many of them are not leveraged at all but the name sounds as if they are. Certainly most of them are unhedged. They generally over expose themselves to speculative risks of various sorts.There are quite a few of them around despite the collapse of Long Term Capital Management.\u00a0 People still invest in them, not many have been deterred.\u00a0 But there are a few lesson in the collapse.\u00a0 Some old and some new.One thing that LTCM did was to leverage themselve to an unbelievable degree. Leverage is not new, leverage has been around a very long time and we have known for a very long time that leverage is risky. The more you leverage, the more risk you’re taking on. And they were leveraged to an extreme degree.\u00a0 Very sophisticated people but still taking a very high risk bet. They got caught. There is nothing profound about it. They played with the odds and they got caught.They took the risk in what really amounts to a fundamentally old fashioned way. The same thing that got Orange County California into trouble.\u00a0 Robert Citeron used reverse floaters and a few exotic instruments.\u00a0 However the main thing that got him in trouble was not that he was dealing in exotics but the fact that he took a leveraged bet to a very high level.\u00a0 Same thing as LTCM but in a subtly different setting.LTCM thought that things to be safer than they turned out to be. In retrospect they funded themselves with repo money.\u00a0 Repo transactions are dependent on selling short government securities.\u00a0 But when government securities became very valuable in a credit panic all their shorts had to be covered at excessively high prices.\u00a0 They knew the risk was there.\u00a0 You can find Myron Scholes telling people that they were subject to the risk that treasuries would increase in price dramatically at some point in time.\u00a0 They thought that chances of that happening were very slight.\u00a0 Yes there were some interesting and odd things in their portfolio but the main story was leverage and risk and getting caught.Now as to the more specific problem of some of their strategies, there is a quotation that I like very much.\u00a0 Its from G.K. Chester \u2013\u00a0“The real trouble in this world of ours’ is not that it is an unreasonable one and not even that it is a reasonable one. The commonest type of trouble is that it is reasonable but not quite. Life is not an illogicality yet it a trap for logicians. It just looks a little more mathematical and regular than it is. It’s exactitude is obvious yet it’s inexactitude is hidden and its wildness lies in wait.”I think it’s a wonderful quotation \u00a0Q: Okay back to personal life. What do you read in your spare time?\u00a0I wish I had more time for fiction. I enjoy it. I probably don’t read nearly as much as I should. I would love to. I had some surgery over the holidays, over Christmas, and I was in bed for well over a month and I got a few novels during that time. I read a couple by Gabriel Garcia that I’d been meaning to read.\u00a0 ‘A Hundred years of Solitude’ and ‘Love in the time of Cholera’.\u00a0 It was pure luxury. In the ordinary course of my life there is a ton of technical reading that I have to do. I read a lot academic papers, I read a lot of journals. I try to stay current with things like Euro-money. I read the Economist very faithfully. So there’s not a lot of time for fiction. I wish there was.I’ve been also been trying to learn Spanish. My wife and I went to Central America on several occasions and actually went to language school and spent each time studying language. As I’ve mentioned I always loved languages and Spanish is a language I’d love to have before I am through. So I have them both in Spanish. It turns out though unfortunately Garcia’s style in Spanish is the densest, the most difficult Spanish I know. Some writers are very simple and clean in Spanish as they are in English and some are extremely complex.\u00a0 He’s a noble prize winner. He’s a Colombian and his most famous book was the first novel he wrote. It’s called a Hundred years of Solitude and I finally got around to reading that. And then his more recent one Love in the time of Cholera is written in the 80s, that’s 20 years after his first one.Q: Any specific authors that you follow in academic literature?I read mostly financial articles. These days my interests are in Emerging Markets. There are hundreds and even thousands of papers that are floating around, one view or another of the Emerging Markets and their crisis and what to do about it.\u00a0 If you want to see the magnitude of that literature, look on Roubini’s web page at Stern. He goes on and on for 50 or 60 pages with links to all the papers. This was recently cited by the Economist as the best economic web page on the internet. Under each heading he has basic reading. He has links to the actual paper and you can download and read it. Its an incredible opportunity to do research. Sit here all day and do it. Its like having an entire library at you finger tips. That’s an example of the stuff that I have to read. I’m writing a textbook on Emerging Financial Markets and I have to be very current on it.Q: You are standing in front of the Graduating Class. What do you have to say before they go out in the real world?Good Luck! There’s so much to learn after Business School. We can’t possibly teach people everything they need to know. We hopefully create a framework for people to go and learn by themselves. Give them an orientation & direction. One of the things I have pleasure in doing is talking to people about their life and where they’re going. A lot of people are generally confused about that. But you can’t make general statements.\u00a0 You can’t say something to a whole group of people on that subject. You really can only deal with one person at a time and get to know them and what their particular focus and needs are and hopefully do some good to them.I wouldn’t presume to give any graduation speeches.