Masters of the Universe and Wolfe's Fuzzy Math: My `Bonfire'
(Bloomberg) -- Three decades ago, Tom Wolfe unleashed his first novel, “Bonfire of the Vanities” -- a sprawling satire of ’80s New York and its self-absorbed Wall Street millionaires.
“Masters of the Universe,” Wolfe called them. I was there. I’m still there, in fact -- right there in chapter six, second paragraph, where he’s writing about United Fragrance bonds.
Wolfe, who died Monday in Manhattan, captured a New York torn between hyper-wealth on Wall Street and seemingly inexorable decline everywhere else. But one thing eluded Tom: bond math.
See that “U Frag 10.1 ’96 102?” That’s me. The story starts in the early summer or late spring of 1987. I’d known Wolfe since the late 1970s and was reading a proof of “Bonfire” as a favor. I recall marveling at how he captured the feel of the era’s trading floors. And has there ever been a better description of how underwriters get paid?
“Just imagine that a bond is a slice of cake, and you didn’t bake the cake, but every time you hand somebody a slice of the cake a tiny little bit comes off, like a little crumb, and you can keep that.”
But back to those United Fragrance bonds. Tom was describing these as having a 13-year maturity. And yet in the proof, the line was “U Frag 13 ’96 102.”
I called him. I told him that I would put the coupon there, not a 13 signifying the maturity. You already had the maturity there, the ’96, right? So the 13 should be … whatever the coupon was, considering the price action described in the chapter.
I knew Tom prided his work on its verisimilitude, its absolute adherence to the facts. For years he had preached that fiction should be just as well-researched as nonfiction reportage. And this was his first novel.
Well, okay, he said. He sounded convinced. What would that coupon be? He could still make changes, but they had to be small.
And so I borrowed the Monroe calculator, and we backed into it. With this price, the yield would be this, and the coupon: 10.10, I told him. That would be a 10.10 percent coupon. And then later in that chapter, bond man Sherman McCoy says, “I can get him United Fragrance ten-tens of ’96 yielding 9.75, if he’s interested.”
I hadn’t heard that anyone ever complained over the years since the novel was published, and every once in a while in a bookstore, I’ll flip open a copy and search out the ten-tens and remember.
My reward for this piece of research was an invitation to the fabulous (hey, it was the ’80s) book-launch party at the St. Regis hotel roof. I remember at one point finding a safe place for Gay Talese’s hat, and seeing Kurt Vonnegut put out a cigarette in a wheel of cheese.
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