Confessions of a Wall Street Insider

“MIKE, IT’S GARRETT,” THE VOICE ON the other end breathed into the receiver with urgency that was only partly concealed.

After Remsenberg had blown up, I’d given my friend Garrett Marquis a “temporary” $10,000 loan to “save his marriage” and keep a roof over his head. I found out later he’d hit Nu up for the same amount and God knows who else. This short-term “I owe you my life loan” was now going on three years, and it had survived Garrett’s extravagant wedding, a new condo purchase, and a Mercedes (“it’s only leased, Mike”). He was that kind of guy.

“You know my uncle is at Bear Stearns, right? Well, he says things are so bad over there that he thinks they’ll get bought. Some bank from Sweden or something.”

“I think that’s kind of in the market already,” I said as though Garrett were a small child who had conjectured that man might one day reach the moon. “Everybody knows Bear is in trouble. There was an article in this morning’s Times, for goodness sake.”

After a small pause to calculate why exactly Garrett was telling me this (like maybe “Hey man, you made $10 thousand on that Bear Stearns short, can we net out my debt?”), I asked him: “Do you want me to tell Zvi?”

“Yo, you know the spot where Garrett’s uncle works?” I asked him, careful not to mention the name of the firm as the eyes and ears on the desk were always roving for action.

“Well he thinks something really might happen. Apparently it’s a shitshow over there.”

“Be my guest,” I told him, well aware he’d call irrespective of what I said.

After calling Drimal and a handful of other contacts, Zvi circled back to his brother.

“Yeah. Good size in the common and a smattering of near term calls. Did you tell Mike about this one?”

“Yeah. Joe too and a few others. Alright, if everyone’s got it on. I’m going to walk it into the Big Guy.”

“Be ready to let some go, you know the Fat Man stampedes in like a fuckin’ elephant.”

“Roger that, Chief,” Nu responded and cued up some more Bear Stearns sell orders.

We were trading in and out of Bear Stearns for a week, only making small coin. The stock was trending downward. Most of us stopped ourselves out when it triggered our initial entry point of $81, and now it was sitting precariously in the mid $50s, having shed the last $10 quicker than Marion Barry in a crackhouse. Then something changed.

“What’s going on with Bear Stearns!?” I shouted, as I noticed it ticking up violently from $55 to $59, leaping dollars like rungs of a ladder. Then it was through $60.

“Anything on the tape?” Paul barked as we checked our news services and fired off instant messages to other traders on the Street that might have some insight into the sudden ramp-up. Futures were gapping up now. Someone apparently knew that a break-the-glass scenario was off the table.

“Maybe it’s a merger,” I theorized. “Or some kind of an outside capital injection? Probably not a merger, but it could be a partnership? Is there anything on the web? Come on. What the fuck is the news? Goddamn Bear Stearns. Goddamn criminals!”

I cursed the buyers out there who were trading on information that the rest of us down the food chain weren’t yet aware of. Somebody clearly knew something but it certainly wasn’t me. The SEC examiners who had been auditing Whitney’s firm for the last three months were seated in the conference room directly next to us. They gingerly stuck their heads out and looked around. I guess hearing me shout was decidedly more interesting than whatever they were parsing in there.

A few more seconds passed, and the news finally hit Bloomberg: “Bear Stearns Bailout Keeps Firm Afloat.”

Embattled firm will tap emergency funding from JPMorgan and N.Y. Fed in effort to fend off collapse.

“Huge!” I agreed. “But what the fuck does it mean? And what did Bear have to give up in exchange for this?”

The full press release was just now hitting the Bloomberg wire and other news services would soon pick it up:

Battered Wall Street brokerage Bear Stearns said Friday that it is receiving short-term emergency funding to prevent its collapse. JPMorgan Chase & Co. and the Federal Reserve Bank of New York said they would provide Bear Stearns funding for up to 28 days, with the Fed providing the money to JPMorgan through its discount window.

To help facilitate the deal, the Federal Reserve is taking the extraordinary step of providing as much as $30 billion in financing for Bear Stearns’s less-liquid assets, such as mortgage securities that the firm has been unable to sell, in what is believed to be the largest Fed advance on record to a single company. Fed officials wouldn’t describe the exact financing terms or assets involved. But if those assets decline in value, the Fed would bear any loss, not JP Morgan.

The last time the Fed had played capital-raise matchmaker had been back in 1998. Global markets had been melting down, and the object of the Fed’s affections, Long Term Capital Management, had been literally self-destructing. And that had been but a $3 billion salvage operation to “save the world.” This was $30 billion? Could things at Bear really be ten times as bad as they were at LTCM?

“Mike, any thoughts here?” Nu yelled across the floor as we all braced at our terminals like fighter pilots caught in a sudden hurricane. I didn’t have anything to add. Not yet. I was still trying to digest the press release. If they really were just backstopping Bear Stearns in the interest of beneficent capitalism—or just injecting some short-term confidence to stop the liquidity panic—then the stock should probably be bought. It was trading at $60, and it had been over $90 a share only two weeks ago.

But this still didn’t make sense. Why would the Fed and JPM be doing this? Did JPM have exposure to Bear’s toxic assets? Were they opportunistically positioning for a buyout? Everyone knew Jamie Dimon was a pretty shrewd guy. Perhaps this was even being forced upon Bear.

I only knew one thing for sure. If Bear was doomed to become a carcass—which I thought probably it was—then $60 wasn’t even remotely cheap. And any first year PR hack knows that you don’t put “collapse” in a financial news release unless you want to set off a thermite grenade in a movie theater with the doors glued shut. Something was definitely happening. There were simply way too many unanswered questions for the press release to be credited at face value.

The confusion running through my head was of no benefit to anyone else, but it did keep my hand frozen on top of the mouse and prevented me from buying or selling any shares. The answer to Nu’s question was “E” on the multiple choice grid: “Not Enough Information.”

“I don’t know,” I finally said. “We don’t know the full story. Watch the share price—it’ll tell you whether the market likes it or not, and whether it’s a good deal for Bear. Feels bearish to me.”

The stock continued ticking up to $63 … and then, ever so slowly, like a wave cresting, began ticking off.

“Fuck!” Paul yelled, as he tried to sell the stock he had just bought moments earlier for a slim profit. “Nice goddamn execution. Order at $62.50 and they filled me deep in the hole.”

Filled in the hole. The clearest signal that there is supply and demand imbalance. The flip side holds true as well. If I were to put in a market order to buy when the stock was trading at $61.10, I’d rather be filled at $61.15 than $61.10. The higher fill tells me that I am competing with other buyers out there and the stock should head higher. Get filled at $61.05, and you know it’s going lower.

Once Bear ticked back through $60, it started peeling off dollars. $59, $58, $57, $56, it sounded like a New Year’s Eve countdown in Times Square. But instead of the ball dropping, it was a financial bomb aimed at global capitalism, the result of a decade of leverage, greed, and extremely bad policy decisions by our so-called leaders in Washington.

The war at $55 per share was ferocious. This was the proverbial line in the sand because it was the price at which the stock had closed the day before. Traders often refer to such a price as the “Armageddon Level.”

If the stock went negative again today, after absorbing this news and after having been down almost 30 percent for the week, it meant that Bear was in much bigger trouble than anyone imagined, and half the Street would have a foot in the aisle, ready to hit eject.

A few weeks earlier, Zvi had talked Raj into taking a position based upon the likelihood of an imminent takeover. If Raj was still long, Zvi’s head would soon have an apple in its mouth, and our biggest ticket to investment Easy Street might well be lost. Raj had recently agreed to provide us investment capital, and being backed by a billionaire was bliss. But now we faced the reality that Raj would surely renege on his commitment if Zvi continued to lose Raj money. My only hope was that Raj had been smart enough to treat Zvi’s “get long Bear Stearns now” whisper wink with the appropriate amount of skepticism, or that if Raj had bought it, that he’d punched the eject button long before today’s news.

When the stock finally knifed through to $55, I looked up and noticed that the Spooz (S&P futures contracts) were still up fifteen points from their open, an obvious mispricing considering the catalyst for the entire bounce was the purportedly good news for Bear Stearns. I stared into my screen like a deer caught in the headlights. Even though my gut told me it was a bigtime short, I was terrified that some other news would come out and propel it higher.

Buying puts was the obvious route, but they were now too damn expensive. The volatility in Bear and the market in general had jacked option premiums. I had little doubt that the market was going lower, and so I shorted about $3 million of SPYs (the stock equivalent of the Spooz).

“Shorting SPYS!” I yelled to the room. “Gonna trade them off Bear Stearns. As long as Bear keeps going down, I’m staying short! Cover and flip long if Bear goes green.”

“Look at the puts!” Eric shrieked. Murmurs of “Jesus,” “Holy shit,” and the more secular “Oh, fuck” filled the room. Someone had backed up the proverbial truck and was buying a ton of the March $40 puts! And the $30s?

“WHAT SICK FUCK IS BUYING THE MARCH $10s?” someone cried at the top of his lungs.

With the stock trading in the low $50s, traders were purchasing the $30 puts, the $20 puts, and now the $10 puts hand over fist. Never in Bear’s 100-year history had the stock moved even 1/10 as much as traders were now predicting it would move in the next few days.

Were these buyers hedging hemorrhaging long positions in the stock or buying relatively cheap insurance against a Black Swan? Or did someone know something? There. There the darkest possibility. A flashback to President Nixon, but the question now for traders and later for regulators: “What did these Bear Stearns put buyers know, and when did they know?”

Bear continued to tumble as the afternoon passed and the market finally, blessedly closed for the day. We understood, however, that this was not the end. This was a short, temporary armistice in what was going to be a war for Bear’s future, and maybe the future of the Street itself.

“No, No, NO!” she screamed, each shriek successively louder and more desperate than the last. Most husbands would have jumped at these escalating cries. I just shook my head because I knew exactly what was coming. I could hear the calm, sedated voice of a National Geographic narrator, The female primate shows her frustration by yelling and banging on the butcher block in a show of force. These weren’t cries for help, just exasperation.

“April fucked this up! How could she? There’s only one tray! Where’s my second tray of mini-cheesecakes?”

“Where the hell did I put that diaper bag?” I asked myself, as I tore apart our mudroom looking for the navy blue and white canvas bag. The only bag I could find was a Lily Pulitzer bag, hot pink with green trim and green and white polka dot handles. There was not a chance in hell I was carrying that thing, especially since my wife had just informed me, ten minutes before our scheduled departure, that due to a “work emergency,” she didn’t think she could come with us to Sylvie’s friend Patrick’s fourth birthday party.

A sign I once saw above a school administrator’s desk flashed through my head: “Poor planning on your part DOES NOT constitute an emergency on my part.” I kept that one to myself. My vodka-centric diet hadn’t yet totally destroyed my self-preservation instinct.

It wasn’t the fact that I was flying solo that annoyed me. That was the ordinary course of business. Lisa worked most weekends, so I usually had the kids all to myself. It was the timing, and the fact that she had already raised Sylvie’s expectations that she’d be joining us. Had I known that an entire tray of mini-cheesecakes would vanish into thin air, I would have politely requested that she check “No Thanks” on that RSVP box.

While things were hectic at home, they were even crazier at work. I was encountering Class 5 rapids, trying to navigate the nastiest financial crisis in anyone’s lifetime in a kayak. Or maybe a secondhand canoe. I was also building a business from scratch, pretty much on my own, and attempting to raise capital when the “smart money” was being put under the mattress, shotgun sales were soaring, and a few people upstate were literally locking themselves in the house with enough food and ammo to last six months. Every day a new crisis roiled the markets and interrupted my plan to expand the firm. I longed for a day to simply take a breath, to wind down, and decompress.

My daughter Sylvie was extraordinarily shy, to say the least. Even a neighborhood birthday party with her regular group of schoolmates had the potential to be a traumatic experience for her. Syl much preferred reading a book alone in her bedroom to interacting with groups of people. And the situation was worse now that Lisa would be working, and my attention would be divided because her younger brother Cam was gonna have to tag along.

Cam hadn’t been properly invited, but bringing him wasn’t a total faux pas. It was acceptable for the younger sibling to show up at a party sans invite at that age, especially if he didn’t consume a lot of cake, juice, bathroom time, or party favors.

I was perfectly capable of handling both of them, at least enough to guarantee no permanent injuries or scars would occur. Besides, I was capable of exploiting the “Single Dad” phenomenon, and knew that I could expect to have a little help from my wife’s friends. There was a bit of social sexism at work at these things, and I sure as hell was happy to use it to my advantage. A mother showing up to a birthday party without her husband was expected to have her shit together on all fronts—on time, well dressed, hair perfect, armed with a fully stocked diaper bag, anticipating any and all contingencies and mishaps. Throw a single dad alone into the same party, and the other mothers would inevitably find it adorable that he’s “trying,” and prove eager to lend a helping hand. It was a double standard and I knew it, but with everything in my life seeming ready to go to hell at any moment, I was going to take what I could get. “Come on, this bag has to be here—I just saw it!” I yelled at the room, knowing full well that “just saw” to my stress and Ketel-addled brain could mean days or months ago. I knew it was here though. In fact, we had a few of them lying around. The LL Bean, long handle, extra large canvas bag with a monogrammed name was my go-to baby gift. I would have patented it had the girl at the Trademark Office been willing to play ball. It wasn’t just the practicality of the bag, it was the wondrous efficiency of the whole damn process. Receive a baby announcement in the mail? Go immediately to the LL Bean website. XL long handles? Check. Boy? Navy. Girl? Pink. Block small capital letter monogramming and free shipping courtesy of our LL Bean Visa card. All I needed was a name and an address, and in under five minutes I could knock off one of society’s more painful rituals—the finding, purchasing, and delivering of an appropriate baby gift for proud new parents who wanted for naught.

After several years of enjoying a personal monopoly on the LL Bean gift bag, a few recipients decided they liked my idea, or that turnabout was fair play. When Cam was born, we received three of the bags back our way. It one of these “regifts” of my trusty navy canvas gift bag that I was desperately searching for.

“These are YOUR friends, sweetheart!” I yelled, knowing full well that Lisa couldn’t hear me over the furious hum of kitchen electronics. “Next time that you’re not sure you can make it, do us all a favor and skip the RSVP for me.”

I mean, at this point, I knew that I was going and taking along the damn hot pink Lily Pulitzer bag with the green polka dot handles and trim. There was just no way around it. As I walked past the front hall mirror, I tried to ignore my reflection, but still managed a glimpse and enjoyed a reflexive shudder. SHE did this to me.

I was a Wall Street trader. A cool guy. An alpha. As an athlete in high school, I had hit the game winning single off future Cubs pitcher Derek Wallace to beat a heavily favored Chatsworth team in the Valley Regional finals. Was Lisa even aware that my unwillingness to try cocaine had kept me from once hooking up with Naomi Campbell while partying with Leo DiCaprio and the NY Yankees after they’d hosted Saturday Night Live? I was a real fuckin’ person who knew real fuckin’ people and did real-guy shit!

But none of this, it seemed, erased the fact that I was now wearing light brown Tod’s, sporting a pink diaper bag and a cloth belt with some kind of fucking freshwater fish on it. Did it really even matter how I looked?

Ultimately, I decided to relax and just roll with it. What difference did it make if I was carrying a bright pink bag? Hell, I was going to Greenwich. I would probably seem more out of place there with the plain bag. And as long as I was carrying the pink one, “I might as well throw on my Kobe’s,” I shouted at Lisa, who was unable to hear me over the din of her Cuisinart.

A few minutes earlier, I had come downstairs with a blue polo shirt half tucked into my shorts, wearing a pair of black and yellow Kobe Airs. I figured my footwear choice would be controversial, but at least up for debate. As I walked into the kitchen, Lisa took a break from delivering avocadoes to guacamole heaven and offered a simple, “Uh, uh. No way. Go upstairs and put on your Tod’s. We’re going to Greenwich, not Studio City.”

But now circumstances had changed, and I was flying solo. Back upstairs, Kobe’s back on! Still king of my castle! Lisa glanced over at my feet when I walked past the kitchen, and decided to let it go.

With the diaper bag on one arm, and Cam in the other, I played the parents’ pre-trip version of treasure hunt which included finding diapers and wipes, putting snacks in Ziplocs, filling spill-proof drink cups, and packing up hats, sunscreen, and any other items that I could bring along to help maintain my sanity.

“Remember, Michael, you have to take your car; I need mine for work,” Lisa shouted.

I got the kids in the car and then remembered my car meant no GPS, a semi-devastating turn of events. Sure, I had once backpacked through the Oregon Desert alone for a week, armed only with a compass and a map, driven cross country on multiple occasions with my friend Rand McNally, and navigated the streets of LA selling popcorn machines with only a Thomas Guide and a tin of mint Skoal—but that had all been many years ago. Ages. I’d seen the tech light since then. In today’s world, a road trip to Greenwich with just an address and two pissed off kids? This was downright barbaric, bordering on an outtake from an episode of The Amazing Race.

After finding the address and Mapquesting directions for the first time in years, we were finally ready to go. I wrestled the second car seat to a draw before successfully popping it in. I strapped the kids in, maxed out the AC to cool the sweat off my face, and headed for I-95. I took a giant breath and checked the rearview mirror. Cam looked content. He was old enough now that his car seat could face forward, and he was drinking in the world speeding by. Syl, on the other hand, looked like she was on the verge of tears, and we hadn’t even left our neighborhood.

“Mommy has to work, sweetheart,” I said. “She wanted to come but she couldn’t. We’ll have a great time.”

“Okay,” she said with a big sigh. I handed her the bag of Wheat Thins and a bottle of cut apple juice. She was quiet for the rest of the ride.

I surprised myself by using the Mapquest successfully. We arrived at the party, and I soon found myself enveloped by other parents and kids.

“I’m so sorry Lisa couldn’t make it,” Patrick’s mom sing-songed as we walked inside the house She leaned in for a cheek air kiss. She was the picture of Greenwich style, white cropped pants, and an obviously expensive embroidered shirt with matching ballet flats. She looked as if she hadn’t consumed non-blended food in the six months since I’d last seen her.

Lisa’s friend Amanda put her hand on my shoulder and asked, “How is the new guy treating you?”

I looked into her sincere brown eyes, and wonderfully pouty mouth, and told her.

“Better than the girls,” I said, referring to both my famously difficult wife, and my hardheaded daughter.

Sylvie’s angelic phase had lasted approximately thirty months. Somewhere around the time that we’d moved from the city, she’d started ripping the hair band out of her pigtails, refusing to wear dresses, and was basically never was the same kid again. The “terrible twos” would have been a monstrous upgrade. This was something else entirely. She was independent, immune to discipline, and at times nearly impossible. Although I was a college graduate, a CFA, and a lawyer—who had presumably, you know, thought about a lot of things—I was utterly out of ideas for how to handle her by the time she turned three. I read parenting book after parenting book. Nothing. If there were solutions out there, I had yet to find them.

It was a beautiful day in Greenwich. The sun was shining. After a miserable winter, it was finally starting to warm up. The party was a heavy drinking Greenwich-Rye crowd. For the first year after Syl had been born, Lisa had bonded with these women as they all shared the travails of a first child. The social roles were clear here: women watched the kids and orchestrated the parties. The men did what they did best at these events: drink beer, and talk hobbies and shop. At some point, the birthday kid’s dad gets yelled at by his wife because he is off drinking, or doing something other than filming pivotal events.

“Mike, how’s it going?” Patrick was an investment banker for SocGen’s Real Estate group, and Jeff was in mortgage origination at Bear Stearns. After a bit of small talk, they demanded that I go get myself a beer.

“You know what, let me get Syl and this little guy set up, and then I’ll definitely join you for a cold one,” I said with a smile.

I still had Cam in my arm, an oversized pink diaper bag over my shoulder, and Syl was clutching my hand like the was terrified to let go. Exactly which appendage did they envision me drinking a beer with?

Privately, I found drinking at these kids’ birthday parties overrated. You still had to drive home, and afternoon drinking made me tired. Not to mention that there was nothing worse in my humble opinion than one or two beers. Once I had one, I ached for another. And if I had another, I generally consumed six more. This was not exactly the way I wanted to spend my Saturday with my kids, so the obvious solution was to have none at all.

The central focus of this party was a real old-time fire engine with an open top that had been hired out for the kids. It was going to take them on a little tour of the neighborhood, and seated about ten kids at once. If I could get Syl to get on the fire engine and ride around with the other kids, I’d be home free for a while.

I took her over to the engine, watched her climb up the ladder in back and wait for a seat. She was biting her lip, a nervous habit, and putting on her brave face. I gave her a thumbs up and a smile, and then Cam and I both waved to her. The fire truck pulled away and I allowed myself a ray of hope.

According to Donnie the Firefighter (who, let’s say, must have normally been stationed in a Chelsea or Castro District firehouse), the ride would last approximately twelve minutes. There was a quarantined section of the house set up with lots of foam and toys designated for “babies,” and I happily dropped Cam into the middle of a foam pit filled with blue and red geometric shapes, toys, and other little kids. I said hello to a nearby mom that was watching her child, and asked her if she’d mind keeping an eye on Cam while I grabbed something to drink.

The answer—like it always was at these things—was “Of course!” I ventured off and found a Diet Coke, which I poured into a red plastic cup to confuse the beer swillers.

On the way back to baby pit, I ran into three more guys I knew from these things—Liam, Tom, and John. They worked for BAC Capital Markets, an SAC Capital spinoff, and Morgan Stanley Prime Brokerage, respectively.

There was a round of obligatory “I’d rather be playing golf” (after a careful glance around the room to make sure that the birthday boy’s dad wasn’t among us). Although watching the birthday boy’s father madly dashing around the yard, furiously snapping away with the camera, and refilling the ice chest with beers, I imagined that he probably felt the same way.

“Actually, we separated a few months ago. She found an email on my Blackberry from our Bloomberg rep that had nothing to do with the markets.”

I gave it my best deadpan, but they still saw through me. Part of Bloomberg’s business model seemed to involve sending hundreds of very young, attractive girls to testosterone-infused trading floors throughout the city under the guise of “tech help.”

“Not really,” I assured them. “She’s just working. But a guy can dream, can’t he?”

They chuckled. The “other woman” humor played well in this kind of inebriated crowd, but also hit a bit close to home with many in our social set. “But for the kids” was a common refrain heard in bars, trains, and confessionals throughout the neighborhoods of people who worked in finance.

Despite doing everything we could to avoid the subject, the talk eventually turned to the carnage in the financial markets, and a series of horror stories began to flow. Most of these guys were only secondarily involved in markets, meaning they were investment bankers or some other arm of the Street. Their livelihoods didn’t depend on outsmarting the markets day in and day out. Many of them had multi-year guarantees, and didn’t feel the constant stress of those of us matching wits with the markets each morning. (Those of us who had less job security, less hair, and more circles under our eyes tended to drink a little more heavily than the rest of the crowd.)

“Well, I have to go check on the little guy,” I offered, looking for an excuse to break from the conversation.

“Why? Where’s he gonna go?” Jeff asked. “Can he walk yet? He’ll be fine.”

I was sure he was correct, but I didn’t like the idea of leaving my two-year- old alone in a strange house for very long. I also wanted to make sure we were waiting outside when the fire truck came back from its tour. The guys caught me looking over at Cam.

“That is a cute fucking kid,” Liam said. “Are you sure he’s not Irish?”

“There’s only one way to be certain … and then what do I do if I find out she’s not the mother?” I joked to more laughter and demands that I return for another beer with them. The truth was, I knew who the mother was, having been in the delivery room from start to finish, and even performing the absurd fantasy surgeon ritual of cutting the umbilical cord. (I thought they might give us a discount on the hospital bill. No dice.)

Back at the foam pit, I found that Cam was fine. My impromptu babysitter was gushing over his eyes and hair. I hoisted Cam onto my hip, grabbed a few pretzel chips for the both of us, and snuck back out front just in time to hear the fire engine’s ancient duck horn in the distance.

“Come on, no tears,” I chanted, the way contestants of yesteryear implored the gods of chance for “no whammies” on The Joker’s Wild. A few similarly minded moms heard me and gave knowing smiles. The fire engine soon pulled into view. I found Syl’s face. No smile but no tears, either! I’d take that trade any day. I waved wildly, making sure she saw me, and went to help her off the fire engine. I stroked her head and asked her if it had been fun.

“Nooo.” That got a small smile. Even at four, she knew her daddy could be a merry prankster.

I suppressed a giant smile of my own, and tried to disguise the pride spilling out of my heart. For a girl whose anxiety typically sent her to the nurse’s office twice a week with a stomach ache, this was a giant victory. Swallowing her nerves and climbing aboard an antique truck with a bunch of boys and girls she didn’t really know was a big step.

I could imagine how she must be feeling. This was a win for her, and I let her know it.

It was announced that there would be another ride. Parents and children could ride together, so I told Sylvie we would go again. That got another smile, and we climbed aboard. As the truck took us slowly around the neighborhood, I held my children’s hands and pointed out the white sailboats on the horizon, rocking their way across the Long Island Sound. The duck horn sounded and I jumped. This produced a hysterical laugh from Cam. The full chortle emanating from such a little redheaded body made me smile, and I joined him. The laughing was infectious, and soon Sylvie was laughing along with some of the other children aboard.

Xanax, Vitamin K, a bottle of Opus—these are the tried and true synthetic somas, but I’ll tell you something. Their palliative effects don’t compare to the powers of your own child’s laughter. It can’t be replicated or replaced. And no matter what pit of hell you are in, it has the power to find you there.

A couple of hours before, I’d been on the verge of staying home on the sofa for the rest of the day. It was the easy way out, but a way out nonetheless. Now, instead, I had a memory of a lifetime to cherish, and I fucking knew it. In a perfect world, I’d go round Ocean Avenue forever on top of this fire engine, with my two kids laughing and the Long Island Sound shimmering in the distance. Circling and laughing forever.

“Time for cake!” a thin, blonde Greenwich woman announced gleefully as we pulled back in the driveway.

I didn’t want to be overconfident, but I was beginning to feel there was a chance I might actually pull this trip off—disaster free.

I encouraged Syl to go find a seat at the table while there were still a few open places. After an off-key “Happy Birthday” (and the annoying modern-Greenwich additional verses “Are you one? Are you two?”), Patrick made the first cut, and cake was passed out to all. Noticing that there were extra slices, I furtively handed Cam a slice. I walked into the living room where the men were gathered, and positioned myself with a clear line of sight to my two cake-faces.

Since the “heavy lifting” of the party was winding down, beers were flowing more freely now, and a decidedly more festive atmosphere was building among the gents. On the outskirts of the cake tables, the women were now cracking into the beer chest themselves, and exchanging their own war stories. (I noticed how the women had the sense to linger just on the outskirts of the cake tables; close enough to intercept trouble, but distant enough not to be summoned for trivial help.)

After Liam shared the news that his wife was pregnant with their third, an informal straw poll broke out regarding who would be joining him at three. Surprisingly, almost every hand was raised, including my own. Several men offered five as their magic number. I was blown away. Half the guys here wanted a basketball team.

Back in Los Angeles, two had been the norm. The rare family that had three kids was considered “prolific,” and the subject of some good natured ribbing regarding “mistakes” and “insatiability.” Here, three was the new two.

Banter was light despite the gathering storm on the Street. I glanced into the dining room to make sure my children were still on board the happy cake train. Syl was eating quietly not speaking to anyone, and I suppressed a wave of sadness by recalling her bravery earlier in the day.

Cam had chocolate all over his face and was grinning wildly. His smile was only surpassed by my own. I was about to go over and wipe him down when I thought, “Who cares, let him enjoy it for a bit.” Also, I was curious to see if anyone else would take pity and wipe him down. Sure enough, a sweet gaggle of moms came over and fussed over him, wiping his face clean and then some. He didn’t even protest this unsolicited handling by strange females.

Then my phone started buzzing. I suddenly noticed that the conversations around me had died down, and that the rest of the men in the room had their phones out too. Blackberries were chiming all over. Every one of us had been sent a hot-off-the-presses release from the Treasury. The chatter ceased as we tried to digest it. Furrowed brows and poker faces quickly replaced toothy grins as we stared at our screens.

JPM to Buy Bear Stearns for $2 per Share: Federal Reserve to Provide Financing

JPMorgan Chase said Sunday it will acquire rival Bear Stearns for a bargain-basement $236.2 million—or $2 a share—a stunning collapse for one of the world’s largest and most storied investment banks. The last-minute buyout was aimed at averting a Bear Stearns bankruptcy and a spreading crisis of confidence in the global financial system. The Federal Reserve and the U.S. government swiftly approved the all-stock deal showing the urgency of completing the deal before world markets opened.

“That has to be a typo, doesn’t it?” a nervous, high-pitched voice followed. “There has to be a zero missing, right?”

“It’s not $20,” Jeff said, a little louder and more definitively than everyone else, trying his best to erase the stunned look on his face. “It’s $2.”

From a birthday party to a funeral in the time it took to check a Blackberry. I don’t know how much stock Jeff owned in his employer, but whatever he thought he was “worth” had probably just been cut by more than half.

Star Trek IV flashed through my mind: The Undiscovered Country. There was nothing else to compare this to. No precedent to call upon. This was a financial 9/11. Capitalism, efficient market theory, our entire regulatory structure—all said that what had just happened to Bear Stearns was impossible. A 100-year-old investment bank doesn’t go from being worth $50 billion one week to a couple hundred mil a few days later.

We were no longer simply in a recession. Something far more serious was unfolding before our eyes. This was an entirely different animal, and it was simply not possible to know what the fallout would be, or how or where it would take place. We were living in strange, dangerous times. Only one thing was certain: Very few of us—if any—would get out of this one without a good deal of pain.

I thought about the coming week at work, and that was all I saw. Pain, and a lot of it. Stocks, commodities, P&Ls—all flashing red, all draining money out of the pockets of traders and investors worldwide. The collapse of Bear was either going to be the dramatic “thud” that creates a bottom—as Zvi and many others were arguing—or the beginning of the end for life as we knew it. Nobody had a grasp anymore on what was happening, or on what it all meant. This was uncharted territory: the place on the map “where dragons lie.”

I kept asking myself the same questions. Who bought the Bear Stearns puts? Who made hundreds of millions of dollars while Bear collapsed? Was it Goldman? If not them … who?

Whenever there’s a rumor or conspiracy suggesting skulduggery, fingers always seem to get pointed at Goldman first. As the most powerful and ethically challenged of all the ethically challenged banks, Goldie was permanently parked in a gray zone and the ideal bogeyman. But that didn’t necessarily mean they were always the culpable party.

Whoever was shorting Bear off the initial bump from the headline and press release knew a lot more than the public. The press release didn’t tell you that Hank Paulson had given JPM the weekend to come up with a deal, but was quite prepared to write Bear’s obituary otherwise. Someone knew, though. And from the prints left on the corpse, it was more than one person or firm.

The only thing better than having friends in high places, is having friends in the highest places.