Albert Einstein once defined insanity as "doing the same thing over and over again and expecting different results." By that measure, Wall Street today is completely off its rocker.

I recently read Michael Lewis's expose of 1980s-era Wall Street, Liar's Poker. Unfortunately, the craziness of Salomon Brothers in the go-go '80s sounds a little too close to recent history.

Terrifying tales from the belly of the beast
The Wall Street Lewis portrayed from his in-crowd perspective during his youthful years at Salomon had little to do with the positive, creative attributes of capitalism. Instead, it seemed ruled by boneheaded stupidity and ruthless selfishness:

  • The young and the clueless. Lewis admits himself that he was not exactly qualified for his lucrative job at Salomon, which hired droves of young folks right out of college. However, his tales of brokers sleeping, tossing paper wads, and throwing spitballs in the back row of his training sessions made me wonder whether the financial world's "best and brightest" would truly act like an unruly passel of fifth-graders.
  • Dog eat dog. According to Lewis, the firm was not exactly big on meritocracy. He describes the process to determine where newly trained brokers would be placed in the organization as "one part luck, one part 'presence,' and one part knowing how and when to place your lips firmly on the rear end of some important person." New "geeks" at the brokerage then had to both dish out and bear with considerable hazing. "The place was governed by the simple understanding that the unbridled pursuit of perceived self-interest was healthy," Lewis writes. "Eat or be eaten."
  • The customer's always wronged. One of Lewis's first "successes" at the investment bank involved unloading bad bonds on a good customer. "Stupid customers (the fools in the market) were a wonderful asset," he writes, "but at some level of ignorance they became a liability: They went broke." Lewis notes that Salomon often seemed to have a disturbing reliance on the idea that customers have "short memories." It's easy to see how that mind-set could ruin any business over the long haul.

Deja vu all over again
Unfortunately, Wall Street doesn't appear to have changed much. (In Lewis's follow-up article in Portfolio magazine, "The End of Wall Street's Boom," he wrote that many young people seemed to have taken his book as a how-to manual, not a warning sign.)

Instead, the insanity seems to have continued unabated. These fabricated towers of fool's gold remain disconnected from reality and filled with pointless ego. Take Goldman Sachs' (NYSE:GS) bizarre statements about doing "God's work," which seemed to reveal Wall Street's unbelievable hubris. Or how about some AIG (NYSE:AIG) executives' asinine audacity to demand their expected bonuses, even as their company remains a ward of the state?

More recent news reveals that CIT Group's (NYSE:CIT) TARP bailout -- $2.33 billion in taxpayer funds -- is officially gone. And who's been brought in to helm this troubled company? John Thain, who led Merrill Lynch when it was taken over by Bank of America (NYSE:BAC) and left in a major fall from grace.

What was I saying about doing the same thing over and over, expecting a different result? On Wall Street, neither the actors nor the actions ever seem to change.

Does Thain deserve a second chance? Or is Wall Street merely reverting to its same greed-maddened form? Share your thoughts in the comment box below.

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