Mark-to-Market

On the morning of September 15, 2008, I set out early to walk down Calle de Génova in Madrid. I had arrived the previous week to give a talk on Orthogonal Polynomials at a conference at Carlos III University and had decided to stay a few extra days to enjoy the city. The sky was clear and radiant, and the weather was warm and pleasant. It was Monday, and the city buzzed with the typical activity of the start of the week. I carried with me a notebook full of equations I was working on at the time, and also a fantastic book I had started on the trip: Failure is Not an Option, the memoirs of Gene Kranz, NASA’s flight director during the Apollo missions.

After walking for about half an hour, I decided to stop at the Gran Cafetería Santander, right by the Alonso Martínez station exit. I sat at one of the tables facing Santa Bárbara square and ordered black coffee and churros. While waiting for my breakfast, I decided to glance at a newspaper someone had left on a seat next to mine. It was El País, headlining in giant letters:

WALL STREET CRISIS. LEHMAN BROTHERS DECLARES BANKRUPTCY.

I had never heard of that firm, and although I tried to understand what was happening, the news seemed cryptic, distant, even irrelevant. Why was this event given so much importance? I knew that stock markets fluctuated, with some people making a fortune and others losing everything. But I had never been interested in the markets, especially when I had such intriguing mathematical problems on my mind. Bored, I folded the newspaper and left it where I found it. I returned to my breakfast, my notebook, and my book. Life went on.

So there I was, oblivious and naïve, while the most significant financial earthquake of the last eighty years was shaking the markets mercilessly. At that moment, I was content thinking about other things, confident that whatever was happening would never affect me, and even more so, that it would never fall within the scope of my interests.

But of course, everything changed. Lehman’s bankruptcy was that cathartic moment that opened the doors for the world as we knew it to change. How could I have imagined that morning that the repercussions of that event would reach every corner of the globe, even there, to that sunny and pleasant Madrid?

As for me, life’s twists and turns led me to work right at the heart of the financial system, and now not a day goes by that I don’t read about the stock market, monitor certain index levels, or work on making the valuation of certain derivatives faster. And I think back to that September morning, and it seems like a life so distant, so remote. So simple.

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