Poker players have a saying that goes like this.
“There’s a mark at every table. Look around. If you can’t spot the mark, it’s you.”
The idea is that its safe to assume that at any given table of serious gamblers, there’s one player who the others are preparing to fleece. They are not necessarily going to cheat or break the rules. But they all tacitly understand that they can make money just by gently encouraging the mark to be more daring, to raise his bets, to bet more confidently, until it all comes crashing down and he’s wiped out.
For years, AIG was the mark of Wall Street. A pair of Goldman’s more bearish fixed-income traders would negotiate with a AIG financial products salesman and get an insurance contract that let Goldman make all the calls. Some guys from SocGen would do the same. The only people who weren’t playing AIG for the mark, it seems, was Citi. (Perhaps because they were afraid that if they showed up at the table, they’d be the marks themselves.)
So here’s a question that we heard asked at a cocktail party last week: who is the mark? No one at the party could quite decide. The strongest consensus was “it’s the Federal Reserve.” But you could tell by looking into their eyes that a few traders were worried because they weren’t absolutely sure who the mark on Wall Street is these days. And they knew what that meant.