Who's creating these days?

7:35 am, express train to Grand Central Terminal. Leading luminaries of Wall Street and the New York City bar populate most every seat as far as one can see. All monthly commuters. All headed in to their high-flying, high-paying positions in the world's leading financial center. The financial center that has spread its ways and wares to all corners of the globe, in the form of debt and equity securities, syndicated bank loans, project finance and other structured financings, commodity and currency derivatives, and complex credit and equity derivatives, to name just a few high-lights. These structures have worked pretty well in the US market and legal system, but they have fared quite poorly in some other parts of the world.

With all the power and influence riding the train right next to me, what strikes me most is what these folks are reading. Almost to a person, they are all reading the Wall Street Journal, and a few are reading the New York Times business section. That's it - I can see scores of the papers, often open to the same page and read at roughly the same pace. Like lemmings. These people are all informing themselves, but only with the same data as their colleagues and competitors.

I have to imagine that such market behavior helps put a kind of frame around what these people create. All the time spent catching up on what your competitors are reading cannot be spent preparing to enter markets and build ideas and products that the competitors are not. Although my evidence is purely anecdotal, my clear sense is that most of these folks do not read other news sources that would inform them better about developments in other fields and from other countries' perspectives. OK, they all have Bloomberg terminals, so they can follow throughout the day whatever Bloomberg thinks is important - but that seems to be much of the same stuff as appears in their morning papers, only more hastily written.

Is it any wonder that this closed information loop leads to Wall Street products that so often merely replicate - culturally - what has been done in the past, even when those products have badly failed investors in parts of the world far away from New York. I have been there when many fixed income products failed investors in the wake of currency and political crises, so I am awed that the international finance products Wall Street and their lawyers still trot out today are complete replicas of the failed deals.

I am sure that institutional compensation structures drive this dynamic as much as anything - it is expensive and risky to adapt deal structures to other cultures, especially when the existing deals continue to sell so well - to a buy-side with complementary compensation structures, and informed by the same news sources. I expect there is opportunity out there for creative people to build new, more culturally-sensitive approaches to investments, approaches that will be more lucrative, even to the deal designers, in the longer term. But somebody will have break out of the "Wall Street Journal on Metro North" model of self-education first.