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The man who almost lost everything

New Yorker critic relives being an 'American Sucker'

By Todd Leopold

In an attempt to make a million dollars, David Denby lost tens of thousands.

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David Denby
Henry Blodget

(CNN) -- Based on a sample of the reaction to David Denby's book "American Sucker" (Little, Brown), you'd think he'd committed an unspeakable crime.

"He shows an absolutely remarkable ability to discuss his behavior without any insight," said a review in the Houston Chronicle. The book shows "an unsightly mixture of pompous petulance and stubborn entitlement," sniffed The Washington Post.

Critics have cackled at Denby's misfortune. Friends have refused to speak to him. And all this in a climate that produces memoirs about an unorthodox sex life (Catherine Millet's "The Sexual Life of Catherine M."), a profanity-laced kiss-off to Hollywood (Joe Eszterhas' "Hollywood Animal") and the rise and fall of a music industry executive (Walter Yetnikoff's "Howling at the Moon").

What did Denby do?

He wrote about losing money. He admitted to greed, immersion in the money culture and being impressed with Sam Waksal's downtown Manhattan residence and the salons within. He actually wanted to make a million.

Is that so terrible? You'd be surprised.

"My book has irritated a lot of people," the New Yorker film critic said in a phone interview from his home in New York. "I've broken a taboo among [some] intellectuals and journalists by talking about money. It's considered poor taste by stating it openly."

And yet, few intellectuals (or anyone) can truly avoid the subject -- not when their lives are tied up in real estate, or nice cars, or any number of material goods ... or the image that having these things represents.

"One problem with capitalism is that it can create an envious attitude toward one's peers. It can hurt friendships seriously, and that's particularly true in New York," Denby said. "It's a kind of functional paranoia. ... That's the downside of our free and open system."

Love and money

Among Denby's contacts: former ImClone executive Sam Waksal, now serving time for securities fraud.

All of this started because of both love and money.

About four years ago, Denby's wife, novelist Cathleen Schine, asked for a divorce. The pair had been married for almost 20 years and lived in a seven-room apartment on Manhattan's comfortable, if not ritzy, West End Avenue. Denby was determined to hold on to the apartment, so he decided to buy out Schine's share of the residence. Given the rise in New York real estate over the years, that amounted to several hundred thousand dollars.

To find that kind of money, he cast an eye on the mania consuming the nation in 1999 and 2000 -- the stock market.

"I became obsessed," he said.

He wasn't the only one. In "American Sucker," he writes about complete strangers offering stock tips, the hum of CNBC in the background and the sense of frenzy that gripped New York. Twentysomethings were becoming millionaires; startup companies with no more than an idea to their names were worth more on paper than major manufacturing firms with a century of tradition. If you didn't make a killing, you were being left behind.

Denby, already known from his New Yorker work, met with some of the characters of the time, notably Merrill Lynch analyst Henry Blodget and Waksal, the ImClone Systems founder. Both men -- even then sliding down the thin edge of the bubble -- have since been discredited; Blodget for making recommendations he didn't believe himself and Waksal for fraud.

In retrospect, Denby said he doesn't blame either man for their cravenness -- "it was part of the mentality of the period" -- but he does observe that their behavior was revealing.

"The one thing I can't forgive [Henry] for was ... the ratings were really a code intended for institutional buyers. They would know the actual rating was two degrees off the stated one," Denby said. "But the rest of his clients did not know that."

As for Waksal, a victim of "a crushing irony -- his drug works and he's in prison" -- Denby said, "he was, I thought -- and still think -- a genuine entrepreneur. ... [And] he's a genuinely charming man.

"But there's something broken inside of him. There's a history of flimflam. I tried to trace this from his family history, and I think it has to do with his family's survival in the Holocaust. In the end, survival is the only thing that matters."

Return from the emotional wringer


Meanwhile, as the market roller coaster plateaued and then plunged, Denby's life became almost haunted.

In the beginning, a New Yorker editor suggested Denby write down his experiences in a journal, which first became an article, "The Quarter of Living Dangerously." The intention was for Denby to follow the market until the end of 2000 for the book, but 2000 was only the beginning.

"There wasn't much of a story," Denby said. "I told the publisher I've got to keep this going."

Then the bubble burst, and Denby found himself trying to cope with a dwindling nest egg along with his collapsing marriage. He had an affair; it provided little joy. He struggled with insomnia. He wanted things he could not have.

And when he finally snapped out of it -- when the market seemed to settle, and September 11 showed what was really important, and he and Schine sold the apartment (in the end, with all the market losses, it was the house that proved profitable) -- he still had to write the book from his journals and relive it all.

Fortunately, Denby said, the act of writing helped him separate from the afflicted man who went through the emotional wringer. And looking back? It was all for the best, he said.

"The truth is, my wife was correct to take off," he said. They're both happier now, he added; Denby is even planning to get married again in the fall. And writing the book was "therapeutic. When you clear away the dead past, new things are born inside of you."

He said he hopes some lessons are drawn from "American Sucker," and he has no regrets about making himself the guinea pig.

"In this country, there's a feeling that if you admit error, your authority collapses. Look at the Bush administration," he said. "But I think that's wrong. If you admit error, people trust you more. So I thought, in writing the book, the only authority is the authority of words. It's my job to tell the truth. And I hope people feel it has some resonance."

Little, Brown is a division of Time Warner, as is CNN.

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