Jonathan Knee’s “The Accidental Investment Banker” caused a stir in the industry when the book was published a year ago, as the ex-Goldman, ex-Morgan Stanley man named names, salary figures and shortcomings from the dotcom boom. Reuters correspondent Jeffrey Goldfarb caught up with Knee, now senior managing director at Evercore Partners, on Tuesday as the book goes on sale in London. Knee remains as candid as ever, questioning the growing belief that the UK capital is overtaking New York as a financial center and seeing ego as the solution to the current crisis. He also talks bonuses, advice for grads and a little ’70s TV.

For a full transcript of the interview click here. Below are excerpts from the conversation.

Q: So are we headed for a serious bust? 
 
JK: I think there will be a radical repricing, which is good. You want bubbles to burst. But I think that these are pretty efficient markets and there’s a huge amount of liquidity out there and it’s very hard when you have that much liquidity to have so much volatility that you can’t get to an equilibrium over some reasonable period of time.
 
Q: What about banking jobs and bonuses?
 
JK: One of the typical signs of the top of the market is when the largest class in history is starting at Morgan Stanley. They’re all walking in and the same time last year’s class is rotating, the music stops and they’re looking for seats and there are less seats than there are people. There’s no question this is going to come out of the hide of the junior people and bonuses.
    The more interesting question is in the following hypothetical: Productive investment banker A has done 10 blockbuster M&A deals, brought in $100 million of revenue. He also was the guy on TXU, which on a mark-to-market basis is a minus $200 million. So next to his name is a minus 100. What is his bonus this year? There are a bunch of people who think of themselves to use 
Michael Lewis’s big-swinging dicks, who are going to have negative numbers next to their names at the end of the year. The question is how do you manage that?
    People are scared to death. The market for lateral hiring is going to totally dry up. Remember over the last five to 10 years, the investment banking group that went from loser to center of the universe was the group that covered private equity firms. They staffed up for being 25 to 40 percent of the revenues of the firm. If the steady state is something different then there’s going to be some dislocation. I think they will continue to be a huge source of the overall fees because they’re just annuities. They’re in the business of generating fees…
    It’s not just that at Goldman Sachs is less than 10 percent of the profit, it’s that within that a smaller and smaller percentage of it is providing advice to CEOs of companies. Providing advice to CEOs is a diminishing slice of a diminishing slice, and the nature of what the other slices are that are overwhelming it are increasingly at odds with the objectives and interests of the CEOs, which makes them less and less comfortable sharing information. There’s a garbage in, garbage 
out problem with your advsiers. It’s like going to a shrink and you don’t tell him your father beat you for the first five years of your life; it’s hard for him to help you.
 
Q: There have been suggestions that London is overtaking New York as a financial center. You’ve worked in both places. Is that a real shift that’s taking place?   
 
JK: I always find that overblown. These are people businesses and decision making tends to be pretty centralized, and at headquarters. More often than not in history when somebody senior is being shifted to Asia or London, and they announce that this is part of the strategy of globalisation, it is in fact somebody having lost a power struggle and being sent to Siberia. 
    London is not Siberia, but it’s not where the day-to-day decision making is going on at those institutions. When Steve Newhouse was moved to London at Morgan Stanley, everybody knew what it meant: That we would not be hearing from Steve Newhouse an awful lot.
    I think this SarbOx stuff is overblown. I think whether more people are listing on AIM, the idea that that’s going to be driving fundamentally where economic activity happens in the world, I think, is overblown.

Q: Will there be a film of this book?
 
JK: I would encourage you to promote that idea shamelessly. So far no one has made any offers, but it may be because I’ve been insisting that Mel Gibson play Sidney Weinberg and that’s been a deal killer…
 
Q: Who would play you in the film?
 
JK: The guy who played Horshack (Ron Palillo) on “Welcome Back, Kotter”. If someone wants to buy the film rights, they can play me in drag for all I care.

(Photo. Jonathan Knee, Bostonia, Boston University’s alumni quarterly)

Despite repeated statements from the muggles at publishers Bloomsbury and Scholastic — and even from JK Rowling herself — that the next Harry Potter story will be the last, one in five children refuse to believe the series will be over after the seventh book. Half the tykes who have resigned themselves to a final goodbye from the bespectacled boy wizard plan to hunt for a new series to read while one-third will re-read the Potter books and about one-quarter say they will steer clear of bookshops until Rowling writes something else.

While Harry Potter has been widely hailed as the only written temptation able to lure children away from their Sony PSPs, the new study from Yankelovich, which was released the same day as the paperback edition of “Harry Potter and the Half-Blood Prince” (coincidence? hmmm), offers some of the first tangible evidence. Fifty-one percent of Harry Potter readers aged 5-17 said they didn’t read books for fun before they discovered Hogwarts and Quidditch.

What may be the report’s most distressing finding to people of, a certain, more mature age, is that 34 percent of parents say Harry Potter is a “must read” for kids and teens. Number two on the list, with only 12 percent? Dr. Seuss.

In a world where books have taken a backseat to video games and DVDs, HarperCollins Canada’s online marketing director Steve Osgoode has ripped a page from Hollywood’s playbook and is pushing Londonstani, the debut novel of Financial Times reporter Gautam Malkani with an online movie-style trailer.

They didn’t manage to secure the services of legendary trailer baritone Don LaFontaine, but it’s still a big step forward from a shelf-end display at Barnes & Noble. Some authors think it’s a desperate ploy by the publishing industry to do something Internet-related, but Blink baron Malcolm Gladwell told London’s The Observer newspaper he’s all for it. “I think I speak for all writers when I say that I am delighted by marketing efforts of any sort,” he said.