by Patricia Sellers

Have we really hit bottom? Sandra Horbach, who heads the consumer and retail group at private equity giant Carlyle Group, says we have.

Horbach and I chatted on stage this morning at the Women’s Alternative Investment Summit down on Wall Street. “Trailblazers Discuss the State of the Market,” the organizers called our session, suggesting that we both have survived cycles and seen a lot. Yes, we have. Horbach, who started her career at Morgan Stanley (MS), spent 18 years at Forstmann Little before moving to Carlyle in 2005. (Meantime, I’ve been at Fortune for 25 years.)

At Carlyle, where she oversees a portfolio that includes Dunkin’ Donuts, Horbach operates out of an office right next to one of the all-time maestros of managing through tough times: Lou Gerstner, who turned around IBM (IBM) after stints atop RJR Nabisco (RAI) and American Express (AXP). “There are good-time CEOs and bad-time CEOs,” Gerstner has told Horbach many times–and yes, she heeds his advice.

As a senior advisor at Carlyle, Gerstner was gloomy and cautious earlier than most investors, Horbach explained. And in line with his thinking, Horbach’s consumer/retail group has bought no companies–zero–in the past couple of years. While credit was tight and asset values were tumbling, “bad-time CEOs” ruled the roost. Or at least these sorts of take-no-prisoner cost-cutters were favored to run Carlyle’s portfolio companies.

But about six months ago, Horbach says, Gerstner and a few others at the firm began urging a shift from defense to offense–to look for growth and start doing deals again. So, yes, the “good-time CEO” is back in vogue. Though, importantly, a new breed will be in demand. That is, CEOs who understand how to build the top line and do add-on acquisitions. Horbach predicts that we’re in for a “revenue-less recovery.”

Later on Postcards: more insights and outlook from Horbach. Stay tuned!

“Investment banking is funny. You do one transaction, then you do another of the same type and then a third. Maybe then you’ve got a business. Do ten, and it is a business.”

- Fred Joseph, former CEO of Drexel Burnham Lambert, who died of multiple myeloma, at 72 on Friday. Given the junk-bond boss’s status in the Business Hall of Shame, you might think Joseph would earn a harshly critical obit. Not so, as the New York Times illustrates today.

Joseph passes on as more of a builder than a destroyer of wealth maybe because we’ve seen, since Drexel’s implosion 20 years ago, more despicable scandal–Enron, Madoff, etc.–and more catastrophic collapse, Lehman Brothers (BCS) above all. The son of a Boston cab driver who earned two degrees from Harvard, Joseph told Fortune in 1988 that he was guilty of just one thing, “surprising naiveté,” amidst Drexel’s insider-trading scandal. He testified against Michael Milken, his partner, who went to prison and became a symbol of greed.

Milken, more visibly than Joseph, had a post-scandal resurrection–funneling his billions into philanthropy, cancer research, and global problem-solving via the Milken Institute, which still draws old Drexel execs to its powwows. These guys (yes, they were guys at the top of Drexel) had faults beyond “naivete,” obviously, but it shouldn’t detract from the fact that Joseph, as well as Milken, were ingenious in eyeing untapped markets and transforming corporate finance. “Our early niches were restructuring troubled REITs and working on equity offerings for companies that were small or troubled,” Joseph told Fortune in the 1988 first-person account of his rise and fall. “That later developed into high-yield bond offerings that we found filled a very important financing need. In those days, there was no long-term fixed-rate capital for most unrated corporations except private placements with insurance companies.”

Soon Drexel was doing junk bond deals for the cable-TV industry, then the airlines. “Sometimes we did it with new products,” Joseph said, noting that Drexel created initial-offering high-yield bonds and then high-premium convertible bonds. “We did two dozen of those deals before anybody else really got into them,” he added. “Timing and communication were always key.”

by Patricia Sellers

Ted Dimon Sr. started a new job yesterday.

Not just any job. Formerly a broker at Merrill Lynch, Dimon joined the brokerage unit of JPMorgan Chase (JPM). His son happens to be CEO of the parent company.

Word is, Jamie Dimon steered clear of the deal to hire his 78-year-old dad, who arrived with five other Merrill brokers in tow. According to people close to father and son, Ted Dimon Sr. initially reached out to Barry Sommers, the CEO of Bear Stearns Private Client Services, in the spring of last year, after JPMorgan Chase bought Bear on the cheap as the Wall Street firm was collapsing. Talks revved up in the past four months, as Merrill has been adjusting to its own integration into Bank of America (BAC) and new leadership under former Citigroup (C) exec Sallie Krawcheck.

It’s been musical chairs across the industry lately. (The Wall Street Journal reported yesterday that UBS’ (UBS) new wealth management boss, Bob McCann, who hails from Merrill, is hiring a team of top guns from his old firm.) For the elder Dimon, the rhythm could not be more different at 277 Park Avenue, where his office is directly across the street from his son’s. (“As I look from the third floor over Park Avenue, I have a bird’s-eye view of when Jamie gets in the morning,” Dimon Sr. said through a JPMorgan spokesman this morning.) Whereas BofA Merrill Lynch employs 14,979 financial advisors (as brokers like to be called), JPMorgan’s Bear operation is a boutique with just 380 such salespeople. Jamie Dimon, who is 53, wants to expand the business, though. He’s talked about upping the number to 1,000.

We hoped to chat with Ted Sr., but he’s apparently too busy building client assets. (He started his new job on the day the Dow hit a 13-month high.) We do have a sense of how the father-son dynamic will work at JPMorgan Chase. In Last Man Standing, the recently released biography of Jamie Dimon, author Duff McDonald says that when Ted Sr., the son of Greek immigrants who became a stockbroker 50 years ago, was working for Salomon Smith Barney under Jamie and Sandy Weill, “there might be a company name on his business card, but Ted Dimon Sr. reported to no one.” He was a “free agent,” and Jamie confirmed that “he would never say I was his boss.”

It was Ted Sr. who introduced Jamie and Sandy Weill decades ago when Jamie was a teenager and the families socialized together. If you’re familiar with the Shakespearean saga that followed, you probably know that Jamie wrote an economics paper at Tufts University, where he went to college,  about the 1974 merger of Hayden Stone (Weill’s company) and Shearson, Hammill (where Ted Sr. worked). Impressed with Jamie’s analysis, Weill hired the brash whiz kid to work for him.

And they went on to assemble the financial-services empire that became Citigroup. Their relationship unraveled over personal rivalries and jealousies. Weill fired Dimon. And Dimon went on to be CEO of Bank One and then, in 2005, JPMorgan Chase.

Now Ted Dimon is staking his future at JPMorgan, which outranks Citigroup, BofA, and even Goldman Sachs (GS) in stock-market capitalization. No dummy, that Dimon.

“If you buy a railroad, you can’t move it to China or to India or anyplace else. You are betting on the United States. I can’t think of a surer bet.”

- Warren Buffett, explaining Berkshire Hathaway’s (BRKB) $44 billion buyout of Burlington Northern Santa Fe (BNI).

Click here to see Buffett talking about his biggest deal ever with CNNMoney anchor Poppy Harlow.

While the size was a surprise, the bet on America was not. In September, at the Fortune Most Powerful Women Summit, Buffett said he was busy buying stocks and had lots of faith in the U.S. “Our genius in the U.S. is not avoiding problems. It’s overcoming problems,” he told my colleague Carol Loomis.

Their on-stage conversation–recalling the collapse of Lehman (BCS) and its awful aftermath, and also looking ahead–was terrific. We ran snippets earlier on Postcards. But since Buffett is back in the news, we’ll share all 22 minutes:

And if you’re curious to know what it’s like to work for Buffett, read “How Warren Buffett manages his managers.”

My Fortune colleague Carol Loomis passed on this YouTube video of a talk that Morgan Stanley (MS) CEO John Mack delivered last week at Wharton. It’s a remarkably candid play-by-play of living through the global economic meltdown.

Mack talks about being pushed by Tim Geithner, then head of the New York Fed, to do a deal with JPMorgan Chase (JPM) or Citigroup (C) or another partner that might stabilize the teetering firm and, with it, the cratering financial system.

Mack refused to be told what to do. As he says in the video, “Stand up for what you believe in. Do what you think is right. Be prepared to suffer the consequences. But don’t be pushed around when you know in your heart of hearts it’s the wrong thing to do.” He and Morgan Stanley survived by lining up a $9 billion investment from Mitsubishi UFJ Financial Group. And Morgan Stanley turned out to be one of two survivors, along with Goldman Sachs (GS), among the Wall Street giants.

Carol doesn’t mind–and I hope Mack doesn’t either–my sharing an email that she wrote to him this afternoon…and his prompt reply:

Loomis: I just watched your Wharton talk on YouTube. This is one of the best 26 minutes I have ever spent. I predict you will soon have more hits on
YouTube than Susan Boyle.

Mack: Carol, Thanks, but I would prefer to listen to Susan Boyle. John

P.S. Click here to see the video and read about Mack’s “Inside the Bunker” talk on Wharton’s website.

Remember Gordon Gekko, Hollywood’s incarnation of greed the last time Wall Street was roundly despised? Twenty-three years ago, Fortune cut a deal with 20th Century Fox to have a mock magazine, with Gekko on the cover, appear in the Oliver Stone firm, Wall Street.

To this day, I gaze at this cover daily because it’s tacked to my office wall–as I told Gekko himself when he sat behind me during lunch today at Michael’s restaurant in midtown Manhattan. Well, the guy dining behind me was actually Michael Douglas, who won a Best Actor Oscar for playing that dastardly investor. As he and his stunning wife, actress Catherine Zeta-Jones, and another couple rose from their table to leave, I leaned in and introduced myself. “I have to tell you,” I told Douglas, “I stare at you everyday because I have the Gordon Gekko Fortune cover on my wall right beside my computer.”

He laughed and said, “It’s on my wall too”–explaining that in the sequel to Wall Street, currently in production at 20th Century Fox (NWS), he’s reprising his role and the vintage Fortune cover hangs in Gekko’s apartment.

We can hardly wait. Andy Serwer, Fortune’s managing editor, makes a star turn–well, actually a cameo–too.

by Patricia Sellers

Lloyd Blankfein hasn’t loved buddying up to Washington this past year. After accepting–and repaying–$10 billion in TARP funds to help rescue the global financial system, the Goldman Sachs (GS) CEO has had to raise his presence in D.C., as well as in the press, to defend the firm’s record profits and opulent pay. “We went from a bankrupt model to ‘too big to fail,’” said Blankfein, referring to Goldman’s scuffed image, in an interview this morning with Fortune managing editor managing editor Andy Serwer.

Blankfein, you would think, would want little more to do with D.C. But apparently he’s thinking otherwise. When asked if he is planning to take a job in Washington after Goldman, the CEO responded with a story about advice he received when he made managing partner at the firm 21 years ago. “A majordomo told me, ‘You should think of your career this way. If someone writes a nine-paragraph obituary, make sure that no more than two paragraphs are about Goldman Sachs.”

The “majordomo” was Jon Cohen, who is now an advisory director at Goldman and back then was a right-hand man to the late John Weinberg.

Without mentioning “Government Sachs,”–the nickname used by people who contend that Goldman has gotten favorable treatment from regulators–Blankfein went on to tick off a list of former Goldman colleagues who have gone on to big government positions: former Treasury Secretaries Hank Paulson and Bob Rubin, New Jersey Governor Jon Corzine, and Steve Friedman and John Whitehead. “All had second, if not third acts, in their careers,” Blankfein noted.

Not that the Goldman chief is going anywhere soon. He just turned 55 and probably has at least left five years running Wall Street’s mightiest firm. But given that he supported Hillary Clinton and then Barack Obama for President, it’s conceivable if the Democrats hold power: Blankfein for Treasury Secretary in 2016?

by Patricia Sellers

Maybe it’s a sign of recovery in the financial services industry: Wall Street’s two most renowned women dropouts have settled on what to do next. Yesterday on Postcards, you read Sallie Krawcheck’s bizarre tale of her bumpy road on the way to Bank of America (BAC). Today, news broke that former Morgan Stanley (MS) co-president Zoe Cruz is starting a hedge fund.

Cruz, who spent her entire career at Morgan Stanley (starting as a summer associate in 1981), got fired by CEO John Mack almost two years ago, taking the hit for the firm’s huge trading losses. This morning, the Wall Street Journal reported that she has begun recruiting employees for her new firm, to be called Voras Capital Management. The name refers to a mountainous region near where Cruz grew up in Greece.

Famouly press-shy, Cruz declined to talk about her plans. In fact, she has not spoken publicly for many years–except for one interview that she did with me in September 2007, shortly before her ouster at Morgan Stanley. Cruz told me then that she never planned her career. “When you don’t plan, things are easier,” she said. She was interested in one thing, she explained: “Leading an organization to be No. 1.”

Now hoping to launch her hedge fund with at least $200 million, Cruz is starting from scratch for the first time in her life. That name, Voras, suggests where she hopes her business will go: “Voras” is Greek for “north.”

by Patricia Sellers

Sallie Krawcheck

A hot job offer dangles before you. How do you know if it’s right? Sometimes you feel it in your gut. And sometimes you get a big, bloody warning sign. Like Sallie Krawcheck did before she opted to join Bank of America (BAC).

Krawcheck, the former Citigroup (C) star who joined BofA in August to head its Global Wealth and Investment Management unit, told a story last evening in an on-stage conversation with my Fortune colleague Carol Loomis at Manhattan’s Museum of American Finance. While she ducked all questions about who might replace departing BofA CEO Ken Lewis (she’s rumored to be in the running, but she’s a longshot), Krawcheck had the audience rolling as she talked about another job that she almost took–until things went awry.

This other job, explained Krawcheck, 44, was “a leadership opportunity at a troubled financial-services company.” The initial meeting with the prospective employer required a flight out of New York. “For the first time in my life, I overslept and almost missed the plane.” No time for a shower, she threw on her clothes. “I think my pajamas were on underneath,” she said.

She thought to herself: “This doesn’t feel very good.”

Krawcheck made it to the meeting, however, and it went well. The second meeting took place, conveniently, in Manhattan. This was a beautiful spring day. Wearing a new suit and new shoes, she recalled, “I couldn’t have been feeling more pleased with myself.”

That is, until Krawcheck, while walking down Madison Avenue to her meeting, caught the heel of her new shoe in a crack in the sidewalk.

“I went flying down onto a grate,” she said. “I stood up, spit out a tooth. Blood was everywhere.”

Still, she was determined: “I can make the meeting. I can make the meeting!”

“I did not make the meeting. Nor did I eat solid food for the next six weeks.”

“I ended up with six stitches, one broken tooth, a hairline jaw fracture, a dislocated jaw and whiplash.”

Yes, the meeting happened, eventually. In fact, the fit between Krawcheck and this financial-services company seemed ideal. She accepted the job offer.

And then, when she went to sign the employment agreement, “I promptly threw up. And I thought, I don’t think this is right for me.”

And that’s how Sallie Krawcheck, No. 30 on Fortune’s Most Powerful Women in Business list, passed up one big opportunity before accepting another at BofA.

I co-hosted CNBC’s Squawk Box Thursday morning, when we unveiled Fortune’s 2009 Most Powerful Women in Business list–topped by PepsicCo (PEP) CEO Indra Nooyi for the fourth year in a row.

With us on the show: bank-industry analyst Meredith Whitney, No. 39 in Fortune’s rankings. She stayed after co-hosting Squawk Box the hour before–and made news, by the way, predicting that home prices will continue to fall and unemployment will go higher. Here’s video of me revealing the 2009 MPWomen rankings and Whitney talking about the list and the Fortune Most Powerful Women Summit, which convenes next week in California.

http://www.cnbc.com/id/15840232?video=1248624903&play=1

We also talked with Xerox (XRX) chairman Anne Mulcahy, who recently ceded the CEO reins to Ursula Burns, who moved up to No. 9 on the annual MPWomen list.

http://www.cnbc.com/id/15840232?video=1248623553&play=1

Our third guest was Yahoo (YHOO) CEO Carol Bartz, No. 8 in the MPWomen rankings, who is as candid as CEOs come. Check out this lively–or maybe I should say rowdy–discussion about Yahoo’s search deal with Microsoft (MSFT) and Yahoo’s new direction:

http://www.cnbc.com/id/15840232?video=1248642312&play=1

For video of PepsiCo (PEP) CEO Indra Nooyi talking about managing in “the age of thrift,” click here.