Michael Lewis: 'Wall Street Has Gone Insane'

[xchrom]

http://www.businessinsider.com/michael-lewis-wall-street-has-gone-insane-2014-4



Michael Lewis is only getting madder as he promotes Flash Boys, an investigation into high frequency trading and what he calls the "rigged" underbelly of Wall Street.
He has been on every talk show and financial news panel in the land, arguing with, among others, Bill O'Brien, the president of the Bats Global Markets stock exchange, about whether or not he and his cohorts are ripping off their customers. If the 53-year-old started off angry, opposition to the book has sharpened his stance into a moral crusade. "I find this story really upsetting," he says over lunch in LA, where his publicity tour just ended. "The idea that the smartest, richest elites of society find this an acceptable activity. This predatory activity."

If it's emotional for Lewis, then the responses have been emotional too, given how unequivocal his accusations are. The cornerstone of Flash Boys, which sold a staggering 130,000 copies in the US in its first week of publication, is a discovery made by an obscure Canadian banker, Brad Katsuyama, who noticed that whenever he tried to execute a trade, the stock price moved before the order went through.

A long and tortured investigation revealed that the variable speeds at which trading information travels down fibre-optic cables to the exchanges was being exploited by brokers and high-frequency traders – so-called for the volume of trades they make – to jump the queue, buy the stocks in question and sell them back at a higher price to the person who expressed the original interest.



Read more: http://www.businessinsider.com/michael-lewis-wall-street-has-gone-insane-2014-4#ixzz2zWW4lcjY

[lostincalifornia]

1. he is pissing them off big time. On the networks like Bloomberg and CNBS, I would say the majority

of the financial guests they have on dis Michael Lewis and his assertions. He definitely touched a nerve

Some of their arguments are outrageous, for instance:

"when we had specialists, they were far worse than the flash traders"

So that is their justification? That says everything about the greedy bastard on wall street

[IDemo]

8. I noticed that several of the commenters at the link

are essentially calling him a know-nothing. No surprise there, whether it's "Business Insider" or "CNN Money".

[lostincalifornia]

20. Apologists for corruption

[el_bryanto]

2. Yeah - Michael Lewis has been skewering Wall Street for Years

Back to Liar's Poker - but usually in the aftermath. Wall Street doesn't mind when you talk about how bad they used to be; what he's doing now is talking about how bad they are, and they don't like it.

Bryant

[dixiegrrrrl]

15. And guess what? The lawsuits about HFT are starting.

I am so enjoying this....one can always count on the eventual arrival of the karma train.

Bank of America and the New York Stock Exchange were among dozens of exchanges, brokerages and traders sued over high-frequency trading by the city of Providence, Rhode Island, over claims they rigged securities markets to divert billions of dollars from buyers and sellers of shares.

Scrutiny of high-frequency trading and whether it gives some investors unfair advantage intensified this year amid government probes and the March 31 publication of “Flash Boys” by Michael Lewis.
The lawsuit filed yesterday is one of the first by an institutional investor since U.S. Attorney General Eric Holder in March promised Congress a full investigation into whether high-frequency traders violated laws against trading on inside information.

One defendant in Providence’s complaint, Virtu Financial Inc., a high-frequency trader that delayed its initial public offering, has received inquiries from the office of New York’s attorney general, Eric Schneiderman, according to a person familiar with the matter. Schneiderman announced last month that he’s investigating high-frequency traders.

The Federal Bureau of Investigation has said it’s looking into whether firms that engage in high-speed trades get an improper jump on other investors by using information about their trading to make profits.
http://www.bloomberg.com/news/2014-04-18/bofa-nyse-brokerages-sued-in-high-frequency-trading-case.html

[99Forever]

3. The game isn't broken, the game is fixed. n/t

[Romulox]

4. Our President's first act was to "make whole" all the investments bankers who destroyed the world

economy.

Who is listening to Michael Lewis?

[IronLionZion]

19. Punish him by electing liberal Democrats at every level

Get out the vote!

[pragmatic_dem]

35. and didn't even slap the wrist of SEC. Reform seems to be a dirty word to Democratic leadership. nt

[dixiegrrrrl]

5. I recommend this book.

Lewis writes in plain english, with wit, and makes this finanacial story very clear, even if people don't like readng "finance books".

The other 2 writers who are so good at money tales are Matt Taibbi and Michael Hudson.

Taibbi just came out with The Divide, I have not browsed it, but it should be good.

He has also written:
Griftopia, "A brilliantly illuminating and darkly comic tale of the ongoing financial and political crisis in America"

The Great Derangement: A Terrifying True Story of War, Politics, and Religion

Smells Like Dead Elephants: Dispatches from a Rotting Empire

Spanking the Donkey: Dispatches from the Dumb Season

Michael Hudson wrote The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America--and Spawned a Global Crisis

[2banon]

10. Excellent reading list, disxiegirl..

[Spitfire of ATJ]

6. It's like pulling into a gas station and watching the price go up because you pulled in.

[laundry_queen]

38. That's a good analogy.

Except I would say the price changes as soon as you start pumping the gas into your almost-totally-empty-so-you-can't-go-anywhere-else tank.

It's a total scam.

Right now, the way our markets work and with the flow of information, we have (it's from the efficient market hypothesis http://en.wikipedia.org/wiki/Efficient-market_hypothesis ) what I was taught a semi-strong market. That means, other than insider info, every one is getting the same information at the same time and it's very difficult to make a buck without insider information. Or....without exploiting computer 'glitches' like this. If these greedy bastards can't make a buck in the market as it is currently because of a level playing field for everyone, they WILL cheat. The game is rigged.

[JEB]

7. One reason to favor a transaction tax.

[grahamhgreen]

14. +1,000 before your +1 registers;)

[paleotn]

16. Agreed. (nt)

[kag]

18. Yeah, what ever happened to that idea?

Haven't heard much about it lately? We need to do it, and fast.

[daleanime]

36. Hell yes.....

long over due.

[2banon]

9. Good to see the face behind the voice I hear on the radio..

His voice is deceptively young sounding.. Yesterday I heard him during an hour long interview hosted by City Arts and Lectures series in San Francisco, broadcast on KQED radio. In his occasional reference to his past publications covering events a couple of decades ago, I would be taken aback, thinking he was too young to even be working much less writing about behind the scenes shenanigans in the financial markets.


I'd love to see some of the video clips on Bloomberg and CNBC etc facing off with those asshats on the subject.

[marmar]

11. k/r

[brewens]

12. Not so long ago, you'd have had to tap a guys phone or bug his office to pull off trades like that.

It might not technically be illegal because of new technology making it possible but it should be.

[jmowreader]

32. Now you just use your checkbook

Order flow is salable. That's how HFT firms get it

[Jerry442]

13. What does it say about our society...

...that some of the most successful and respected people in it are basically casino operators running rigged games?

[paleotn]

17. Love his books, but....

...his subjects are sometimes a bit behind the curve. Nothing wrong in that. Most people are.

Even this is a little stale....Wall Street's newest scam....uh, I mean securitized investment.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/11/08/wall-street-figured-out-how-to-securitize-your-rent-should-you-worry/

Robert Hockett says it best...

"We don't want to become a landlord-tenant culture, a sharecropper society. It's kind of like medieval Europe, where a few large financial institutions own everything, and we just rent from them."

Forget about ever owning again ( a middle class family's largest and most important investment ) that is unless you want to pay way more than the house is worth. That's the only way to beat out the all cash vultures who want to buy your dream home and then rent it to you, turning you into a virtual serf. Eventually, we'll end up like some giant banana republic, with 1% owning all the land and housing stock, and the rest of us own virtually nothing.

[Johonny]

28. +1

[alcibiades_mystery]

21. It's a feature, not a bug

Every damn decade we now have to have this discussion: X thing that Wall Street does is CRAAAAAAAAZZZZY! No, the whole fucking thing is destructive BY design. It is an insane way to run a society and allocate resources. It's stupid. Capitalism is fucking stupid and destructive, and wall Street is its ultimate manifestation. The violence that Wall Street thinking inflicts on populations isn't an accident. It's structural. It;'s how capitalism actually works: by murdering and stealing from others.

[DeSwiss]

22. Capitalism is INSANE, buddy.

- That's the first symptom. And it's always fatal -- for others.

K&R

[Trust Buster]

23. Want to really get disgusted ?

Read Matt Taibbi's "Griftopia". He writes in plain English how Wall Street has seized control of the commodity markets and manipulate the price of oil and food commodities. He discusses why we were paying $4.50 a gallon in 2008. All Wall Street manipulation for reasons of their own profiteering. A must read.

[Skittles]

24. imagine what jails would look like

if all the thieving Wall Street bastards were incarcerated

[YOHABLO]

31. Country Clubs?

[Skittles]

34. YOHABLO NAILS IT

*YES INDEED*

[nikto]

37. No need to incarcerate ALL of them

We still have The Death penalty---That could keep the prisons from being unnecessarily crowded.

[SleeplessinSoCal]

25. Who is the one to address this and rectify the practice? n/t

[burrowowl]

26. K&R

[russspeakeasy]

27. + 100000000000000000000

[Rex]

29. Greed is good, that is the mantra.

Of course it is insane. Trying to pretend it deals with the human aspect is laughable. Human capital is disposable capital to a conglomerate.

[blkmusclmachine]

30. Rigged

[snot]

33. K&R'd.

[Sherman A1]

39. K&R