Books postsSunday April 06, 2014
Flash Boys: Which of the Wall Street Banks Rushed to Engage in Shitty Practices?
Wall Street bull.
So I'm reading Michael Lewis' book, “Flash Boys: A Wall Street Revolt,” about high-frequency trading on Wall Street and what it means. Much recommend, by the way.
Lewis is good at this kind of thing. Not just describing the complexities of Wall Street to financial doofuses like me; he good at telling the stories of people who figure out what the system is doing and/or missing, its market inefficiences, and what these people then do as a result. So Billy Beane exploited the truer, Jamesian numbers of Major League Baseball that other, old school GMs discounted. So Steve Eisman saw the disaster securitized subprime mortgages would become for Wall Street, and shorted them. So here, Brad Katsuyama, the most Canadian of Canadians, the polite, Royal Bank of Canada rep on Wall Street, figured out, with a crack team he assembled like in the best Hollywood heist movies (or in the first season of “The Wire”), how Wall Street, around 2007, became rigged because of high frequency trading.
Essentially Wall Street firms are using computers and fiber optic cable to do what would be illegal if human beings did it. They front-run trades. It would be as if you wanted to buy something, X, and, as you were buying it, someone came between you and X, bought it, and then immediately sold it to you at a higher price. When you got your credit card receipt back, the price had jumped, and you didn't know why, and you never saw who came between you and the thing you wanted.
It should be illegal. It's not. But it's definitely shitty.
And which of the Wall Street banks rushed to engage in shitty behavior?
To Spread this seemed an obvious restriction: The [fiber-optic cable] line was more valuable the fewer people that had access to it. The whole point of the line was to create inside the public markets a private space, accessible only to those willing to pay the tens of millions of dollars in entry fees.
“Credit Suisse was outraged,” says a Spread employee who negotiated with the big Wall Street banks. “They said, ‘You’re enabling people to screw their customers.'" The employee tried to argue that this was not true—that it was more complicated than that—but in the end Credit Suisse refused to sign the contract. Morgan Stanley, on the other hand, came back to Spread and said, We need you to change the language. “We say, ‘But you’re okay with the restrictions?’ And they say, ‘Absolutely, this is totally about optics.’ We had to wordsmith it so they had plausible deniability.” Morgan Stanley wanted to be able to trade for itself in a way it could not trade for its customers; it just didn’t want to seem as if it wanted to.
Of all the big Wall Street banks, Goldman Sachs was the easiest to deal with. “Goldman had no problem signing it,” the Spread employee said.
Wall Street and financial folks are howling about the book, apparently. Here, Lewis answers back.
Carson Karin Gets No Respect
I already mentioned the typo on Amazon's Kindle that changes Hollywood legend Garson Kanin to Garson Karin.
This is from the New York Times site: a review of the book I'm reading:
I recommend the book, by the way, Kanin's memoir, “Hollywood,” because it's informative and damn, damn fun, even if (caveat) it should be a little tighter and better organized. But if you like stories, this one's got 'em. Basically, it's a love letter to the golden age of Hollywood in general and Samuel Goldwyn in particular. It's the best kind of love letter: the kind that sees the faults.
Sophia Loren: The Wrong Kind of Sexy
Another great story from Garson Kanin's memoir, “Hollywood.”
Apparently in the late 1950s, Spencer Tracy approached Kanin, who wrote some of the great movies of the late '40s and early '50s (“Adam's Rib,” “Born Yesterday”), to write something for him and Sophia Loren, who, as Kanin writes, “had recently come upon the scene, bringing with her a sultry, volcanic, sexual quality that had long been missing from the screen.” Kanin did. Problem? No one wanted it. Because? None of them, Tracy, Kanin or Loren, had been successful at the box office in recent years. Tracy agreed to less money, Loren, too. Kanin agreed to waive his director fee. Nada.
But Kanin's agent, the wonderfully named Abe Lastfogel, insisted Kanin pitch to Lou Schreiber at 20th Century Fox. He did. Smartly. He told him the story first so Schreiber was interested. Then he kept describing the main characters so Schreiber would suggest the actors Kanin already had in mind. Schreiber bit:
“It sounds like Spencer Tracy to me. Could you get him?”
“We sure in hell could try,” I said. “Great idea, Lou. I have the feeling he might go for this.”
Then he did the same for the female lead. Nada. Schreiber had no one in mind. So Kanin made the leap to Sophia Loren himself. Schreiber was less than excited.
“Sophia Loren!” Schreiber repeated incredulously. We could not have done worse had we suggested Tokyo Rose.
“What's the matter with Sophia Loren?” I said. “She's beautiful, she's young, she's a tremendous screen presence ...”
But it was the box office. Loren had made a string of bad movies for Hollywood that had done nothing. Kanin insisted it wasn't her fault.
“How come you guys always blame someone else? She didn't pick the subjecdt and she didn't write the picture. She didn't direct it or cut it or release it. So how come it's her fault?”
You know why,” said Schreiber. “It’s because that’s the kind of personality she is. Women don’t like her. She makes them nervous. She’s too sexy.”
“What’s wrong with that?”
“Too sexy in the wrong way.”
“I didn’t know there was a wrong way.”
Then Schreiber gets nasty about it. The picture's never made and everyone goes onto other things. Fifteen months later, Schreiber called Lastfogel to see if he still represented Loren and if she was available. Yes and yes. So he sent over an offer: $1 million guaranteed to appear in “The Story of Ruth.” Kanin: “It was a lesson I never forgot.”
Sophia Loren: the wrong kind of sexy.
Help Me Copy Curmudgeon, You Are My Only Hope
I'm reading “Hollywood” by Garson Kanin on my Kindle and came across this spelling error from amazon.com. It's on the Kindle, too, but not in the book. ATTN: Copy Curmudgeon. Not to mention Mr. B:
“Hollywood” is a lot of fun, by the way. Great stories so far on Samuel Goldwyn. He's a major asshole but he's got personality, and, as we've learned, personality goes a long way.
Gabriel Sherman: 'Paranoia is Essential to Understanding Roger Ailes'
This afternoon, Gabriel Sherman, author of “The Loudest Voice in the Room: How the Bombastic, Brilliant Roger Ailes Built Fox News—and Divided a Country,” which is much recommended, held an online chat on Reddit, and I arrived in time to ask him two questions.
The first—based upon this post—was kind of lame, since it asked what couldn't really be answered. Still, I was curious if it brought up anything interesting from Sherman. I've done enough Q&As to realize that the best questions can get you nothing while the worst can open up a goldmine. Not really a rationale for asking bad questions, but ... You ask what interests you.
Q: Do you feel Roger Ailes' paranoia, chronicled in the last part of the book, is a consequence of how he lived his life? I.e., he expects his enemies to be as ruthless with him as he's always been with them?
Sherman: Paranoia is essential to understanding Roger Ailes. I'm a reporter, not a novelist, so I can't be in his head. But following the adage that “action reveals character,” I think your question gets at something. Ailes has certainly justified his behavior in the past by projecting the worst motives onto his enemies. One instance: at NBC, at the apex of the anti-Semitism investigation, Ailes claimed his opponents were “un-American” because they were challenging his abusive management style. Ailes also talks of people being “spies,” which is revealing, since he's a man who has had private investigators follow people and spy on them.
If you've read the book, the second question is inevitable. McGinniss and Ailes were friends in the late 1960s, so ...
Q: Did Ailes ever mention anything about Joe McGinniss moving next door to Sarah Palin? He was once friends with the former, and never with the latter, despite the former being a conservative bete noire and the latter being a conservative icon. So I'm curious if he ever went on the record on the subject.
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