July 29, 2015

Michael Lewis

Green Army: Persons of Interest

Mark Baum:
[In] a few years people are going to be doing what they always do when the economy tanks: they will be blaming immigrants and poor people.
(The Big Short, 2015)

Charlie Munger [Vice-chairman, Berkshire Hathaway]:
[High frequency trading is] the functional equivalent of letting a lot of rats into a granary [— it does] the rest of the civilization no good at all.
(Investors Conference, 2014)

Michael Lewis:
Financial intermediation is a tax on capital …
[It’s] the toll paid by both the people who have it and the people who put it to productive use.
[It is, in effect, a private Tobin tax.]
(Flash Boys, 2014, p 109)

Fair Trading Versus Free Riding

In 2014, [one] money manager bought and sold roughly $80 billion in US stocks.
The teachers and firefighters and other middle-class investors whose pensions it managed were collectively paying a tax of roughly $240 million a year for the benefit of interacting with high-frequency traders in unfair markets. …

The big banks and the exchanges have a clear responsibility to protect investors — to handle investor stock-market orders in the best possible way, and to create a fair marketplace.
Instead, they’ve been paid to compromise investors’ interests while pretending to guard those interests. …

[There] is now a minority [of Wall Street dissidents] trying to fix the [system:]
  • their new stock market [IEX] is flourishing;
  • their company is profitable;
  • Goldman Sachs remains their biggest single source of volume; [and]
  • they still seem to be on their way to changing the world.
All they need is a little help from the silent majority.

(Flash Boys: One Year Later, Vanity Fair, March 2015, emphasis added)