Michael Lewis’s Flash Boys: Who Plays Brad Katsuyama in the Movie?

Michal Lewis is a national treasure.  He is able to take complex things and make them accessible to people like your mom – if you want to be condescending to your mother. In a way, he is one of the best nonfiction writers in English working today. I’d put him up there with Bill Bryson. But you know that already.  This is a Michael Lewis book. You know: the guy who wrote Liar’s Poker, Moneyball, The Big Short, and that other book you like.

What Lewis does is take a look at an issue, but he does this thing where instead of boring you with a lot of details, he tells the story of a person  (For real – this book has no index, no endnotes) and the problem they face and the cool things they do.  The person isn’t really usually that far removed from what we imagine ourselves to be, but perhaps a better version than the self we really are.  In Flash Boys, that person is Brad Katsuyama.  Katsuyama was a worker on the exchange for the Royal Bank of Canada. He noticed that there were issues with trading. Namely that the trades that his traders were trying to make basically disappeared in front of him when they tried to execute them.

This lead the reader to go on a journey led by Lewis as the reader follows along with Katsuyama as everyone learns what the issue was and why those trades were disappearing. Mainly the story is computers, software, and companies using their smarts to insert themselves in the middle of a trade.

Eventually Brad and the reader learn all about this and is disenchanted with the system as it exists so he sets out to change this. His mission is to create a new exchange that disarms the smart “High Frequency Trading” and levels the playing field for everyone.  It’s a good story, and Lewis tells it well.

My issue with it is that with the structure of the story, where it focuses on Katsuyama and his team, is that it is one-sided.  The implicit message is that they are the good guys and the HFT guys are the bad guys.  If you don’t know much about the world that Lewis describes then you take it for granted that he is right.  The last third of the book becomes an advertisement for the exchange that was started.  It has started a lot of conversations amongst finance and economic people about the value of HFT, but that is nowhere in the book. Does it help price discovery; does it provide liquidity; does it make trading more efficient ? Or is HFT just predatory; is it pure rent as Lewis quotes someone  “The market is all about algos and routers. It’s hard to figure this stuff out. There’s no book you can read .” (209)? I don’t know, but thankfully this book is bringing those issues.

Ultimately, I have to hoist a footnote that Lewis writes that sums up the whole book for me: “’Glitch’ belongs in the same category as ‘liquidity’ or for that matter, ‘high frequency trading.’ All terms used to obscure rather than to clarify, and to put minds to early rest.”(203).  Lewis lets in his editorial voice come in to show that even though he has written a whole book there is an inexactness to defining what HFT is – you have to get to the nitty-gritty to really know (He recommends a couple of books in the text but I didn’t highlight them). Because in the end, this book is only tangentially about HFT. It is really about Brad Katsuyama. All I wonder is who is going to play him in the movie

The Up Side of Down by Megan McArdle: a good writer who I don’t hate anymore

My first encounter with McArdle’s work was in the Atlantic, when she was the business editor. 

I hated her work for the Atlantic. It was, in fact, a major reason I stopped my subscription (That and a lack of editorial consistency with a redesign every year. Say what you want about Harper’s, at least they’re consistent).  Mainly I hated that the magazine that was so progressive in so many ways both currently and historically would employ a libertarian to do their business and economic coverage.

I like her a lot more now.  I think perhaps our economic and political positions have come closer together through mutual moderation.

I like this book, though it is a bit uneven.  The ostensible thesis is that we need to be able to fail better, so that our outcomes are more like those of a forager, who shares his/her individual bounty with the group and less like the farmer who fails alone (50). I support a libertarian coming to terms with the need for collective solutions, and I was shocked to even see McArdle call for something like the WPA (186) even if she does spend considerable time bashing unions and government investment in green technology (130).

The thing is, though, the best written, and the most interesting parts of this book are not the ones that speak directly to the thesis. In a somewhat divergent structural method from a lot of social scienc book, McArdle speaks about her life a lot.  She has come face to face with relative failure, spending two years unemployed. These are the best parts of the book, and the most well written. Though theoretically building her ethos, they work independent of the thesis and would be interesting to see as a stand-alone book. (It does complicate my own priors about her. She speaks of her childhood in NYC Private Schools, her University of Chicago MBA, and when she was unemployed and changing jobs, the first job she got in journalism was with the Economist. That kind of failing up can make it easy to hate her in the jealously envious sort of way).

So, yeah,  read the book.  McArdle is a good writer who I don’t hate anymore. 

One last note: this being a book that covers social science, the Marshmallow Study has to get mentioned.  In this case, McArdle leaves it be until page 223 of 268 pages.  Therefore it gets a Marshmallow Index score of 1.2.

Michael Lewis is a National Treasure: Reading "The New New Thing"

Here’s the thing.  The book “The New New Thing” isn’t in fact a new thing.  It appears to come from a time in Michael Lewis’s life where his books didn’t automatically go into a paperback pressing.  It took me a while to figure this out.  I was at my library looking at the new shelf, and there on the shelf was this book.  I had to look, since I had not heard of the book at all and thought that it was weird that it bypassed my attention.  I cursed Amazon’s bots for not recommending this to me the first time around. Briefly, I thought their technology had failed.

So it is not a new book, but the words are fresh and come off the page as only Lewis can make them.  He is perhaps one of the better story-tellers around, so he is a bit of a national treasure.  What’s weird is that the book is basically just a long profile of Jim Clark, a dot-com (and earlier) superstar who was good with hardware and smart enough to glom on to the right software guys.  I may be part of the wrong circles, but I had never heard of the man before the book (meaning I don’t know what his last 15 years or so have been like) but the book covers an exceptional time in Clark’s life which also corresponds with the  tech bubble.  It is of a piece of the tech bubble in another way – of the five or so companies that Clark has a hand in during the book, only one at this point is immediately recognizable: the now defunct browser company Netscape. (The book did make me want to find what had happened to the company, merged into AOL and wound down around 2008 but the tech lives on in firefox)

There’s also a whole lot about Clark’s attempt to build a giant automated sailboat.  Lewis is on the not-entirely-successful maiden voyage.  Clark seems to have been of his time but also ahead of it. This makes the book interesting, but more so as an artefact of the time than of anything else. It is to be read if you’re a Lewis completest, but passable otherwise.

Reading the Econimic Consequences of the Peace: Was it too Late?

This professor Keynes provides a clear-headed and thorough look at what the treaty lays out for the German people and the German state. If conditions are not ameliorated, then there may be great consequences for for the victor nations. Let's change that before it is too late.

Unfortunately, the copy is not without its flaws.  The charts that the Professor included in the book have formatting issues that render a reading difficult.  Thankfully he explains the important issues which the charts bring up

You're all wrong

You're all wrong!

Matt Bors's Life Begins at Incorporation:

I have been a fan of Matt Bors for a while.  His cartoons are funny and pointed; he is clever on twitter. I bought this book because I believe in supporting artists who I like, and I have to give this book my unqualified praise.  I am now a bigger fan of Bors having read this book than I was before.

This book is a collection of comics and essays covering contemporary events from a left / civil libertarian viewpoint.  What impressed me was how clean and articulate he is on the page given more room to let out his mind than a tweet or a comic.  It was kind of like he was living in my head, and saw a lot of how I feel about politics an life and wrote it better than I could have.  And he can draw.  I think I have a bit of a guy crush on him (Is that even a thing?).

Anyways, buy this book.  Do it for Matt.  He needs money.

Smith's Who Stole the American Dream: I'm still working on my enemies list

I read a lot of books and blogs about politics and economics from a leftwing perspective.  If you look at the charts and graphs, so many of them show a disconnect with previous trends somewhere between 1970 and 1980.  I know that there are faces  and names that people like to point to as drivers of that and punk songs denouncing Ronnie and Maggie, but I was curious about the root of the deregulation movement and the rise of “neoliberalism” (however you want to define that term).  I had a feeling that there was someone behind the figureheads who helped birth our right wing nation between Nixon and Reagan.  

I thus asked a shorter version of that question and was recommended this book.  It is well written, though a bit longer than I prefer  (443 pages without the notes). Smith takes the prime mover to be the “Powell Memo,” a plan for the long game that got us here today.  For what I was interested in, that felt glossed over, and it was the contemporary situation that Smith explored in more depth – and well.  I hate to fault a book for being good but just not being good at what I was looking for, but here I am doing it. I think the title might be part of the problem. I felt that it was more about people who have lost the American dream and less about helping me build an enemies list.  A lot has been written about the current situation (and I am sure historians will write a lot more as time passes), but I wanted to know more about these guys where dismantling the dream.