Flash Boys: a Wall Street Revolt by Michael Lewis

Mike Lewis‘s latest book on the high frequency traders and their need for speed and presumed market abuse left me bored. Maybe I understand too little on the subject, maybe I care too little about robots taking advantage of nanoseconds, hard to say.

Would I recommend it? Naw, other Lewis’s books like Boomerang or The Big Short (or Liar’s Poker!) are much, much better.

But my ultimate gut feel – he understood too little and trusted too much those folks who agreed and wanted to talk to him.

Oh well, in a microsecond, this book, gone.

 

Advertisements

The Accidental Investment Banker by Jonathan A. Knee

The Accidental Investment Banker: Inside the Decade that Transformed Wall Street turned out to be a book I would strongly recommend all junior bankers to read. And senior bankers. And clients – umm, maybe.

A dear old friend and revered former boss ZS suggested it to me back in November 2007 in London, during a roadshow, at the height of the IPO craze – back in the good old times, as now they are called in bankers lingo.

Not as sensational as House of Lies – an image-shattering tv show about consulting powerhouses, especially in the eyes of less sophisticated Russian clients – but quite educational indeed for those not too familiar with the i-banking industry.

The fact that it is not as funny and as politically incorrect as Liar’s Poker or Monkey Business, both of which tended to hyperbolize trading floor and i-banking paranoias respectively, is a strong plus. This book, written a couple of years ahead of the Too Big To Fail drama, gives a much more balanced and candid view of what banking was and what it evolved into. All the conflicts of interest, hidden agenda, internal politics, tricks and treats of the trade, sugar and spice and all things nice, you name it.

In total, it has been one of the most gripping reads recently. Get a copy indeed.

Some bankers were famous for getting revenue credit for a wide range of transactions to which their connection was obscure at best. Referred to internally as “velcro bankers,” because they would stick their name on any deal in the general vicinity, it was said that they engaged in “hoverage” rather than “coverage” of accounts. These bankers consistently managed to get revenue credit on deals even where there they would fail my own “police- lineup” test for awarding secondary revenues: if the client could pick the banker out of a police lineup, he gets secondary credit.


The Big Short: Inside the Doomsday Machine by Michael Lewis

The Big Short turned out to be quite a wholesome book – it seems, the more I read Lewis, the more I like him – so I guess I have to read more.

To tell you frankly, for a person not too involved with and not too interested in FI markets, I never really took time to analyze what hit the big WS firms back in 2008 – I guess I am still a bit puzzled how the smart guys outsmarted themselves and kept this rotten pile of crap on their balance sheets – I don’t buy into this loan warehousing idea – and blunt bets for the trading units would be, umm, stupid – I know, boys will be boys etc, but still, why not push the crap away to, as Lewis calls him, the sucker, a mystery to me. S&P, AIG and the rest – easy to understand – but MS, ML and the rest of the folks – uh, why?

As in his golden 80s when Lewis spat venom about Salomon Bros, his recent stuff is all about “ibankers, the wrongdoers of the world” – oh, well. #occupymyasshuh

* * *

When a Wall Street firm helped him to get into a trade that seemed perfect in every way, he asked the salesman, “I appreciate this, but I just want to know one thing: How are you going to fuck me?”

* * *

Senior management’s job is to pay people,” he’d say. “If they fuck a hundred guys out of a hundred grand each, that’s ten million more for them. They have four categories: happy, satisfied, dissatisfied, disgusted. If they hit happy, they’ve screwed up: They never want you happy. On the other hand, they don’t want you so disgusted you quit. The sweet spot is somewhere between dissatisfied and disgusted.”


Boomerang: Travels in the new third world by Michael Lewis

Mike Lewis’s last book isn’t one at all. In fact, it is a collection of five standalone articles published between 2009 and 2011 in the Vanity Fair magazine, disguised as a book and given a new introductory chapter. 

Five stories of people that Lewis wants to show as stupid and/or crooked – Icelandic fisherman i-bankers, corrupt Greek public servicemen, Irish real estate developers and politicians who got far too excited to think clearly, anal rule-abiding German-based bond investors, and greedy Californian firefighters – all in one bowl. 

A funny read at times – though I guess I should know better than take all Lewis claims for granted – fact of life, the guy loves to exaggerate. The best bits are Iceland and the Greeks, but I will probably steal today’s quote from the German section, huh. 

“The Hamburg red-light district had caught Dundes’s eye because the locals made such a big deal of mud wrestling. Naked women fought in a ring of filth while the spectators wore plastic caps, a sort of head condom, to avoid being splattered. “Thus,” wrote Dundes, “the audience can remain clean while enjoying dirt!” Germans longed to be near the shit, but not in it. This, as it turns out, is an excellent description of their role in the current financial crisis.”

PS: BTW that thing, that particular Frankfurt WC, has already been mentioned to me more than once in one quite interesting Russian corporate banking urban legend – did you guess which one? 😉

“The interesting thing, said the German financier, who visited often, is the glass room at the top, from which one looks down over Frankfurt. It is a men’s toilet. Commerzbank executives had taken him there to show him how, in full view of the world below, he could shit on Deutsche Bank.”