Michael Lewis: ‘I hate that traders become billionaires’

Lewis did suggest that the takeaways were that the US should have fewer political appointees and more civil servants so that there would be more experience and fewer “pleasers.”

“Nobody seems to have taken that seriously.” Actually, he says, energy secretary Jennifer Granholm has “read” the hunch and [Lewis’ previous book] The fifth risk”, and wanted a key cybersecurity role to be made non-political.

But the Senate disagreed and decided the role would seem insignificant.

So as the pandemic subsides, Lewis worries that the experience is being wasted.

“There is nothing to learn. And there is certainly no social consensus… If we want to live the lives we lead, we have to become much more sophisticated about how we manage risk.”

He wants more tracking of diseases, better communication of statistics. He thinks we should be careful when pathogens start to show up: The US should have closed schools while studying swine flu in 2009.

Lewis now lives in Berkeley, but he was born in hurricane-stricken New Orleans.

“When I was growing up, nobody did anything. Really. They have their houses boarded up. Now New Orleans hurricane season is a much more sophisticated risk management venture. They are evacuating the city more often, but in response to much better data. That seems like progress.”

Making political points isn’t really Lewis’s game. Yes, The fifth risk (2018) targeted the Trump administration for being so hostile to the federal government that it didn’t even bother figuring out what it was doing. But he insists he’s no expert and prides himself on “not straining the reader.”

Above all, he wants his characters to be heard, from the Big Swinging Dicks from his first book liar poker further.

Why do characters open up to him? “First it’s time.” Lewis spent “hundreds of hours” with Charity Dean, a California health official who is the heroine of the hunch

Second, Lewis’s books are a two-way street. “I usually know how to make myself useful for [sources]† In money ballLewis got out of touch with Billy Beane, general manager of the Oakland Athletics baseball team, who found that some players were systematically undervalued.

In return: “I was able to bring him a lot of information from the locker room because the players were talking to me and they didn’t want to talk to him”.

Brad Pitt played Billy Beane in the movie version of Moneyball.

if the hunch has not yet led to change, money ball sure did. Top sport is infused with data analysts.

Did that improve the sport? “It’s been really bad for baseball.” The smart way to play baseball is “to minimize movement” so that “it becomes a slower, more plodding game”.

But in basketball and American football, he says, “the smart way to play it is much smoother and more active.

“The three-point shot wasn’t fully appreciated until 20 years after the three-point line existed, and it was appreciated by analytical people.”

Lewis’ criticism is that he is biased towards his characters. Do the villains even get the right to answer?

“Oh yeah. I’m just not showing the work.” He says he confirms what he was told: He spent so much time with other baseball teams “that Billy Beane didn’t even know I was writing a book about the Oakland A’s”.

But what if the story doesn’t add up and Lewis is such a good storyteller that readers swallow it anyway? In Flash Boys (2014) he focused on high-frequency trading to manipulate the market, although it has arguably lowered costs for many investors.

Did he pick the wrong target? “It depends on what you think my target was. I thought the exchanges were the target.”

Exchanges make money by selling privileged access to traders. “Stock market shouldn’t be so profitable. I’m not even sure it should be for-profit companies; they should be mutual ventures.”

As for traders, they are a mix: smart ones who take risks and “dumb, fast traders who don’t add anything” [and] just take advantage of latency issues,” he says.

“It bothers me that they become billionaires and that people think they make a big contribution to society. But they are not the problem. The problem is the system.”

If so, why have regulators looked at high-frequency trading and decided not to act? “This is wrong. Because I spoke to the people who ran the SEC [Securities and Exchange Commission]†

“They come in and say: we’re going to fix this, this is outrageous. But fixing it is incredibly difficult because of the way the system is anchored…I’ve had people very senior at the SEC asking for my signature because Flash Boys inspired them.” (Some high-frequency traders loved the book, he says.)

Lewis cites a “millions of dollars” lobbying campaign against Flash Boys

“I have emails between supposedly independent financial experts – the kind of people who appear on CNBC, and heads of high-frequency trading firms – where this person says I will discredit for $50,000 a month Flash Boys† So this is my next book. I’m not letting this go.”

A scene from The Big Short. Paramount Pictures

Bad regulation helps to explain politics, he says. “What really works for Trump is: the system has been manipulated. He’s wrong about how rudely he’s doing it, and he won’t fix any of it, and he’s friends with all the people who get the money. But he is not wrong that there is an incredible unfairness.”

liar poker, his wild tale of learning to sell bonds, shaped our image of Wall Street. did Flash Boysby claiming the system has been rigged, contribute to the meme stock craze?

“I don’t think anyone needed me.” It was fueled, he says, by the response to the financial crisis. He has said that he finds the meme stock craze funny.

“I really don’t see why I should be so upset about it. I don’t think the SEC should get in the way of this. But I hope none of my friends buy GameStop.”

Should the SEC also omit Elon Musk, who falsely declared his Twitter interest when he wanted to buy the company?

“If he actually violates the security law, which he appears to be doing, no… If the fact that Elon Musk did it deters the SEC from enforcing his own law, then you have to question the value of the law. That seems crazy to me.”

Lewis studied art history at Princeton. Can he see any value in NFTs, which some say are related to fine arts? “I don’t trust myself in this area. I see myself saying something really stupid that I regret five years later. But the answer is no.”

His oldest child wants him to write about climate change, but Lewis is looking for the right character: “Someone who has already made billions of dollars, who operates largely in secret, who makes bets that pay off because of this catastrophe … I have did a casting search and I don’t think that person exists.”

Does that frustrate him? ‘That I can’t write about the most important thing? Not too much. A little.”

He’s 61 now. Isn’t he worried his best days are over?

“No, no, I think they’re ahead of me, actually. I think I’m getting better and better.” In this confidence, I glimpse the charlatan 25-year-old bond seller Lewis once was. Still, I leave breakfast feeling like I’d tell him everything if I were a renegade investor who cynically made billions from climate catastrophes.

Michael Lewis on site

  • Any chance of another Trump presidency? 18.3 percent

  • Will Biden run again? Is he still alive? If he’s still alive, I assume he’ll run again.

  • What do you say to young people who want to enter the financial world? There are good ways to do it and there are bad ways to do it. Be careful how you do it, rather than whether you do it.

  • Uber or walk? To walk.

  • Twitter or Instagram? Twitter, as a news feed.

  • The metaverse in one word? Shallow and fake.

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