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Michael Lewis: "8 Things I Wish For Wall Street"
Authored by Michael Lewis, originally posted at Bloomberg View,
It's a wonderful life on Wall Street, yet here is a holiday wish list to make it even better.
1. The financial sector rids itself of anyone with even the faintest reason to believe that he or she is unusually clever.
All those who have scored highly on standardized tests, or been invited to join Mensa, or finished in the top quartile of any graduating class will be banned. Most of our recent financial calamities -- collateralized debt obligations, credit default swaps on subprime mortgage bonds, trading algorithms that prey on ordinary investors, the gaming of rating companies' models, the rigging of the Greek government's books so the country might disguise its true indebtedness -- required a great deal of ingenuity. Lesser minds would have been incapable of causing so much damage.
Of course, it's not easy to prevent clever people from working in finance, or from doing anything else they want to do. Perhaps now more than ever, clever people are habituated to being paid to ignore the spirit of any rule -- which is one reason they have become such a problem on Wall Street. Upon seeing a new rule they do not think, "What social purpose does this serve, and how can I help it to do the job?" They think, "How can I game it?" If it pays to disguise their intellects, clever people will do it better than anyone else. Without further regulation, our entire society would soon be operating in the spirit of the Philadelphia 76ers: Kids tanking the SAT, parents choosing high schools that guarantee failure, intellectual prodigies scheming to gain entry to Chico State. No single rule, by itself, is capable of protecting the rest of us from their intellects. We'll need more rules.
2. No person under the age of 35 will be allowed to work on Wall Street.
Upon leaving school, young people, no matter how persuasively dimwitted, will be required to earn their living in the so-called real economy. Any job will do: fracker, street performer, chief of marketing for a medical marijuana dispensary. If and when Americans turn 35, and still wish to work in finance, they will carry with them memories of ordinary market forces, and perhaps be grateful to our society for having created an industry that is not subjected to them. At the very least, they will know that some huge number of people -- their former fellow street performers, say -- will be seriously pissed off at them if they do risky things on Wall Street to undermine the real economy. No one wants a bunch of pissed-off street performers coming after them. To that end ...
3. Women will henceforth make all Wall Street trading decisions.
Men are more prone to financial risk-taking, and overconfidence, and so will be banned from even secondary roles on Wall Street trading desks -- though they will be permitted to do whatever damage they would like in their private investment accounts. Trading is a bit like pornography: Women may like it, but they don't like it nearly as much as men, and they certainly don't like it in ways that create difficulties for society. Put them in charge of all financial decision-making and the decisions will be more boring, but more sociable. Of course, this raises a practical question: How will our society find enough women older than 35, with no special intellectual ability, to fill all of Wall Street's trading jobs? Well ...
4. Wall Street will take the resources it once hurled at Harvard and Yale universities, to recruit their students, and invest in America's leading retirement communities, to recruit their swelling population of elderly women, most of whom are currently wasting valuable trading hours.
I think that we can all agree that a human being is never too old to trade. Many of these ladies would no doubt love a chance to engage in a bit of risk management. Wheel 'em in! After all, there was a time, not very long ago, when very old men were allowed to linger in their Wall Street jobs until carried out, feet first. These old guys were useful; they improved the moral tone of the place. If nothing else, they reminded the young people around them of their own mortality. Which brings me to ...
5. No firm shall be immortal -- or rather, no firm shall be too big to fail.
No firm shall even be faintly suspected of being too big to fail, as the suspicion creates the reality. Of course, we here run the risk of destroying the spirit of Wall Street, and we don't wish to do that. Wall Street wouldn't be Wall Street without special privileges -- without some special exemption from the rules. But the nature of that exemption must change: The too-big-to-fail Wall Street bank will be replaced by the Wall Street bank that is too old to fail. Firms whose employees exceed a certain average age will be allowed to get themselves in trouble as often as they like, and be bailed out each time by the government. Think of it as a new form of Social Security: the older you are, no matter how addled you might become, the more indiscriminately others will lend you money. Government policy will no longer encourage reckless speculation by the young, at the expense of the old. It will instead promote a bubble -- a veritable feeding frenzy -- in the market for senior citizens.
6. Strive to make the rest of society feel as if finance is something everyone can and should understand, by making it easily understandable.
The new crowd running Wall Street -- a pleasant and sociable mix of old ladies and academically challenged middle-age men -- will probably resist any addition of complexity to the financial system. Of what use is a predatory algorithm to a sane and happy 85-year-old woman? Still, it's better here to err on the side of caution. To put an end to the use of complexity to obfuscate, buffalo and deceive the public, any new financial idea -- a new security, a new stock-market order type, a new market regulation -- must be explained on a single sheet of paper, in clear language, understandable by whoever at the time happens to be the most prominent Kardashian. I don't imagine that this will put an end to financial innovation. But it will help. To further protect us from new ideas ...
7. All new American financial inventions, before they are inflicted on the American economy, will first be tested upon foreigners.
What is needed is a society, roughly similar to our own, with some taste for risk-taking, in whose economic health we are not deeply invested. The French would be ideal for this job. But if the French won't try our new stuff before we do, we can always bribe the Greeks to do it.
8. Channel America's testosterone into financial regulation.
Our new financial system will probably be so well behaved that it will not require further regulation. It will be slower and more deliberate. It will be more focused on the longer term and its reputation with the public -- as older people tend to be. It will probably even serve the economy, rather than be served by it. But as a final safeguard the Securities and Exchange Commission will need to be dismantled, and rebuilt as a for-profit enterprise. So that it might be at once feared and loathed, the regulator will be named "Goldman Sachs." Goldman Sachs will be paid by the government a finders' fee, for every little old lady it discovers in the act of a financial crime. Goldman Sachs will be allowed to pay as much as it wants to its employees -- the alpha males who happen to get caught forging birth certificates and attempting to get jobs on Wall Street before they turn 35.
Of course, in the beginning, when told they must become financial regulators, these ambitious young people will scream and holler, perhaps even weep. But they will figure out how to make their situation work for them; they always do. Before long we may find that our regulators are even better paid than people who work on Wall Street. Who knows -- by the time they turn 35, and become eligible for Wall Street jobs, they may have decided there is no higher calling than to maintain order and fairness on Wall Street.
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#9 .. Michael.. shut up already!!!! if market was rigged we would all be rich!.. but bill gross is not crazy..
http://hedgeaccordingly.com/2014/12/bill-gross-says-hes-not-crazy-jns.html
I'd like the media to stop getting duped by fake sudden-wealth stories:
http://tinyurl.com/o687u4n
Right let Hillary handle it, she will give it that women's fairness.
OUTLAW ALL DERIVATIVES!! WHAT GOOD ARE THEY, EXCEPT TO MAKE MONEY FOR A BUNCH OF MOTHERFUCKING PSYCHOPATHS? THE ONLY PEOPLE WHO CAN HEDGE SHOULD BE THE PRODUCERS OF PRODUCTS THAT FLUCTUATE IN PRICE, AS A WAY OF CONTROLLING THEIR COSTS. EVERYTHING ELSE - GONE! THAT SHOULD DESTROY A LARGE PART OF THEIR TOOLKIT.
Never trust anyone that bleeds for 5 days and doesn't die.
9. Stop running up the price of hookers and blow.
3. Women will henceforth make all Wall Street trading decisions
How's that workin' out for:
Argentina?
The Federal Reserve?
+1, no shit. Ive heard the same arguement that women, being the 'gentler sex' would make great presidents becuase they would be far less likely to take us to war. Obviously whoever said that has never met a vicious thundercunt like hillary
plus Madeleine "Price worth paying" Albright, Samantha Power, Susan Rice, Victoria Nuland, Condoleezza Rice etc aka The Harpies of the Apocalypse.
Does Blythe not even get an honorable mention?
Has everyone forgotten Thatcher?
Haha. By no means was hillary the only one, all of those deserve mention as well. Hillary is just the first one that popped into my head. History is littered with them
Once again I ask, could 2 sisters cause ww3? Probably.
Imagine, two sisters could fight each other without physically hurting each other. Yep. Both their armies will kill each other's entire population. Then the two sisters would have a good cry, kiss and make up, and then do it all again next month ...
... all the while complaining that men are such bastards ....
"General, when I told you to nuke my sister's capital city, I didn't mean it. You should have known ..."
He said old women..... oh. never mind.
Nothing for or against women.
Add to your list Russian CB head http://en.wikipedia.org/wiki/Elvira_Nabiullina
... "if market was rigged we would all be rich!"...
Two sides to every trade. The market can't be rigged for everyone. Losers keep losing and winners keep rigging.
No. Morons keep getting duped, and the dupers keep looking for more morons
GREAT ARTICLE
for the first points, the EU Parliament legislated an alternative:
The Banker Bonus Cap
the net effect is similar
WTF is THIS ?????
Michael Lewis, is that really you? I've read about six of your books and I can tell you that even as humour, this is ten steps backwards for you.
Michael Lewis: I've plugged you too many times on ZH already but:
Step 1. Force the entire world to read Liars Poker and The Big Short so they understand what they're up against. Yes, they can go to the library if they don't want to buy your books. I'll even chip in a few bucks to help spread the word.
Step 2. Everyone has a real job, like you've mentioned, and lives by themselves for a couple of years i.e. do their own work, pay their own bills, do their own cooking, washing, cleaning etc. so they understand what it really takes to run a house hold. That should also cut the divorce rate too, when husbands and wives really understand what the other half has to do, and they both come to understand the value of specialized labour.
Step 3. Stop pretending that bankers can be trusted to lend the "right amount" of money to the "right" people. They don't lend money, they don't get paid. What do you think they're going to do? And now they've got bailouts behind them.
Step 4. I understand your frustration with smart people but it was being "smart" that helped me recognize the problem and kept me out of trouble - when the minimum wage is $400pw and the minimum mortgage on the cheapest fixer-upper is also $400pw, you know there are problems. When a so-called "wealth club" openly promotes, as defined by Minsky, Ponzi Finance, you know you've got problems.
Given that the real world can't handle people with brains, and people with brains can't handle the real world, I think the intellectuals should be locked up where we can do the least damage - in universities. Let us loose in the physics, chemistry, maths and engineering departments. Every couple of years we'll show yas some exciting new toys that we have invented and everyone will be happy. Intellectuals are only a problem when they are allowed into finance, big pharma, and politics. Keep dumb people in finance and politics - they'll still be corrupt, but at least they'll be transparent and everyone will know what the real game is. Actually, forget that last sentence. Isn't that how it is already? Except all the "intellectuals" are at work behind the scenes ...
5. Ban all credit cards and even debit cards. CASH ONLY. I'm quite sure that at this point in time we can agree that 99.9999999999999999999999999999999999999999% of the population simply CANNOT handle credit or even debit cards. There's nothing like an empty wallet to explain why you're poor. As long as there is a plastic card in that wallet, there's always hope that a pre-approved $25000 credit limit is in the mail. It does not have the same impact.
Plus, as it stands with direct debit, if you, your boss, and your supermarket all have the same bank then the bank has that money 100% of the time and they still go broke even when they have all that money 100% of the time. The only way to return to having banks that value money is to go back to a time when banks had to EARN YOUR TRUST to get your money. Eliminate Direct Debit. I don't remember things getting cheaper when businesses no longer had to hire security guards to deliver the pay roll.
It's hard to believe that it comes from Lewis, who's usually a much better writer than this.
Also, even as fantasy his suggestions are distasteful. There sure is a lot of coercion involved.
Just burn it!
Margin debt has rolled over. The last two times that's happened? 2000 and 2007
http://www.goldsqueeze.com/analysis/margin-debt-as-of-gdp-signalling-all...
It's comedy relief hour on ZH. This was an hysterical read, thank you.
My favorite was this: "Of what use is a predatory algorithm to a sane and happy 85-year-old woman?
I can see it now - an old lady at her trading desk saying "So I double click on the 'e', right?"
1 thing I wish for Wall-Street:
That they all be hung
I think you mean 'hanged.'
https://www.youtube.com/watch?v=gnlhKWeDWMA
No, he means they should be nail-gunned then hung like dead pheasants. Give them a couple of weeks in a cold dry room to acquire a nice gamey state. Add some fava beans and a nice chianti.
Black dude..."They said you was hung!"
Bart..."And they was right."
https://www.youtube.com/watch?v=cdExsAQuCQA
Man hating is still a form of bigotry,
even if urban Dykes have their panties in a knot around the holidays.
There really is no excuse for this shit.
Unfortunately, Blankfein’s band of spies got him an advance copy of the list, which he made his own, with the following alterations:
1) Replace “unusually clever” with “remotely human”
2) Replace “under age 35” w/ “over age 35”
3) “Women” w/ “Machines”
4) “valuable trading hours” w/ “valuable trading fees”
5) “too big to fail” w/ “too small to fail”
6) “easily understandable w/ “completely incomprehensible”
7) “tested upon foreigners” w/ “tested upon daytraders”
8) “regulation” w/ “deregulation”
"6. Strive to make the rest of society feel as if finance is something everyone can and should understand, by making it easily understandable."
It is easy - "don't spend more than you make" and "there is no such thing as a free lunch" - Washington and Wall Street spend more than they make and get a free lunch. Until that changes nothing else matters.
9. Put Lloyd Blankfein, Jamie Dimon, Jon Corzine, and all the other TBTF crooks and thieves in a cell with no toilet for a week where they have to listen to the Beatles "Number 9" over and over again - then draw and quarter them in the public square televised.
It's way more difficult than that. Financial behavior is largely determined by how the human brain has a hard time working out concepts with a time component. The future's decision making weight is discounted for the short term as a hard wired response. Insert your own personal belief on how far "the future" is, but it's probably still too short. It's the answer why exponential functions catch people up who are not familiar with them, and even some who should know better. It also allows Wall Street and Government to sell things to the common people, because a trillion of something has no basis of comparison in the human imagination.
It takes constant effort fighting against this. Even then it is easy to fall into the traps designed to ensnare us because they are placed squarely in the blind spot of our analytical capability on purpose. We are not only fighting them, but also waging a battle against our own perspectives. Any addict will tell you the second fight is difficult in the extreme and painful to fight.
Disagree with everyone but #5.
This is obviously coming from someone who is slowly waking up but not quite there yet...
#1, #2, #3 #4 are just stupid
#6 - who enforces that Michael? Oh right...
#7 - Only an American would be this stupid... let's test everything on foreigners first... obviously they won't mind right?
#8 - All the regulation is what got us into trouble in the first place: ALL REGULATORS ARE EVENTUALLY BOUGHT OFF AND END UP MAKING THE FRAUD 10X WORSE THAN IT WOULD HAVE OTHERWISE BEEN WITH NO REGUALTORS!
Mike please stop putting women on a pedestal. They are as a group no more or less honest, greedy, violent, or shortsighted than men. That part of this article is dissappointingly naive.
I think you should put women on a pedestal...
High enough that you can look up their dress.
Women are far less honest than men. They'll stoop lower and lie harder than men in order to provide for their children or improve their lot in life.
Men are a team, traveling like sperm in the same general direction for common goals. Women are solitary alley cats spraying on the fence late at night. A guy will go home with a fat chick so his buddy can go home with her slim, sexy friend because he knows his buddy will do the same for him tomorrow night. Women would never engage in such cooperative behavior.
Mean while in Hawaii, a non-CIA and/or Mossad created terrorist group called the Lavas is threatening to destroy a gas station and strip mall.
https://ph.news.yahoo.com/hawaii-lava-course-hit-gas-235800180.html
The naked omnipotent ones should quickly find a wedding party and school to bomb to save the day. That seems to be all terrorists seem to understand.
An American, not US subject.
3. Women will henceforth make all Wall Street trading decisions.
Ok, Put the crack pipe down, buddy. Feminism is another state creation that is sucking whats left of the life out of America.
Tylers, you can do a lot better than this.
Voted 1, zero if I could.
I agree. Tylers, you can do a lot better than this.
And Michael Lewis, you can also do a lot better than this.
The barfing picture might also work here...
May wall streeters get EVERYTHING they deserve for Christmas.
HO HO HO's!
In number 1 exchange The financial sector" and "anyone" with "publishers" and "authors." It should read:
1. Publishers rid themselves of authors with even the faintest reason to believe that he or she is unusually clever.
So he wants to turn Wall Street into Peace Corp.
That's a striking analogy.
Next fantasy...
Peace corp shot to kill.
#9 A Happy Saturnalia
https://lh6.ggpht.com/_6UwGwE5SPNM/SsbT-reNlmI/AAAAAAAAF3Q/dJJ60MP-xzo/r...
#9 Heavy duty nail guns for all banksters.
1. Herpes
2. Leprosy
3. Ebola (#'s 1-3 in that specific order)
4. Rough ladyboy assassins when they call for prostitutes.
5. A solid silver dildo (for Blythe Masters' ass)
6. A disease-ridden Merkin (for Lloyd Blankfein's head)
7. Moar throat cancer (for Jamie Dimon)
8. Cocaine laced with cyanide.
Get to work Mr. Bullard!
Sounds like Canada's banking system. No Canadian bank CEO had a college degree, as recently as the mid 80s. They all rose through the ranks. Resulting in a very boring but stable system with occasional small crises on the periphery but avoided all the big catastrophes.
It used to be a common thing to read about some giant crash in South America or Wall Street, then at the bottom of the page, the Canadian banks were in on this when the going was good but started getting out a year and a half ago, the result being that in today's crash they lost $14.75.
Things Stevie Wonder wishes:
https://www.youtube.com/watch?v=hYKYka-PNt0
I wish for only one thing: that they be horizontalized.
I'd rather have a psychopathic bloke after me than a psychopathic woman anyday!
1. Death.
2. Death.
3. Death.
4. Death.
5. Death.
6. Death.
7. Death.
8. Death.