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Speaker 1: Pushkin, Sorry to wake you up to do this. No,

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Speaker 1: it's fun, all right. So what do you think the

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Speaker 1: stock market is? That's my son Walker. He's eleven, roughly

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Speaker 1: the same age that I was when my father sat

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Speaker 1: me down for the talk. My father never did actually

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Speaker 1: explain how sex work. I think he thought a person

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Speaker 1: just naturally figure that out. Money was different. Money was

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Speaker 1: something that needed explaining. I think the stock market is

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Speaker 1: from the way I look at it at school. When

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Speaker 1: I board, I can just open up the stock market

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Speaker 1: app and it tells me how much a business is

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Speaker 1: growing and making money. And another thing you can do

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Speaker 1: with the stock market is you can invest money in it.

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Speaker 1: So if the stock market grows, then your money will

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Speaker 1: grow with it. Very true. Both excellent. But how do

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Speaker 1: you open up the stock market app at school if

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Speaker 1: you don't have a phone. It's an iPad. It's on

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Speaker 1: the iPad pro they give us at school. Yeah, there's

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Speaker 1: there's this little thing on that I've had this stocks

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Speaker 1: and I pressed on it and now and then I

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Speaker 1: just typed some random I just type fart on it

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Speaker 1: and far talks came up. So I have that on

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Speaker 1: my front page now, fart talks. Yeah, far talks. Is

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Speaker 1: that a company? Yep, it's called Fart Do you spell it?

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Speaker 1: F A R t O X FARTF What did they do?

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Speaker 1: Let's just check this. It's really funny. Yeah, and it's

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Speaker 1: been growing, but it has no recent story. It looks

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Speaker 1: you know what it's. It's not an actual company. It's

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Speaker 1: a complicated it's a complicated stock Back to the talk.

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Speaker 1: We're at the desk in my office. I've pulled up

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Speaker 1: the Charles Schwap stock trading page. Now. My father just

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Speaker 1: tended me a little black ledger. He said it was

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Speaker 1: for me to record my stock market holdings. He bought

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Speaker 1: me ten shares of a restaurant company called ChartHouse because

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Speaker 1: they own Burger King, and I knew what Burger King was.

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Speaker 1: Tell me a company that you like, or a company

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Speaker 1: who's products you really like? Here, just a company, any

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Speaker 1: company like? Do you like Apple? Do you like? Oh? Yeah? Apple?

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Speaker 1: Apples from my favorite. If you own a piece of apple,

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Speaker 1: you you know, you might like to own it for

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Speaker 1: a while, but if it goes up, you might want

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Speaker 1: to sell it. Right where do you think you'd go

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Speaker 1: to sell it? You kind of need a place where

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Speaker 1: everybody who would want to buy shares an Apple or

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Speaker 1: any other company, can meet up with anybody who wants

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Speaker 1: to sell the shares an Apple or any other company. Right,

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Speaker 1: so it'd be it would be great if it's just

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Speaker 1: one place, and it used to be just one place,

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Speaker 1: the New York Stock Exchange. That's that's what that's a

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Speaker 1: stock exchange is where buyers and sellers come together to

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Speaker 1: trade shares. But what if the buyers can't afford to

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Speaker 1: fly all the way too, Well, that's a very good point.

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Speaker 1: That can then they used to do is make a

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Speaker 1: phone call or even before that, they send a telegram

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Speaker 1: or even by mail, say I want to do this,

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Speaker 1: and there'd be someone there for them, and that's called

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Speaker 1: a stockbroker. It's a really good question because you don't

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Speaker 1: want to Who wants to have to fly all the

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Speaker 1: way to New York if you want to sell or

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Speaker 1: buy your shares or buy shares? But now there's no

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Speaker 1: people at the exchange. Now it's just computers. Now it's

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Speaker 1: just computers, and like all the orders are going into

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Speaker 1: computers because you can't persuade a computer, can't persuade a computer,

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Speaker 1: or you can't cheat a computer. Well, that's interesting, how

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Speaker 1: do you What do you mean, Well, I mean, unless

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Speaker 1: you can hack into it, it's pretty hard to cheat

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Speaker 1: your way into getting stock without paying anything. It's funny,

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Speaker 1: that is. Mine instantly went there. Mine had two when

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Speaker 1: I was his age. I looked inside the little black ledger,

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Speaker 1: studied my ten shares of chart House, worth roughly two

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Speaker 1: hundred bucks, this unimaginably huge sum, and I noticed a

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Speaker 1: line item twenty bucks broker's commission. What's a broker's commission,

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Speaker 1: I asked my dad. He explained, a guy charged twenty

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Speaker 1: bucks just to pick up the phone and tell someone

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Speaker 1: to buy the stock. What's this guy's name? I asked.

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Speaker 1: I still remember this feeling of outrage, the sheer unfairness

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Speaker 1: of it all, twenty bucks for a phone call. My

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Speaker 1: dad told me the stockbroker's name. Then I asked where

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Speaker 1: the stockbroker lived, and my father told me that too.

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Speaker 1: The guy lived in a great, big house a few

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Speaker 1: blocks away from us. Then a where he looked across

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Speaker 1: my dad's face. Why do you want to know where

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Speaker 1: he lives, he asked, because I'm gonna go egg his house.

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Speaker 1: I said, because that's just what you did to grown

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Speaker 1: ups who behaved badly. You egged their houses, which is

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Speaker 1: to say that when I first learned how the people

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Speaker 1: inside the stock market got themselves paid, I was genuinely

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Speaker 1: pissed off. I'm Michael Lewis and this is Against the Rules,

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Speaker 1: a show about the attack on the authority of the

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Speaker 1: referee in American life and what that's doing to our

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Speaker 1: idea of fairness. And we're now at the end of

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Speaker 1: our season, the final episode in which we try to

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Speaker 1: answer the question why on earth would anyone ever want

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Speaker 1: to be a referee? Do you want to get in

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Speaker 1: front of the battle? You care? Yeah, that's good. This

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Speaker 1: is where I'm in a car outside of Dublin, in

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Speaker 1: the village of Dalky. God, it's gloomy. Thank you for

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Speaker 1: coming and getting us. God, I'm with Am and Ryan.

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Speaker 1: He'd spent his career in the nineteen seventies and eighties

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Speaker 1: as a civil servant. His job was to encourage foreigners

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Speaker 1: to invest in Ireland, which back then seemed a hopeless task.

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Speaker 1: In nineteen ninety, the Irish government had moved him and

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Speaker 1: his family to the United States to Greenwich, Connecticut. They

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Speaker 1: were transported to what was and is ground zero for

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Speaker 1: America's money culture, our bond traders and investment bankers and

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Speaker 1: hedge fund managers. Did you all enjoy living in the

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Speaker 1: States or was it the first months were difficult? What

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Speaker 1: did you What made it difficult? It was the people

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Speaker 1: were a bit snooty. Yeah, a bit snooty, he says,

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Speaker 1: in case you didn't hear it, Well they are, yeah,

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Speaker 1: they're there. Yeah. I guess there are places in the

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Speaker 1: States where you could have found snoot to your people,

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Speaker 1: but not many. I think there farkersies number five yeah, yeah, yeah,

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Speaker 1: and sometimes they are yeah. When the Ryans moved from Ireland,

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Speaker 1: they had no errors about anything except maybe the fact

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Speaker 1: that they had no heirs. Ireland was still a poor country.

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Speaker 1: The Ryans weren't fancy and didn't really care to be.

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Speaker 1: They weren't inclined to look down on other people or

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Speaker 1: look up to them, and were suspicious of anyone who

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Speaker 1: did either. In other words, they were Irish desired in Jersey.

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Speaker 1: What did he play soccer? Yeah, football, soccer, yeah, just

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Speaker 1: there on the other side, and that's his sister. They

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Speaker 1: remained in America four years. They sent their sixteen year

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Speaker 1: old son, Ronan to Greenwich High School and then on

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Speaker 1: to Fairfield University, where Ronan developed a secret love for

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Speaker 1: a kind of person his parents never fully understood, the

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Speaker 1: American money person. Take me back to the first encounter

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Speaker 1: you ever have with the US stock market years ago,

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Speaker 1: my junior year in college. They gave us tours of

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Speaker 1: the New York Stock Exchange floor. This was in nineteen

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Speaker 1: ninety five. That's Ronan, and there was literally thousands of

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Speaker 1: people pushing and shoving. And at the end of the day,

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Speaker 1: when I'm leaving the office AE five, these guys had

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Speaker 1: walked out an hour before. It was flashy cars. They

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Speaker 1: were wearing their jackets and the bars. They were kind

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Speaker 1: of like the cool kids post college. So I just

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Speaker 1: I just thought it was interesting. Actually more than interesting.

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Speaker 1: Ronan wanted to be one of them, one of those

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Speaker 1: people on the lucky side of America. He had no

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Speaker 1: connections and no money and no real reason to think

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Speaker 1: Wall Street was waiting for him. And really he wasn't

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Speaker 1: much like the Wall Street traders. They were big and

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Speaker 1: he was slight. They projected confidence and he projected doubt.

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Speaker 1: Yet he insisted that Wall Street was where he was

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Speaker 1: going to himself. That is, he didn't dare whisper any

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Speaker 1: of this to his parents or his friends, it would

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Speaker 1: have sounded phony. He knew his parents would say, going

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Speaker 1: to Wall Street, why have you started farting channel number five?

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Speaker 1: As Ronan approached college graduation, his interest in being a

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Speaker 1: stock market trader became an obset. He wrote dozens of

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Speaker 1: letters to every Wall Street firm, even the small ones.

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Speaker 1: He received only one reply, a form letter. So I

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Speaker 1: graduated in June. My parents had already moved back to Ireland.

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Speaker 1: I was living with my friend's mother on the floor

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Speaker 1: of her apartment, looking for a job, and it wasn't

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Speaker 1: going swimmingly well. And then I got a call one

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Speaker 1: day from a guy from MCI. MCI was a phone company.

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Speaker 1: He went to work for the phone company, and not

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Speaker 1: for the glamorous part of it, And it started off

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Speaker 1: as something called a national account support consultant. And they

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Speaker 1: shipped me off to Atlanta for a couple of weeks

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Speaker 1: and started training me on fiber optic gables and the

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Speaker 1: difference between glass and copper, and network switches and voice

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Speaker 1: and data. And I was just doing pagers on people's belts.

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Speaker 1: I was doing voice, you know, I was working with

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Speaker 1: travel agents. You know. I would go up to some

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Speaker 1: offices in the Bronx where they literally had phone boots

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Speaker 1: for people who wanted to call home to Columbia or

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Speaker 1: El Salvador and couldn't afford to a few years later,

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Speaker 1: Ronan moved from the phone company to another company called Radiance.

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Speaker 1: Radiance was in sort of the same business as MCI.

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Speaker 1: It helped people to move their data around, Only Radiance

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Speaker 1: was helping people who worked with Wall Street traders, traders

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Speaker 1: who wanted to speed up their trades in various stock markets.

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Speaker 1: In the early two thousands, all the stock markets, the

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Speaker 1: New York Stock Exchange in NASDAC and the others had

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Speaker 1: up and moved out of New York City to New Jersey,

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Speaker 1: where floor space was cheaper. They had also gotten rid

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Speaker 1: of all the human beings who worked on their trading floors.

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Speaker 1: The guys Ronan had once found so cool. The stock

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Speaker 1: markets were now simply stacks of computers inside New Jersey

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Speaker 1: data centers. The old New York Stock Exchange basically became

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Speaker 1: nothing more than a stage set for CNBC. One day

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Speaker 1: at Radiance, Ronan got a strange call from a trader

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Speaker 1: in Kansas City. The guy wanted Ronan to figure out

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Speaker 1: why his stock market orders were taking so long to

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Speaker 1: reach the stock exchanges in New Jersey, and it's taking

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Speaker 1: him forty three milliseconds round trip for these trades to

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Speaker 1: be acknowledged. And I remember my inner monologue at the

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Speaker 1: time is I don't even know what the hell a

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Speaker 1: millisecond is. But I said, Ted, that sounds terrible. I

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Speaker 1: think I can help you. A millisecond is one thousandth

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Speaker 1: of a second. It takes roughly four hundred milliseconds to

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Speaker 1: blink your eye if you do it fast. Ronan knew

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Speaker 1: that the guy's biggest problem was that he was in

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Speaker 1: Kansas City. Data travels at the speed of light, but

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Speaker 1: it still travels. The further you are from the stock exchanges,

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Speaker 1: the longer it takes for your trades to get to them.

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Speaker 1: So Ronan moved the guy's trading machines into a building

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Speaker 1: in New Jersey near the stock exchanges and dropped his

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Speaker 1: trading time from forty three milliseconds to three point nine milliseconds,

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Speaker 1: or roughly one hundredth of the time it takes you

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Speaker 1: to blink your eye if you do it fast. And

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Speaker 1: this guy came up to visit his computer, as I

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Speaker 1: guess a few weeks later and he was thrilled. And

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Speaker 1: you know, according to what he told me, I was

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Speaker 1: trying to ask him, I'm like, what's the value of

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Speaker 1: a millisecond? I'm very pleased that you, as my client,

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Speaker 1: are happy. I just have no idea why you are.

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Speaker 1: And his explanation was in the first I believe, he said,

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Speaker 1: the first four or five days of trading out of

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Speaker 1: New Jersey, same strategy that I was running in Kansas.

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Speaker 1: I've made more additional profit than to pay for your

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Speaker 1: services for eighteen months. Anyway, words soon got out across

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Speaker 1: Wall Street, and if you wanted to make your trades

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Speaker 1: go faster, you call Ronan Ryan, and Ronan was soon

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Speaker 1: helping all these high frequency traders, as they were called.

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Speaker 1: Ronan had no idea how they were making their money,

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Speaker 1: but they would use these mysterious terms like sniffing out

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Speaker 1: the whale order, and they'd be like, yeah, you know,

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Speaker 1: we can see footprints of large orders entering the market,

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Speaker 1: and we can you know, basically, if we see there's

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Speaker 1: demand of a stock because a big pension firm or

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Speaker 1: mutual fund is trying to buy it, we can buy

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Speaker 1: it ahead of them and sell it back to them.

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Speaker 1: For more, Ronan was running these super straight fiber optic

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Speaker 1: lines across New Jersey. He was scoping out the data

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Speaker 1: centers that housed the exchanges to find the shortest paths

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Speaker 1: from the traders computers to the stock exchange computers. The

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Speaker 1: stock exchanges didn't really understand what was going on, at

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Speaker 1: least at first, but then high frequency traders started to

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Speaker 1: offer the stock exchanges huge sums of money for what

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Speaker 1: seemed like absurdly small things like a shorter cable between

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Speaker 1: the traders computers and the stock exchanges computers, and they

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Speaker 1: all insisted on having their computers inside the same buildings

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Speaker 1: in New Jersey. Co location, they called it. The stock

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Speaker 1: exchanges became a peculiar kind of landlord. Just the amount

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Speaker 1: that they charge these co located clients to connect them.

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Speaker 1: You pay it again into the building and then to

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Speaker 1: get from your spot in the building to the exchanges

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Speaker 1: meet me point is bananas like. They'll charge as much

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Speaker 1: as forty thousand dollars a month for a cable. Forty

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Speaker 1: thousand dollars a month for a cable that you could

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Speaker 1: buy retail for two hundred bucks. Ronan had no clear

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Speaker 1: idea why these big shots were throwing so much money

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Speaker 1: around inside these New Jersey data centers, But then neither

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Speaker 1: did the data centers. The American part of him just

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Speaker 1: sort of went along for the ride. Whatever these people

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Speaker 1: were doing must be cool and great, just another wonderful

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Speaker 1: aspect of American capitalism. The Irish part of him began

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Speaker 1: to wonder if that was true? And what is I

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Speaker 1: X group? Group? Is a I X is a stock exchange?

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Speaker 1: All people have things that set them apart. Would set

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Speaker 1: Brad Katziamo apart? Was his refusal to be set apart.

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Speaker 1: Ever since he was a little kid in the Toronto suburbs,

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Speaker 1: people had been telling him that he was special, and

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Speaker 1: he'd been refusing to take them too seriously. When he

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Speaker 1: was seven, his mom told him he had been identified

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Speaker 1: as gifted and offered a spot at a special school.

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Speaker 1: Brad say he'd rather stay in the normal school with

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Speaker 1: his friends. When he was fifteen, he ran a forty

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Speaker 1: yard dash in four and a half seconds and the

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Speaker 1: track coach told him he could be a star. He

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Speaker 1: said he'd rather stay on the football team with his friends.

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Speaker 1: At seventeen, he could have gone to any university in

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Speaker 1: the world. He chose to go to Wilfrid Laurier, west

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Speaker 1: of Toronto to stay with his friends. Brad never thought

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Speaker 1: much about what he would do for a living, but

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Speaker 1: the Royal Bank of Canada found him and hired him,

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Speaker 1: and naturally told him he was going to be a star.

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Speaker 1: Brad had never set foot in the United States, but

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Speaker 1: right after nine to eleven RBC sent him to Wall

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Speaker 1: Street to run their stock trading. He was twenty three

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Speaker 1: years old, and so when the two thousand and eight

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Speaker 1: financial crisis happened, Brad Casiyama was making two million dollars

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Speaker 1: a year running US stock market trading for the Royal

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Speaker 1: Bank of Canada. But by then, at least to him,

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Speaker 1: something was feeling very wrong. The trouble started with a

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Speaker 1: computer he used to trade in the stock market. Up

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Speaker 1: until early two thousand and eight, the screens on his

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Speaker 1: trading desk had always given him real time pictures of

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Speaker 1: the market. If he wanted to buy, say, Hewlett Packard stock,

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Speaker 1: he checked his computer screens to see how much of

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Speaker 1: it was offered. If they said ten thousand shares were

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Speaker 1: offered for sale at a certain price, Brad could hit

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Speaker 1: a button and buy all ten thousand shares. At that price.

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Speaker 1: Then one day he couldn't Basically my just the computer says, okay,

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Speaker 1: well you didn't buy ten thousand, you bought eight thousand,

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Speaker 1: and so it was bothersome, But you kind of tend

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Speaker 1: to rewire your brain to realize that tradings computerized. It's

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Speaker 1: a fast moving market. Things are happening. Maybe someone else

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Speaker 1: wanted to buy Hewlett Packard at the same time I

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Speaker 1: wanted to buy it. The issue is that by two

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Speaker 1: thousand and eight the problem got worse. Instead of buying

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Speaker 1: eighty percent of what I saw, I'd get sixty percent.

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Speaker 1: By two thousand and nine, instead of getting sixty I'd

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Speaker 1: get forty percent of what I saw. So I was

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Speaker 1: missing entire chunks of stock, millions of dollars worth of stock,

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Speaker 1: of essentially just disappearing. Brad isn't buying and selling stock

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Speaker 1: just for himself or for the Royal Bank of Canada. Mainly,

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Speaker 1: he's acting on behalf of big American and Canadian pension

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Speaker 1: funds and mutual funds and the ordinary people whose money

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Speaker 1: they managed. His losses are also their losses, and he

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Speaker 1: can't figure out why they're mounting. His first thought was

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Speaker 1: it was a computer problem. Maybe the buttons on his

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Speaker 1: keyboard didn't work or something. The Royal Bank of Canada's

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Speaker 1: geek squad turned up at his desk and told him

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Speaker 1: the computer buttons work fine. It was Brad who was

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Speaker 1: the problem. They said. He wasn't pressing the button fast enough,

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Speaker 1: and I'd count to five or seven or ten, whatever,

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Speaker 1: nothing would happen. Then I'd press the button, and then

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Speaker 1: I'd miss shares in the stock with your hires. It

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Speaker 1: was very clear that it wasn't someone else wanted to

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Speaker 1: buy Hewlett Packard because I wanted to buy it, and

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Speaker 1: something between me pressing the button and my trade actually executing,

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Speaker 1: something was happening, but I could never get a real

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Speaker 1: answer as to what was happening. Brad figured out that

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Speaker 1: whatever was happening had to do with the way information

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Speaker 1: had started to travel. By two thousand and nine, the

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Speaker 1: stock exchanges were in some weird relationship with these new traders,

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Speaker 1: these so called high frequency traders. But Brad hadn't completely

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Speaker 1: worked out was exactly what enabled these guys to know

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Speaker 1: what he was doing before he even did it. But

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Speaker 1: then he heard about this person who helped make high

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Speaker 1: speed traders go faster, An Irish guy named Ronan Ryan,

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Speaker 1: like people here, Oh, the exchanges are in New Jersey.

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Speaker 1: If you don't live in New Jersey, I live in

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Speaker 1: New Jersey. I happen to know where Mahwa is. I

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Speaker 1: know where Secaucus is. You live in New York. Brad

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Speaker 1: lived in New York and the clue where these places wore.

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Speaker 1: And these are things that were fairly rudimentary to me.

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Speaker 1: Not because I'm smarter than anybody else Wall Street, It's

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Speaker 1: just this is the industry that I grew up with.

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Speaker 1: Ronan explained to Brad what happened when he pushed the

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Speaker 1: button to trade that instantaneous was not instantaneous. The signal

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Speaker 1: Brad sent to buy ten thousand shares of Hewlett Packard

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Speaker 1: needed to travel from his desk at one Liberty Plaza

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Speaker 1: in Lower Manhattan out to the data centers scattered across

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Speaker 1: the Jersey suburbs, to the New stock markets full of

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Speaker 1: server racks trading stocks. So one press of the button,

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Speaker 1: what I thought was an instantaneous action was actually a

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Speaker 1: series of action that happened over the course of many milliseconds.

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Speaker 1: High speed traders were able to buy technology and data

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Speaker 1: from the exchanges to pick up a signal at one

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Speaker 1: exchange and race me while my order is in flight

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Speaker 1: to the other exchanges to do one of two things. One,

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Speaker 1: they wanted to cancel any sell orders they had out

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Speaker 1: there because here comes a big buyer. I don't want

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Speaker 1: to sell any more because I know there's a buyer coming.

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Speaker 1: But two, to actually buy stock ahead of me to

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Speaker 1: sell back to me at a higher price. It's called

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Speaker 1: front running. It's not really about being an investor yourself.

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Speaker 1: It's about finding out what real investors are about to

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Speaker 1: buy and buying it before they do so you can

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Speaker 1: sell it to them for a higher price. You're only

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00:20:26,916 --> 00:20:31,076
Speaker 1: buying because you know I want to buy, and you're

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Speaker 1: buying not to own shares in a company that you

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Speaker 1: think is going to help you know, you know develop,

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Speaker 1: you know, an investment return because you understand their business model. No,

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Speaker 1: you're buying it just to flip it back to me

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Speaker 1: because you know I want to buy it. So Brad

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00:20:43,916 --> 00:20:46,036
Speaker 1: figures all this out with a lot of help from Ronan,

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Speaker 1: after which Brad takes a long look at this guy,

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Speaker 1: this oddly wary irishman. Ronan still longed to be a

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Speaker 1: big shot Wall Street stock Market trader, and Brad decided

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Speaker 1: to make him one. Inside of a year, Ronan was

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Speaker 1: earning more than a million bucks. Brad builds this team

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Speaker 1: of people inside the Royal Bank of Canada. The team

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Speaker 1: consists mostly of immigrants who are running tests on the

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Speaker 1: American stock market to see how to unrig it, to

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Speaker 1: see if they can make it impossible for their own

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Speaker 1: stock market orders to be front run. So they try this.

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Speaker 1: Instead of sending one signal to the four New Jersey centers,

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Speaker 1: they send four different signals, so they all arrive at

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Speaker 1: the four different centers at precisely the same moment each

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00:21:36,916 --> 00:21:39,796
Speaker 1: signal was in order to buy. However, many Hewlett Packard

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Speaker 1: or whatever shares were for sale in just that data center,

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00:21:45,396 --> 00:21:48,796
Speaker 1: and just like that, the whole problem vanished, at least

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Speaker 1: for RBC. Brad was once again able to buy all

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Speaker 1: the shares for sale on his trading screen without being scalped,

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Speaker 1: without electronic frontrunners in the middle of his trade. But

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00:22:00,196 --> 00:22:03,396
Speaker 1: the problem still bothered Brad because it was so obviously

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Speaker 1: outrageously unfair. The US government had granted licenses to these

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00:22:08,556 --> 00:22:12,476
Speaker 1: stock changes on the condition that they referee the stock market.

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Speaker 1: Winners and losers are no longer determined solely based on

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Speaker 1: who understands a company better and fundamentals. It's now based

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00:22:19,476 --> 00:22:22,516
Speaker 1: on how long my cable is and do I use

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00:22:22,596 --> 00:22:26,996
Speaker 1: microwave versus fiber optic cable. We've talked about this sort

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Speaker 1: of thing before in this podcast. It happened with CEO

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00:22:30,516 --> 00:22:34,396
Speaker 1: pay consultants and the ratings agencies and art connoisseurs and

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00:22:34,516 --> 00:22:38,716
Speaker 1: probably all kinds of other referees. The ref got bought.

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Speaker 1: In this case, the refs are the stock exchanges. They

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Speaker 1: were now providing a slow picture of the stock market

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Speaker 1: to ordinary investors while selling a faster picture of that

395
00:22:48,076 --> 00:22:51,436
Speaker 1: same market to a select group of high speed traders.

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00:22:52,436 --> 00:22:56,036
Speaker 1: That is like finding out the umpire makes more from

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Speaker 1: selling things to one of the teams than they do

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Speaker 1: from umpiring the game. One thing a lot of people

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00:23:00,916 --> 00:23:04,356
Speaker 1: don't realize is that right now New York Stock Exchange

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00:23:04,356 --> 00:23:07,116
Speaker 1: in AzaC, they make more money selling high speed data

401
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Speaker 1: and technology than they do from matching buyers and sellers.

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Speaker 1: Back in twenty fifteen, I wrote a book called Flashboys

403
00:23:18,516 --> 00:23:21,876
Speaker 1: about Brad and Ronan and the problem of high frequency trading.

404
00:23:22,236 --> 00:23:24,676
Speaker 1: Because I was as outraged as I had been as

405
00:23:24,716 --> 00:23:27,356
Speaker 1: a kid when my father tried to explain to me

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00:23:27,436 --> 00:23:29,956
Speaker 1: that some stockbroker had charged twenty bucks to make a

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Speaker 1: phone call, and I wanted to egg his house. And

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00:23:33,076 --> 00:23:37,196
Speaker 1: I assumed that any right thinking person would share my outrage.

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Speaker 1: This is what's weird. The computers aren't in one place anymore.

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Speaker 1: They're they're all in New Jersey, right outside of New

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00:23:47,196 --> 00:23:50,996
Speaker 1: York City. But they're in like four or five different

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00:23:50,996 --> 00:23:53,596
Speaker 1: places in New Jersey. So you see what it says

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00:23:53,596 --> 00:24:00,316
Speaker 1: that ap that it's called their ticker, and we say

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00:24:00,356 --> 00:24:03,196
Speaker 1: buy let's say we want to buy one share, we

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00:24:03,236 --> 00:24:05,996
Speaker 1: want to buy it. Let's buy ten shares? Okay, all right,

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00:24:06,116 --> 00:24:10,116
Speaker 1: isn't that a lot? You're right with that? Yeah? Um,

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00:24:10,116 --> 00:24:13,276
Speaker 1: this is gonna how are you get into college? It's

418
00:24:13,276 --> 00:24:15,636
Speaker 1: going to pay my college could if it goes up

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00:24:15,636 --> 00:24:18,996
Speaker 1: a lot? You want to click it? You can do it. Yeah,

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00:24:19,036 --> 00:24:20,756
Speaker 1: you sit in my chair. So what you do is

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00:24:20,796 --> 00:24:24,756
Speaker 1: you go place order Place order. That's it, place order.

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00:24:24,796 --> 00:24:26,516
Speaker 1: So what does it say. It says right now, it

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Speaker 1: says your estimated total amount is one nine dollars fifty

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00:24:31,596 --> 00:24:33,836
Speaker 1: five cents, and you go down the air place order

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00:24:34,716 --> 00:24:40,116
Speaker 1: do it. Yeah, so they're not allowed to buy in

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00:24:40,156 --> 00:24:44,556
Speaker 1: the night. It's closed at night. Oh, so people are

427
00:24:44,556 --> 00:24:47,556
Speaker 1: gonna breaks. People have so people can have breaks, and

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00:24:47,596 --> 00:24:50,356
Speaker 1: the computers, I would bet and the computers need to

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00:24:50,396 --> 00:24:54,476
Speaker 1: break too. They probably do. Now I hit him with

430
00:24:54,516 --> 00:24:58,876
Speaker 1: it right between the eyes, the brutal facts of life.

431
00:25:00,356 --> 00:25:02,756
Speaker 1: I explained that when he bought his first Apple shares,

432
00:25:03,316 --> 00:25:05,796
Speaker 1: these other computers get to see what he's doing before

433
00:25:05,836 --> 00:25:08,556
Speaker 1: anyone else, Like there are people out there who get

434
00:25:08,556 --> 00:25:13,876
Speaker 1: to live in the few milliseconds ahead of us. This

435
00:25:13,916 --> 00:25:15,436
Speaker 1: is the funny thing about the start man. I'm trying

436
00:25:15,436 --> 00:25:18,316
Speaker 1: to explain to you, is that you think about You

437
00:25:18,396 --> 00:25:21,396
Speaker 1: understand why stocks exist, You understand why people would want

438
00:25:21,396 --> 00:25:25,596
Speaker 1: to buy them and sell them. But it's harder to

439
00:25:25,676 --> 00:25:28,636
Speaker 1: understand why anybody needs to sit in the middle between

440
00:25:28,676 --> 00:25:31,876
Speaker 1: the people who would buy and sell and be given

441
00:25:32,116 --> 00:25:35,676
Speaker 1: different information from everybody else, better information so they can

442
00:25:35,756 --> 00:25:37,596
Speaker 1: make money off the people who want to buy and sell.

443
00:25:39,556 --> 00:25:42,716
Speaker 1: The reason all this happens is it happens so fast

444
00:25:43,436 --> 00:25:45,996
Speaker 1: that nobody sees it. These signals move at the speed

445
00:25:45,996 --> 00:25:50,756
Speaker 1: of light, which is the second fastest thing. What's the

446
00:25:50,756 --> 00:25:58,476
Speaker 1: first fastest thing? Thought? Thought that threw me for a second.

447
00:25:58,636 --> 00:26:02,356
Speaker 1: I mean, is it true? Do thoughts move faster than light?

448
00:26:03,116 --> 00:26:06,276
Speaker 1: Did I just prove that they don't? I honestly don't

449
00:26:06,316 --> 00:26:09,396
Speaker 1: know or if it matters. But then I realized he

450
00:26:09,436 --> 00:26:12,236
Speaker 1: didn't pick up on what I was trying to tell him.

451
00:26:12,396 --> 00:26:14,236
Speaker 1: Let's see what we got it for. We got it

452
00:26:14,956 --> 00:26:21,356
Speaker 1: one hundred and fifty dollars and forty five cents. Actually

453
00:26:21,396 --> 00:26:23,996
Speaker 1: it's even smaller. See one hundred fifty forty five point

454
00:26:24,036 --> 00:26:29,196
Speaker 1: four cents. That's what we paid for the stock. Someone's

455
00:26:29,236 --> 00:26:31,396
Speaker 1: computer in the one of the exchanges in New Jersey

456
00:26:31,556 --> 00:26:35,476
Speaker 1: was looking at it and seeing that Apple was below that,

457
00:26:36,596 --> 00:26:40,356
Speaker 1: and ah, I can buy it cheaper and sell it

458
00:26:40,396 --> 00:26:43,836
Speaker 1: to that kid in Berkeley, California and steal a few

459
00:26:43,836 --> 00:26:47,836
Speaker 1: pennies from him. It is not illegal for kids to

460
00:26:47,836 --> 00:26:50,676
Speaker 1: buy stock, but their parents have to do it for them.

461
00:26:50,876 --> 00:26:54,916
Speaker 1: That's correct, So we didn't break the law technically, I

462
00:26:55,036 --> 00:26:57,916
Speaker 1: clicked the button. So what we'll never do is buy

463
00:26:57,916 --> 00:27:00,516
Speaker 1: stock drunk. Yeah, it's illegal for kids to buy to

464
00:27:00,516 --> 00:27:06,476
Speaker 1: stock drunk, so never trade stocks while drinking. Even an

465
00:27:06,516 --> 00:27:09,796
Speaker 1: eleven year old senses that with all this money lying around,

466
00:27:09,916 --> 00:27:13,716
Speaker 1: there must be laws involved here, and there are. He's

467
00:27:13,756 --> 00:27:16,036
Speaker 1: required by a law to send his order to a

468
00:27:16,076 --> 00:27:21,076
Speaker 1: stock exchange through a stockbroker, and that stockbroker gets paid

469
00:27:21,116 --> 00:27:24,716
Speaker 1: by the exchanges for those orders, so the stockbroker is

470
00:27:24,716 --> 00:27:27,996
Speaker 1: in on the game too. The game is to maximize

471
00:27:27,996 --> 00:27:30,196
Speaker 1: the kill of the high speed traders so that they

472
00:27:30,236 --> 00:27:32,796
Speaker 1: can afford to pay the stock exchanges, and the stock

473
00:27:32,836 --> 00:27:37,436
Speaker 1: exchanges can in turn pay the stockbrokers. Everyone in the

474
00:27:37,516 --> 00:27:40,236
Speaker 1: middle takes a bite out of the prey. The prey

475
00:27:40,356 --> 00:27:45,236
Speaker 1: is us, and it's all legal because the people who

476
00:27:45,276 --> 00:27:48,236
Speaker 1: make the laws screwed up and they're only now beginning

477
00:27:48,276 --> 00:27:53,996
Speaker 1: to admit it. The parent company that owns the New

478
00:27:54,076 --> 00:27:57,756
Speaker 1: York Stock Exchange is among the few most profitable companies

479
00:27:57,796 --> 00:28:01,076
Speaker 1: in the United States, which is astonishing if you think

480
00:28:01,076 --> 00:28:03,916
Speaker 1: about it, because their business is simply the exchange of

481
00:28:03,956 --> 00:28:08,196
Speaker 1: financial instruments rather than the creation of anything real. That's

482
00:28:08,276 --> 00:28:11,876
Speaker 1: Robert Jackson, who in twenty seventeen was named one of

483
00:28:11,876 --> 00:28:15,196
Speaker 1: the five commissioners that the Securities in Exchange Commission it's

484
00:28:15,196 --> 00:28:18,236
Speaker 1: supposed to oversee the stock exchanges. Think of it as

485
00:28:18,276 --> 00:28:23,156
Speaker 1: the referees. Referee. I totally understand why a car manufacturer

486
00:28:23,236 --> 00:28:26,476
Speaker 1: might be or why an incredibly innovative internet company might be,

487
00:28:26,796 --> 00:28:29,236
Speaker 1: but the idea that the place you go to make

488
00:28:29,276 --> 00:28:32,836
Speaker 1: investments is the most profitable business in America tells me

489
00:28:32,876 --> 00:28:35,796
Speaker 1: that something's wrong. Can you think of any analogy to

490
00:28:36,076 --> 00:28:39,476
Speaker 1: this situation where you've got the companies that are responsible

491
00:28:39,516 --> 00:28:43,596
Speaker 1: for both providing this public good, this public service, or

492
00:28:43,596 --> 00:28:48,516
Speaker 1: this public information and are also competing with it in

493
00:28:48,556 --> 00:28:52,796
Speaker 1: the private sector. I can't, And that just shows how

494
00:28:52,836 --> 00:28:55,236
Speaker 1: backward our system for stock markets are. I can think

495
00:28:55,276 --> 00:28:57,236
Speaker 1: of lots of examples in the American economy and in

496
00:28:57,276 --> 00:29:00,316
Speaker 1: our history where we've had a publicly provided good and

497
00:29:00,396 --> 00:29:03,596
Speaker 1: a privately provided good, and sometimes that you even compete

498
00:29:03,636 --> 00:29:05,516
Speaker 1: with each other. It would be an example of that.

499
00:29:05,756 --> 00:29:09,036
Speaker 1: So there's public transportation that's available in the subway, and

500
00:29:09,196 --> 00:29:12,396
Speaker 1: there's privately available substitutes. But this is a little like

501
00:29:12,516 --> 00:29:15,236
Speaker 1: letting Uber run the subway and being surprised that the

502
00:29:15,276 --> 00:29:19,516
Speaker 1: subway sucks, yeah, Or like having Barnes and Noble run

503
00:29:19,556 --> 00:29:22,596
Speaker 1: the library. That's right, and then it's acting surprised when

504
00:29:22,596 --> 00:29:24,676
Speaker 1: you get to the library and you realize it doesn't

505
00:29:24,716 --> 00:29:28,156
Speaker 1: have that many books. Let's talk just a little bit

506
00:29:28,196 --> 00:29:31,956
Speaker 1: about what it says about fairness in the American economy

507
00:29:31,996 --> 00:29:34,756
Speaker 1: that this has been allowed to happen. Do you worry

508
00:29:34,756 --> 00:29:36,996
Speaker 1: about that subject at all? Here's what I worry about

509
00:29:37,556 --> 00:29:40,396
Speaker 1: that if we stop somebody on the street and said, hey,

510
00:29:40,396 --> 00:29:42,156
Speaker 1: here's what happens when you buy and sell a share

511
00:29:42,196 --> 00:29:45,996
Speaker 1: of stock. It's not that it goes to some central

512
00:29:46,036 --> 00:29:48,276
Speaker 1: place where people figure out what the price should be

513
00:29:48,276 --> 00:29:51,196
Speaker 1: and then give you the best price possible. No, no, no.

514
00:29:51,236 --> 00:29:54,156
Speaker 1: This order bounces around data centers in northern New Jersey

515
00:29:54,156 --> 00:29:57,676
Speaker 1: and then is routed to one of twelve exchanges, where

516
00:29:57,996 --> 00:29:59,876
Speaker 1: the guy who you gave the order too is paid

517
00:29:59,876 --> 00:30:02,236
Speaker 1: best to send it there, and then you're given a

518
00:30:02,276 --> 00:30:06,676
Speaker 1: price that's probably reflective of a second class quality of data.

519
00:30:06,796 --> 00:30:08,796
Speaker 1: If we told that to somebody, I think they'd be

520
00:30:08,836 --> 00:30:12,876
Speaker 1: out But would they I mean, would they really be

521
00:30:13,036 --> 00:30:15,796
Speaker 1: that outraged? I just want to know how this makes

522
00:30:15,796 --> 00:30:19,836
Speaker 1: you feel. Some guy has got a penny or two,

523
00:30:20,636 --> 00:30:23,556
Speaker 1: maybe just a fraction of a penny. Well, it's probably

524
00:30:23,556 --> 00:30:29,916
Speaker 1: a penny or two of your money because the stock

525
00:30:29,956 --> 00:30:33,116
Speaker 1: exchange told him a walker's coming to buy apple stock.

526
00:30:34,836 --> 00:30:36,716
Speaker 1: You can go see if you can get it cheaper

527
00:30:37,236 --> 00:30:39,836
Speaker 1: and sell it to him. You can stand in the

528
00:30:39,836 --> 00:30:42,356
Speaker 1: middle of his trade. You can get between him and

529
00:30:42,356 --> 00:30:44,996
Speaker 1: the person who's actually trying to sell the stock and

530
00:30:45,116 --> 00:30:49,276
Speaker 1: make money. You feel our care about that? I don't

531
00:30:49,316 --> 00:30:53,836
Speaker 1: really care. Why not, because the original order we placed

532
00:30:54,276 --> 00:30:57,996
Speaker 1: we got we that's that was our choice right to

533
00:30:58,076 --> 00:31:01,076
Speaker 1: place it, and if we were willing to do that,

534
00:31:02,036 --> 00:31:07,476
Speaker 1: it really shouldn't have mattered. It was true. He really

535
00:31:07,516 --> 00:31:09,916
Speaker 1: didn't care. It was just a few pennies and it

536
00:31:09,956 --> 00:31:13,276
Speaker 1: wasn't even really his money. He didn't even care when

537
00:31:13,276 --> 00:31:14,836
Speaker 1: I told him that if you added it up across

538
00:31:14,876 --> 00:31:17,876
Speaker 1: the entire market, the theft from all the little kids

539
00:31:17,876 --> 00:31:20,716
Speaker 1: and grown ups, it came to many billions of dollars

540
00:31:20,716 --> 00:31:23,356
Speaker 1: a year. He didn't care that the cost was spread

541
00:31:23,396 --> 00:31:26,796
Speaker 1: across millions of victims while the benefits were concentrated in

542
00:31:26,796 --> 00:31:30,556
Speaker 1: the hands of the rich few. I obviously found the

543
00:31:30,596 --> 00:31:35,516
Speaker 1: situation outrageous. My son did not. It's like the lottery.

544
00:31:35,676 --> 00:31:38,836
Speaker 1: You're happy when if you win it and just stick

545
00:31:38,836 --> 00:31:40,596
Speaker 1: with that, and you don't really care about where the

546
00:31:40,996 --> 00:31:42,876
Speaker 1: lottery is fair enough if you want, and if you lose,

547
00:31:42,916 --> 00:31:45,956
Speaker 1: you just let go. Well, well, if people are really

548
00:31:45,996 --> 00:31:48,596
Speaker 1: addicted to it and they know if that they're gonna lose,

549
00:31:49,036 --> 00:31:51,396
Speaker 1: but if they win, they're like Hallie Ella's go home,

550
00:31:52,516 --> 00:31:55,796
Speaker 1: let's go. It crossed my mind, and not for the

551
00:31:55,836 --> 00:31:59,076
Speaker 1: first time that about the best joke life might play

552
00:31:59,116 --> 00:32:01,556
Speaker 1: on me is from my son to end up a

553
00:32:01,596 --> 00:32:04,956
Speaker 1: Wall Street trader. He already seems to have a useful

554
00:32:05,036 --> 00:32:07,716
Speaker 1: character trait, a sense that the game is not about

555
00:32:07,796 --> 00:32:10,636
Speaker 1: right and wrong, but about winning and losing a certain

556
00:32:10,756 --> 00:32:21,836
Speaker 1: shall we say, lack of interest in the moral question. Hi,

557
00:32:21,916 --> 00:32:24,676
Speaker 1: I'm Beth. I'm a senior studying social studies with a

558
00:32:24,716 --> 00:32:27,836
Speaker 1: focus on Brazil, and I'm from Sacramento, and I'll be

559
00:32:27,956 --> 00:32:31,716
Speaker 1: returning to Bank of America in a sales rolera. I'm

560
00:32:31,756 --> 00:32:34,516
Speaker 1: a senior at the College I studying math and computer science,

561
00:32:34,556 --> 00:32:37,436
Speaker 1: and I'll be returning to Goldman in a trading role.

562
00:32:38,876 --> 00:32:44,236
Speaker 1: We're at Harvard in a seminar mainly juniors and seniors. Anyway,

563
00:32:44,236 --> 00:32:47,876
Speaker 1: they're all older than eleven years old and supposedly interested

564
00:32:47,876 --> 00:32:51,316
Speaker 1: in fairness, since that's what the class is about. My

565
00:32:51,436 --> 00:32:54,956
Speaker 1: name is Michael Sandel, and I teach political philosophy at

566
00:32:54,996 --> 00:32:59,396
Speaker 1: Harvard University. He teaches a course called Justice. It's one

567
00:32:59,396 --> 00:33:02,556
Speaker 1: of the most sought after courses at Harvard. This seminar,

568
00:33:02,796 --> 00:33:08,196
Speaker 1: called Casino Capitalism, is its first cousins. Oh, Vinnie, all right,

569
00:33:08,236 --> 00:33:14,716
Speaker 1: we'll wait till three. Is this Vinnie? Yeah, welcome Vini.

570
00:33:15,636 --> 00:33:18,796
Speaker 1: It's a chance for thirteen hand picked students to discuss

571
00:33:18,796 --> 00:33:22,156
Speaker 1: the fairness of a lot of real world situations, especially

572
00:33:22,196 --> 00:33:25,436
Speaker 1: real world situations on Wall Street. Many of the students

573
00:33:25,436 --> 00:33:29,276
Speaker 1: have already worked on Wall Street and planned to return. Well,

574
00:33:29,316 --> 00:33:34,156
Speaker 1: why don't we begin. I'm delighted that Michael Lewis and

575
00:33:34,236 --> 00:33:37,356
Speaker 1: Brad katzi im I could join us for the discussion

576
00:33:37,396 --> 00:33:40,316
Speaker 1: of Flashboys. Shall we go around you? Yeah? So, I'm

577
00:33:40,356 --> 00:33:43,396
Speaker 1: Michael Lewis. I'm the author of Flashboys and a bunch

578
00:33:43,396 --> 00:33:47,516
Speaker 1: of other books and working on this podcast, which gonna

579
00:33:47,516 --> 00:33:50,516
Speaker 1: be called Against the Rules. I remember classes like this,

580
00:33:51,356 --> 00:33:56,836
Speaker 1: the semi preparedness, the homework half done, the thoughts half baked,

581
00:33:57,636 --> 00:33:59,676
Speaker 1: the warrior that today I'm going to be found out.

582
00:34:00,156 --> 00:34:04,396
Speaker 1: Although today that's not the problem. I'm the homework. So

583
00:34:04,596 --> 00:34:08,516
Speaker 1: is Brad. Brad Katsiamma. I'm CEO, one of the co

584
00:34:08,596 --> 00:34:14,236
Speaker 1: founders of IX. Obviously, I work in finance. That's fortunately

585
00:34:14,316 --> 00:34:20,196
Speaker 1: or unfortunately, originally Canadian from just outside of Toronto, living Darren, Connecticut. Now,

586
00:34:20,996 --> 00:34:23,476
Speaker 1: after Brad figured out how the stock market got rigged,

587
00:34:23,596 --> 00:34:25,956
Speaker 1: He set out to fix it. He quit his two

588
00:34:25,996 --> 00:34:28,076
Speaker 1: million dollars a year job as the head of stock

589
00:34:28,156 --> 00:34:30,916
Speaker 1: market trading at the Royal Bank of Canada. He took

590
00:34:30,996 --> 00:34:34,196
Speaker 1: no pay and lots of abuse from Wall Street as

591
00:34:34,196 --> 00:34:37,876
Speaker 1: he set out to create a fair stock exchange, the

592
00:34:37,996 --> 00:34:42,996
Speaker 1: Investors Exchange. He called it I e X. What's interesting

593
00:34:43,076 --> 00:34:44,516
Speaker 1: is that never in my life have I been a

594
00:34:44,516 --> 00:34:53,076
Speaker 1: controversial person or looking to fight against the system. I

595
00:34:53,116 --> 00:34:55,436
Speaker 1: guess in a way, that was the first time I

596
00:34:55,476 --> 00:34:58,556
Speaker 1: think I was motivated to fight against the system. Did

597
00:34:58,636 --> 00:35:01,636
Speaker 1: everyone come away from reading the book believing that Wall

598
00:35:01,676 --> 00:35:06,276
Speaker 1: Street is rigged? Yes, say, rate your handed. You did

599
00:35:07,716 --> 00:35:10,236
Speaker 1: all but a few hands go up. And those of

600
00:35:10,236 --> 00:35:16,036
Speaker 1: you who who do not think it's trigged, Kade Marius

601
00:35:16,036 --> 00:35:19,836
Speaker 1: Shara is not sure. That's how you don't think it's rigged,

602
00:35:20,916 --> 00:35:23,756
Speaker 1: even having read Flash Boys, Well, I'm so here. I'm

603
00:35:23,796 --> 00:35:26,756
Speaker 1: a little like vacillating, only for the fact that maybe,

604
00:35:26,796 --> 00:35:28,796
Speaker 1: like I didn't understand it as well as I could have.

605
00:35:28,996 --> 00:35:31,676
Speaker 1: But in my mind, it seems to be like a

606
00:35:31,716 --> 00:35:34,996
Speaker 1: trade gets executed. Someone catches on the trade and just

607
00:35:35,076 --> 00:35:36,916
Speaker 1: gets to make a better price because they get to

608
00:35:36,956 --> 00:35:39,196
Speaker 1: dump it out. Real quickly, and in my mind, why

609
00:35:39,276 --> 00:35:41,916
Speaker 1: is that a problem? A moral problem? I mean, when

610
00:35:42,036 --> 00:35:45,076
Speaker 1: Lebron James goes to dunk a basketball and Jalen Brown

611
00:35:45,156 --> 00:35:47,516
Speaker 1: stops him and then passes it to Tatum on the

612
00:35:47,556 --> 00:35:49,676
Speaker 1: other side and he dunks it, no one says anything.

613
00:35:49,956 --> 00:35:51,356
Speaker 1: It kind of sounds like to me, this is the

614
00:35:51,396 --> 00:35:54,156
Speaker 1: same thing. You gotta love him just for giving it

615
00:35:54,196 --> 00:35:57,956
Speaker 1: a whirl, but most everyone else seems to disagree with him.

616
00:35:58,076 --> 00:36:01,636
Speaker 1: The Dutch student Marius is the only one who expresses

617
00:36:01,676 --> 00:36:05,076
Speaker 1: anything like outrage at Bay. I think what I found

618
00:36:05,156 --> 00:36:07,396
Speaker 1: very surprising is when you talk with traders that had

619
00:36:07,436 --> 00:36:10,196
Speaker 1: been active in the fifties sixteen seventies, when they were

620
00:36:10,196 --> 00:36:14,236
Speaker 1: still like runners around and phone calls, everyone will say, yes,

621
00:36:14,276 --> 00:36:16,516
Speaker 1: there was also a use of arbitrage, and there was

622
00:36:16,876 --> 00:36:19,556
Speaker 1: people like taking their bit out of the market, but

623
00:36:19,636 --> 00:36:21,756
Speaker 1: it was clear, it's clear for everyone that was an

624
00:36:21,756 --> 00:36:24,676
Speaker 1: illegal action, and it was kind of still frowned upon

625
00:36:25,036 --> 00:36:27,316
Speaker 1: but tolerated. But I feel like in this book it

626
00:36:27,436 --> 00:36:30,196
Speaker 1: sounds like the same thing as happening only on an

627
00:36:30,196 --> 00:36:35,236
Speaker 1: institutionalized scale with those high frequency traders. But yet still

628
00:36:35,236 --> 00:36:37,836
Speaker 1: it's not illegal, or it's not really frowned upon. Or

629
00:36:38,156 --> 00:36:40,996
Speaker 1: not properly regulated. I feel like there's like a moral

630
00:36:41,116 --> 00:36:44,196
Speaker 1: decay from back then to appear even though the whole

631
00:36:44,196 --> 00:36:52,836
Speaker 1: problem has increased in scale. It's a great point because

632
00:36:52,956 --> 00:36:55,956
Speaker 1: I think people are willing to do things behind a

633
00:36:55,996 --> 00:36:58,116
Speaker 1: computer screen they might not be willing to do in person.

634
00:36:59,596 --> 00:37:02,276
Speaker 1: And I think because you don't have that interface with

635
00:37:02,316 --> 00:37:04,716
Speaker 1: the person that, let's say you're taking advantage of it

636
00:37:04,836 --> 00:37:07,076
Speaker 1: kind of lets you tell yourself a lot of lies

637
00:37:07,116 --> 00:37:09,756
Speaker 1: about what you do when you are not getting that

638
00:37:09,796 --> 00:37:13,876
Speaker 1: direct feedback. Morally, the story Brad tells is as black

639
00:37:13,916 --> 00:37:17,316
Speaker 1: and white as it gets. The students see that, they

640
00:37:17,436 --> 00:37:20,356
Speaker 1: argue some about who deserves the most blame for the situation.

641
00:37:20,596 --> 00:37:24,156
Speaker 1: Who's the biggest villain, the high speed traders, the people

642
00:37:24,236 --> 00:37:26,636
Speaker 1: like Ronan Ryan who wants helped the high speed traders,

643
00:37:27,276 --> 00:37:31,636
Speaker 1: or maybe it's the SEC. Brad says, none of the above.

644
00:37:32,316 --> 00:37:35,116
Speaker 1: It's like sitting in a casino with a broken slot machine.

645
00:37:35,356 --> 00:37:36,996
Speaker 1: You know, either person that puts your hand up and

646
00:37:36,996 --> 00:37:38,676
Speaker 1: says it's broken, or do you drain it of all

647
00:37:38,716 --> 00:37:43,636
Speaker 1: it's you know, you know money, it's you know they're capitalists.

648
00:37:43,636 --> 00:37:47,156
Speaker 1: But the exchange is I think broke the system on

649
00:37:47,196 --> 00:37:50,556
Speaker 1: purpose to make money by selling people, the ability to

650
00:37:50,556 --> 00:37:57,276
Speaker 1: take advantage of that system, the fact that they're villains

651
00:37:57,276 --> 00:37:59,796
Speaker 1: on Wall Street, Well, that turns out to be not

652
00:37:59,916 --> 00:38:02,716
Speaker 1: all that interesting. At Harvard, the students know too much

653
00:38:02,716 --> 00:38:06,436
Speaker 1: to be upset. They've long since adapted to this world.

654
00:38:06,876 --> 00:38:08,916
Speaker 1: They don't want to talk about corruption of the refs,

655
00:38:09,196 --> 00:38:12,156
Speaker 1: or the elaborate system of bribes and kickbacks, or what

656
00:38:12,276 --> 00:38:15,276
Speaker 1: it all says about modern life. They want to talk

657
00:38:15,316 --> 00:38:17,236
Speaker 1: about the person who strikes them as the freak of

658
00:38:17,236 --> 00:38:21,956
Speaker 1: the story. Brad katze Yama, a student named Keller, kind

659
00:38:21,956 --> 00:38:24,716
Speaker 1: of puts his finger on it. I think it's extremely

660
00:38:24,716 --> 00:38:26,556
Speaker 1: impressive that you guys were able to figure out the

661
00:38:26,556 --> 00:38:28,676
Speaker 1: problem and then march right against it. You guys were

662
00:38:28,676 --> 00:38:30,956
Speaker 1: able to say no to the broken slot machine. It

663
00:38:30,956 --> 00:38:32,516
Speaker 1: would have been very easy to make a lot of

664
00:38:32,516 --> 00:38:37,076
Speaker 1: money understanding the market this way. But and then he

665
00:38:37,116 --> 00:38:40,396
Speaker 1: says the pronoun he referring to you just chose not to.

666
00:38:40,756 --> 00:38:44,996
Speaker 1: And so I was wondering, you know, like why and how?

667
00:38:45,236 --> 00:38:48,436
Speaker 1: Because I know and even with my positions about finance,

668
00:38:48,476 --> 00:38:50,036
Speaker 1: I think it would have been extremely difficult for me

669
00:38:50,076 --> 00:38:53,236
Speaker 1: to walk away from a broken slot machine that was

670
00:38:53,276 --> 00:38:57,076
Speaker 1: paying out. So heavily. Yeah, Michael and I obviously talked

671
00:38:57,076 --> 00:39:00,476
Speaker 1: a lot about this. Of course we had, because he

672
00:39:00,556 --> 00:39:04,836
Speaker 1: begs the question why you Why would any big time

673
00:39:04,876 --> 00:39:08,676
Speaker 1: Wall Street trader rebel against his industry? Why would anyone

674
00:39:08,756 --> 00:39:13,116
Speaker 1: quit him multimillion dollar job to become a referee? Have

675
00:39:13,236 --> 00:39:15,516
Speaker 1: you come away from this experience thinking that maybe you

676
00:39:15,596 --> 00:39:18,876
Speaker 1: care more about fairness than a lot of people. I

677
00:39:18,916 --> 00:39:23,396
Speaker 1: think this is a complicated subject, and we're fighting a

678
00:39:23,476 --> 00:39:26,916
Speaker 1: system who are trying to confuse people into thinking the

679
00:39:26,916 --> 00:39:29,796
Speaker 1: world works one way, and we're trying to explain it

680
00:39:29,836 --> 00:39:32,276
Speaker 1: in a different way. And to figure out who's right

681
00:39:32,356 --> 00:39:35,436
Speaker 1: or wrong, you have to put in the work to

682
00:39:35,636 --> 00:39:39,676
Speaker 1: actually understand the details to come to the conclusion that

683
00:39:39,756 --> 00:39:42,876
Speaker 1: the market is not fair. And so I don't think

684
00:39:42,876 --> 00:39:46,316
Speaker 1: it's necessarily I care more about fairness than others. I

685
00:39:46,356 --> 00:39:49,156
Speaker 1: think it's I've put in the work to understand what's

686
00:39:49,156 --> 00:39:53,236
Speaker 1: fair or not. Brad katsa Yama is great at explaining things.

687
00:39:53,596 --> 00:39:56,676
Speaker 1: The one thing he can't seem to explain is himself.

688
00:39:57,836 --> 00:39:59,956
Speaker 1: Good people don't like to explain to you why they're

689
00:39:59,996 --> 00:40:03,116
Speaker 1: good people, So that these questions he will not I

690
00:40:03,116 --> 00:40:05,316
Speaker 1: could promise you he will never answer this question to

691
00:40:05,396 --> 00:40:10,276
Speaker 1: your satisfaction. No, he actually won't because because he's not righteous.

692
00:40:10,276 --> 00:40:13,036
Speaker 1: He's not self righteous. He's actually just a great guy.

693
00:40:13,356 --> 00:40:16,116
Speaker 1: And the people who follow him follow him because they

694
00:40:16,116 --> 00:40:19,156
Speaker 1: sense that he's thinking more about their well being than

695
00:40:19,196 --> 00:40:22,156
Speaker 1: his own. And it's a it's a rare quality. I

696
00:40:22,196 --> 00:40:26,916
Speaker 1: associate it with being a Canadian. So the simple answer

697
00:40:26,996 --> 00:40:28,796
Speaker 1: is he's just a Canadian. And then if he was

698
00:40:28,836 --> 00:40:30,796
Speaker 1: an American, there's no chance he would have ever done

699
00:40:30,796 --> 00:40:32,556
Speaker 1: any of this. If I were you, I wouldn't say

700
00:40:32,556 --> 00:40:37,796
Speaker 1: a word brat. But you know what, even as I

701
00:40:37,836 --> 00:40:40,836
Speaker 1: said it, I realized I was wrong or anyway that

702
00:40:40,836 --> 00:40:42,996
Speaker 1: I'd let my mind come to rest before it should.

703
00:40:43,076 --> 00:40:46,156
Speaker 1: But you know, it's was peculiar about your situation and

704
00:40:46,276 --> 00:40:49,756
Speaker 1: character was It's it's odd to find someone get as

705
00:40:49,876 --> 00:40:54,716
Speaker 1: deep into Wall Street as you got before experiencing extreme

706
00:40:54,796 --> 00:41:00,396
Speaker 1: moral revulsion. So it's the combination of the power of

707
00:41:00,396 --> 00:41:02,316
Speaker 1: the feeling you had and how far into it you

708
00:41:02,396 --> 00:41:05,396
Speaker 1: were when you had it that the kind of person

709
00:41:05,436 --> 00:41:08,236
Speaker 1: who's going to be you got a long way into

710
00:41:08,276 --> 00:41:11,316
Speaker 1: it before they offended your sensibilities, and then they offended

711
00:41:11,316 --> 00:41:13,236
Speaker 1: it in a big way. Yeah, So that that's actually

712
00:41:13,396 --> 00:41:15,436
Speaker 1: that's a fair point. So this is the piece where

713
00:41:15,876 --> 00:41:18,476
Speaker 1: you know, I don't use this as a place to

714
00:41:18,556 --> 00:41:20,636
Speaker 1: try to take the moral high ground because I did

715
00:41:20,716 --> 00:41:23,156
Speaker 1: tolerate a lot of stuff. I saw a lot of

716
00:41:23,196 --> 00:41:26,396
Speaker 1: stuff that I just did not think was good. Um,

717
00:41:26,556 --> 00:41:29,436
Speaker 1: and I just I just like looked at it. That's

718
00:41:29,476 --> 00:41:32,516
Speaker 1: really screwed up, and I moved on. So what was

719
00:41:32,556 --> 00:41:35,916
Speaker 1: it about this particular situation that led him to turn

720
00:41:35,996 --> 00:41:38,876
Speaker 1: his back on money and risk it all to make

721
00:41:38,916 --> 00:41:42,596
Speaker 1: the world fair. Brad's decision was hard for the Harvard

722
00:41:42,596 --> 00:41:48,476
Speaker 1: students to understand. Ronan Ryan's would have been utterly incomprehensible.

723
00:41:49,316 --> 00:41:52,876
Speaker 1: It's right, it's right that it's in this building. They

724
00:41:53,076 --> 00:41:57,196
Speaker 1: and the Hey, they have direct fiber optic connections to

725
00:41:57,356 --> 00:42:02,276
Speaker 1: every NBA arena from here. Uh. Crazy, it is crazy,

726
00:42:02,476 --> 00:42:05,036
Speaker 1: and it's right. It's right. And see see the NBA logo.

727
00:42:05,436 --> 00:42:08,276
Speaker 1: Oh yeah, that's funny. Because you know the lady who

728
00:42:08,276 --> 00:42:15,836
Speaker 1: wanted me to meet you like this, nobody shoot them.

729
00:42:16,236 --> 00:42:20,556
Speaker 1: The NBA Replay Center is where this podcast began. It's

730
00:42:20,596 --> 00:42:23,516
Speaker 1: also just down the road from where Ronan's career collided

731
00:42:23,556 --> 00:42:27,116
Speaker 1: with Wall Street. The whole area looks as if it's

732
00:42:27,156 --> 00:42:29,236
Speaker 1: waiting for someone to replace the rock on top of

733
00:42:29,236 --> 00:42:32,236
Speaker 1: it that they wish they'd never removed. But a lot

734
00:42:32,276 --> 00:42:35,716
Speaker 1: happens here. Let's see, wonder can we just pull in here?

735
00:42:36,796 --> 00:42:40,636
Speaker 1: There you go. It takes us five minutes to drive

736
00:42:40,716 --> 00:42:43,276
Speaker 1: from the replay center to the first Wall Street data

737
00:42:43,316 --> 00:42:46,156
Speaker 1: center where Ronan worked for Radiance. It could be a

738
00:42:46,196 --> 00:42:51,676
Speaker 1: self storage facility except for one thing. There's a tower

739
00:42:51,756 --> 00:42:56,156
Speaker 1: on top festooned with satellite dishes. Look where we're sitting

740
00:42:56,196 --> 00:42:58,396
Speaker 1: right now, Michael. We're in a crappy park lot across

741
00:42:58,396 --> 00:43:01,156
Speaker 1: the street from one of the most important capital market

742
00:43:01,236 --> 00:43:04,556
Speaker 1: building on the globe. On the globe, you just wouldn't

743
00:43:04,556 --> 00:43:08,076
Speaker 1: picture the epitome of markets being here. It's it's a

744
00:43:08,276 --> 00:43:12,796
Speaker 1: very curious situation. And if CNBC was being honest, they

745
00:43:12,876 --> 00:43:15,516
Speaker 1: just have a camera on that building the whole time

746
00:43:15,596 --> 00:43:18,476
Speaker 1: while they're talking about what's going on in the stock market. Yeah, yeah,

747
00:43:18,476 --> 00:43:21,516
Speaker 1: because that's where it is. Yeah, eight trillion dollars of

748
00:43:21,636 --> 00:43:26,556
Speaker 1: stocks traded inside this place in the last year, and

749
00:43:26,636 --> 00:43:28,956
Speaker 1: it would occur to no one to visit it to watch.

750
00:43:29,396 --> 00:43:30,956
Speaker 1: You know, you look up. You just take for granted

751
00:43:31,196 --> 00:43:34,356
Speaker 1: the massive number of wires and power cables and all

752
00:43:34,396 --> 00:43:35,996
Speaker 1: the way stuff, and you don't never ask what the

753
00:43:35,996 --> 00:43:40,076
Speaker 1: hell they are. All of those towers up there are

754
00:43:40,236 --> 00:43:42,876
Speaker 1: microwave towers. You have to pay them from a cable

755
00:43:42,956 --> 00:43:45,196
Speaker 1: from your computers up onto the roof, and they sell

756
00:43:45,236 --> 00:43:48,396
Speaker 1: you roof rights and roof rights basically means they'll bolt

757
00:43:48,476 --> 00:43:56,276
Speaker 1: on your satellite dish, your your microwave dish. Yeah. Ronan

758
00:43:56,356 --> 00:43:59,596
Speaker 1: taught Brad about all this new technology inside the stock market,

759
00:44:00,396 --> 00:44:02,556
Speaker 1: and he did it so well that Brad created a

760
00:44:02,596 --> 00:44:05,716
Speaker 1: stock exchange that might put the entire racket out of business.

761
00:44:06,956 --> 00:44:10,236
Speaker 1: Brad taught Ronan how to trade stocks so well that

762
00:44:10,276 --> 00:44:13,396
Speaker 1: when Brad ditched his job, the Royal Bank of Canada

763
00:44:13,436 --> 00:44:16,396
Speaker 1: wanted Ronan to replace him, which is to say that

764
00:44:16,476 --> 00:44:20,796
Speaker 1: Ronan Ryan, finally, after fifteen years, got the job offer

765
00:44:20,836 --> 00:44:23,956
Speaker 1: he had dreamed of that, a big shot Wall Street

766
00:44:23,996 --> 00:44:28,556
Speaker 1: trader making millions of dollars a year. But when Brad

767
00:44:28,716 --> 00:44:31,716
Speaker 1: left to start I e X, Ronan left with him

768
00:44:31,836 --> 00:44:35,036
Speaker 1: to build the fair exchange, to create the honest ref

769
00:44:35,516 --> 00:44:38,076
Speaker 1: And they didn't do it in the American way by

770
00:44:38,116 --> 00:44:41,756
Speaker 1: getting outraged or appealing to a higher authority or electing

771
00:44:41,796 --> 00:44:44,436
Speaker 1: a crazy person. They just did an end run around

772
00:44:44,476 --> 00:44:52,556
Speaker 1: the whole problem of high frequency trading. Inside the same Bland,

773
00:44:52,596 --> 00:44:56,236
Speaker 1: New Jersey warehouse, I e X coiled miles of fiber

774
00:44:56,276 --> 00:45:00,036
Speaker 1: optic cable and stuck it in a box. Then they

775
00:45:00,036 --> 00:45:03,156
Speaker 1: announced that anyone who traded on I ex would have

776
00:45:03,196 --> 00:45:07,076
Speaker 1: to send their orders through this box. The magic shoe box.

777
00:45:07,276 --> 00:45:10,916
Speaker 1: Ronan called it. It's slowed down the high speed traders

778
00:45:10,956 --> 00:45:14,756
Speaker 1: just enough. Explain in the simplest way that you could

779
00:45:14,836 --> 00:45:17,596
Speaker 1: resume mom could explain what the speed bump does. It's

780
00:45:17,676 --> 00:45:20,996
Speaker 1: literally coiled cable, thirty eight miles of cable, which takes

781
00:45:21,636 --> 00:45:23,916
Speaker 1: the light signal three hundred and fifty millions of a

782
00:45:23,956 --> 00:45:25,836
Speaker 1: second to go around it. So we're not talking about

783
00:45:25,916 --> 00:45:29,196
Speaker 1: slowing things down dramatically. But what that allows us to

784
00:45:29,236 --> 00:45:31,996
Speaker 1: do as an exchange is it gives us the exchange

785
00:45:32,036 --> 00:45:34,476
Speaker 1: the clearest picture on what's going on in the market,

786
00:45:34,916 --> 00:45:38,356
Speaker 1: whereas other exchanges, because they're slower than the people trading

787
00:45:38,356 --> 00:45:41,676
Speaker 1: on their market, they're printing trades without a clear picture

788
00:45:41,676 --> 00:45:46,076
Speaker 1: of what's going on. The magic shoebox is a machine

789
00:45:46,116 --> 00:45:49,396
Speaker 1: for slowing things down in a speeded up world, an

790
00:45:49,396 --> 00:45:52,436
Speaker 1: engine of fairness. There's been a bunch of studies about

791
00:45:52,436 --> 00:45:56,036
Speaker 1: its effects. It saves investors somewhere between one and twelve

792
00:45:56,036 --> 00:45:59,356
Speaker 1: basis points. A basis point is one hundredth of a percent,

793
00:46:00,116 --> 00:46:03,076
Speaker 1: which sounds like a tiny amount, right, But across the

794
00:46:03,116 --> 00:46:06,876
Speaker 1: American stock market, each basis point comes to seven billion

795
00:46:06,956 --> 00:46:11,436
Speaker 1: dollars a year. If the entire stock market traded on IX,

796
00:46:12,236 --> 00:46:16,116
Speaker 1: investors would be spared being ripped off somewhere between seven

797
00:46:16,236 --> 00:46:19,716
Speaker 1: and eighty four billion dollars a year. This shit adds

798
00:46:19,756 --> 00:46:28,356
Speaker 1: up in Jersey. The skimming of the American investor isn't

799
00:46:28,356 --> 00:46:33,196
Speaker 1: a street mugging. It's fantastically complicated and at bottom a

800
00:46:33,236 --> 00:46:36,836
Speaker 1: little boring. There was no reason Ronan had to leave

801
00:46:36,836 --> 00:46:39,836
Speaker 1: his dream job to step in between Wall Street and

802
00:46:39,916 --> 00:46:43,716
Speaker 1: its investors and say stop, you're not doing this anymore.

803
00:46:44,356 --> 00:46:46,396
Speaker 1: I think had I not worked at RBC for a

804
00:46:46,436 --> 00:46:47,996
Speaker 1: couple of years, I might have thought this was a

805
00:46:48,036 --> 00:46:51,756
Speaker 1: great business opportunity. But the level of full of shitness

806
00:46:51,796 --> 00:46:54,036
Speaker 1: on the people that we were meeting was just making

807
00:46:54,076 --> 00:46:56,676
Speaker 1: me more and more angry. So it was more like

808
00:46:56,716 --> 00:46:59,076
Speaker 1: a challenge to make this fair because people What was

809
00:46:59,116 --> 00:47:01,836
Speaker 1: most annoying is people are saying it's already fair. Nothing

810
00:47:01,876 --> 00:47:04,756
Speaker 1: to see here, Ronan could have walked away from his

811
00:47:04,796 --> 00:47:09,756
Speaker 1: middle class Irish self and acquired whatever he wanted, including airs. Instead,

812
00:47:09,756 --> 00:47:13,476
Speaker 1: he flew to Ireland. His parents still had no real

813
00:47:13,516 --> 00:47:16,756
Speaker 1: idea what their son did for a limit, but he

814
00:47:16,796 --> 00:47:19,596
Speaker 1: wanted to talk to them about it because somehow they

815
00:47:19,596 --> 00:47:22,716
Speaker 1: were still important to him. Their voices were still in

816
00:47:22,716 --> 00:47:29,116
Speaker 1: his head, hanging over a chair, maybe he said, okay, okay,

817
00:47:29,756 --> 00:47:32,396
Speaker 1: that's why I'd gone to visit Ronan's mom and dad

818
00:47:32,596 --> 00:47:35,836
Speaker 1: just outside of Dublin, in the village of Dalkey, to

819
00:47:35,916 --> 00:47:39,436
Speaker 1: hear their voices. What did you think when he told

820
00:47:39,436 --> 00:47:45,036
Speaker 1: you was making a million dollars a year? Holy shit, No,

821
00:47:46,076 --> 00:47:48,716
Speaker 1: it's hard to believe, you know, I couldn't kind of think.

822
00:47:49,996 --> 00:47:54,116
Speaker 1: You know, they're saying every business deal there are two people.

823
00:47:54,156 --> 00:47:58,196
Speaker 1: There's a Funk and Fucky and a new Ronan could

824
00:47:58,196 --> 00:48:06,996
Speaker 1: be the funker, you know, so that's see. Yeah, how

825
00:48:06,996 --> 00:48:10,476
Speaker 1: do it feeling? How it feeling about him? And then,

826
00:48:10,516 --> 00:48:13,116
Speaker 1: in the same breath that Ronan revealed his new Wall

827
00:48:13,156 --> 00:48:15,916
Speaker 1: Street power and wealth, he confessed that he was thinking

828
00:48:15,916 --> 00:48:18,996
Speaker 1: of walking away from it all, plus tossing a match

829
00:48:18,996 --> 00:48:21,676
Speaker 1: over his shoulder to burn the place down in a

830
00:48:21,716 --> 00:48:24,036
Speaker 1: way that would make it virtually impossible to go back

831
00:48:24,076 --> 00:48:27,876
Speaker 1: as a regular trader on Wall Street. And for Ronan's dad,

832
00:48:27,956 --> 00:48:30,596
Speaker 1: here was the kicker. His son was leaving the playing

833
00:48:30,676 --> 00:48:35,156
Speaker 1: field to become a referee. It all struck me that

834
00:48:35,276 --> 00:48:38,396
Speaker 1: if you see referees, that was kind of skinny legs,

835
00:48:38,396 --> 00:48:40,676
Speaker 1: and they're always popping around the place. And I was thinking,

836
00:48:40,876 --> 00:48:42,956
Speaker 1: you know, those who can do, those who can't teach.

837
00:48:43,356 --> 00:48:46,356
Speaker 1: You know, those who can kick the ball, play football,

838
00:48:46,396 --> 00:48:51,396
Speaker 1: those can't referee. And it just sort of thoughts strange.

839
00:48:51,836 --> 00:48:55,036
Speaker 1: You know that anybody would want to be one? Why

840
00:48:55,116 --> 00:48:56,516
Speaker 1: would you want to be one? Why would you want

841
00:48:56,556 --> 00:48:57,956
Speaker 1: to be a trap? Why would you want to be

842
00:48:57,956 --> 00:49:05,756
Speaker 1: a policeman? Gona making people miserable every day? I X

843
00:49:05,796 --> 00:49:09,836
Speaker 1: did not so much open for business as explode. After

844
00:49:09,876 --> 00:49:13,196
Speaker 1: its opening, Wall Street's biggest banks were fine hundreds of

845
00:49:13,236 --> 00:49:17,516
Speaker 1: millions of dollars for cheating ordinary investors. I X itself

846
00:49:17,516 --> 00:49:20,556
Speaker 1: as a target of an expensive and mendacious political media

847
00:49:20,596 --> 00:49:23,636
Speaker 1: campaign bought and paid for by the exchanges and high

848
00:49:23,676 --> 00:49:29,876
Speaker 1: frequency traders. Brad and Ronan were threatened and slandered. They

849
00:49:29,916 --> 00:49:33,636
Speaker 1: needed bodyguards. It took them two years to get the

850
00:49:33,716 --> 00:49:37,116
Speaker 1: SEC's approval to open for business more than four times

851
00:49:37,116 --> 00:49:39,076
Speaker 1: as long as it took an exchange built by high

852
00:49:39,116 --> 00:49:44,556
Speaker 1: frequency traders, all because they were doing the most seditious

853
00:49:44,556 --> 00:49:46,356
Speaker 1: thing that you could do. At the heart of American

854
00:49:46,396 --> 00:49:54,916
Speaker 1: capitalism introduced fairness. Right, Yeah, fathers never know their sons

855
00:49:54,396 --> 00:49:56,956
Speaker 1: are like my father, nephy knew a job I had,

856
00:49:56,956 --> 00:50:00,156
Speaker 1: he taught I'd worked for since HSIPOL chargeable organization give

857
00:50:00,236 --> 00:50:04,836
Speaker 1: them money to companies. He didn't understand inward investment. But

858
00:50:05,236 --> 00:50:10,116
Speaker 1: I didn't fully understand for Ronan was that Ronan Ryan.

859
00:50:10,836 --> 00:50:13,196
Speaker 1: I don't think he particularly even wanted to be a referee.

860
00:50:13,916 --> 00:50:16,356
Speaker 1: It just so happened that the place he landed, Wall Street,

861
00:50:16,636 --> 00:50:21,196
Speaker 1: couldn't accommodate both his ambition and his character. His Mama

862
00:50:21,196 --> 00:50:23,436
Speaker 1: and daddy raised him a certain way, and he couldn't

863
00:50:23,516 --> 00:50:26,236
Speaker 1: quite forget it. They raised him to see other people

864
00:50:26,276 --> 00:50:28,716
Speaker 1: as just people who are either full of shit or not.

865
00:50:30,196 --> 00:50:32,436
Speaker 1: It turned out that Wall Street had a crying need

866
00:50:32,476 --> 00:50:35,756
Speaker 1: for someone who is not full of shit, and Ronan

867
00:50:35,876 --> 00:50:41,956
Speaker 1: Ryan had a serious talent for it. Now right, I did,

868
00:50:42,076 --> 00:50:47,876
Speaker 1: I got everything. Why do people become referees actual refs,

869
00:50:47,916 --> 00:50:50,236
Speaker 1: I mean, not the ones who get into it because

870
00:50:50,276 --> 00:50:52,916
Speaker 1: some powerful player has bribed them to play the role.

871
00:50:54,316 --> 00:50:58,156
Speaker 1: I don't think there's a single simple reason the refs

872
00:50:58,156 --> 00:51:00,556
Speaker 1: in the NBA may there, mainly because they love the

873
00:51:00,596 --> 00:51:04,876
Speaker 1: game and it's their way into it. Ken Feinberg, he

874
00:51:04,996 --> 00:51:08,396
Speaker 1: discovered in himself a gift for a kind of ferocious neutrality,

875
00:51:09,156 --> 00:51:12,276
Speaker 1: found ways to exercise that gift, and discovered that our

876
00:51:12,316 --> 00:51:19,916
Speaker 1: society just now desperately needs it. Let's pause a moment

877
00:51:19,956 --> 00:51:23,396
Speaker 1: to thank our refs, the honest ones. We can tell

878
00:51:23,436 --> 00:51:25,796
Speaker 1: ourselves that they're doing what they're doing for the same

879
00:51:25,876 --> 00:51:28,356
Speaker 1: self serving reasons the rest of us do what we do.

880
00:51:29,356 --> 00:51:32,636
Speaker 1: But there really are people who step up in certain moments,

881
00:51:32,996 --> 00:51:37,756
Speaker 1: in certain situations to insist on fairness, even if their

882
00:51:37,756 --> 00:51:41,996
Speaker 1: fathers never fully understand what they do, and even though

883
00:51:41,996 --> 00:51:51,116
Speaker 1: the world never fully appreciates it. All right, consider it

884
00:51:51,156 --> 00:51:54,076
Speaker 1: a birthday present. Ten shares of Apple, all right, all right,

885
00:51:55,196 --> 00:51:59,796
Speaker 1: give me Apple screws us. Not my fault, if not

886
00:51:59,876 --> 00:52:03,476
Speaker 1: your fault, Thanks for being Thanks for being my getting paid.

887
00:52:04,116 --> 00:52:07,796
Speaker 1: You're a good podcast job. Do you think in the

888
00:52:07,836 --> 00:52:11,316
Speaker 1: olden days just is very off topic, But it's about money.

889
00:52:11,996 --> 00:52:15,956
Speaker 1: When money was like a dollar, you could buy a

890
00:52:15,996 --> 00:52:18,876
Speaker 1: lot of stuff. M Do you think in the olden

891
00:52:18,956 --> 00:52:24,636
Speaker 1: days people called people with over one hundred dollars hundred nays,

892
00:52:27,676 --> 00:52:29,996
Speaker 1: one hundred air as opposed to a millionaire. Yeah, and

893
00:52:30,036 --> 00:52:32,676
Speaker 1: then a thousand air. They must have had a word

894
00:52:32,676 --> 00:52:35,556
Speaker 1: before a millionaire, right, Yeah, it was called rich because

895
00:52:38,756 --> 00:52:50,596
Speaker 1: they're rich. They're just a rich I'm Michael Lewis. Thanks

896
00:52:50,596 --> 00:52:54,396
Speaker 1: for listening to Against the Rules. Against the Rules is

897
00:52:54,396 --> 00:52:57,676
Speaker 1: brought to you by Pushkin Industries. The show is produced

898
00:52:57,676 --> 00:53:01,276
Speaker 1: by Audrey Dilling and Catherine Girdo, with research assistance from

899
00:53:01,356 --> 00:53:05,396
Speaker 1: Zoe Oliver Gray and Beth Johnson. Our editor is Julia Barton.

900
00:53:06,156 --> 00:53:10,436
Speaker 1: Mia Lobelle is our executive producer. Our theme was composed

901
00:53:10,436 --> 00:53:15,156
Speaker 1: by Nick Brittell, with additional scoring by Seth Samuel, mastering

902
00:53:15,236 --> 00:53:20,076
Speaker 1: by Jason Gambrel. Our show was recorded at Northgate Studios

903
00:53:20,076 --> 00:53:24,516
Speaker 1: in Berkeley by Tofa Ruth Special thanks to our founders

904
00:53:24,596 --> 00:53:38,036
Speaker 1: Jacob Weisberg and Malcolm Gladwell. That's not Yours