Speaker 1: Pushkin, Sorry to wake you up to do this. No,
Speaker 1: it's fun, all right. So what do you think the
Speaker 1: stock market is? That's my son Walker. He's eleven, roughly
Speaker 1: the same age that I was when my father sat
Speaker 1: me down for the talk. My father never did actually
Speaker 1: explain how sex work. I think he thought a person
Speaker 1: just naturally figure that out. Money was different. Money was
Speaker 1: something that needed explaining. I think the stock market is
Speaker 1: from the way I look at it at school. When
Speaker 1: I board, I can just open up the stock market
Speaker 1: app and it tells me how much a business is
Speaker 1: growing and making money. And another thing you can do
Speaker 1: with the stock market is you can invest money in it.
Speaker 1: So if the stock market grows, then your money will
Speaker 1: grow with it. Very true. Both excellent. But how do
Speaker 1: you open up the stock market app at school if
Speaker 1: you don't have a phone. It's an iPad. It's on
Speaker 1: the iPad pro they give us at school. Yeah, there's
Speaker 1: there's this little thing on that I've had this stocks
Speaker 1: and I pressed on it and now and then I
Speaker 1: just typed some random I just type fart on it
Speaker 1: and far talks came up. So I have that on
Speaker 1: my front page now, fart talks. Yeah, far talks. Is
Speaker 1: that a company? Yep, it's called Fart Do you spell it?
Speaker 1: F A R t O X FARTF What did they do?
Speaker 1: Let's just check this. It's really funny. Yeah, and it's
Speaker 1: been growing, but it has no recent story. It looks
Speaker 1: you know what it's. It's not an actual company. It's
Speaker 1: a complicated it's a complicated stock Back to the talk.
Speaker 1: We're at the desk in my office. I've pulled up
Speaker 1: the Charles Schwap stock trading page. Now. My father just
Speaker 1: tended me a little black ledger. He said it was
Speaker 1: for me to record my stock market holdings. He bought
Speaker 1: me ten shares of a restaurant company called ChartHouse because
Speaker 1: they own Burger King, and I knew what Burger King was.
Speaker 1: Tell me a company that you like, or a company
Speaker 1: who's products you really like? Here, just a company, any
Speaker 1: company like? Do you like Apple? Do you like? Oh? Yeah? Apple?
Speaker 1: Apples from my favorite. If you own a piece of apple,
Speaker 1: you you know, you might like to own it for
Speaker 1: a while, but if it goes up, you might want
Speaker 1: to sell it. Right where do you think you'd go
Speaker 1: to sell it? You kind of need a place where
Speaker 1: everybody who would want to buy shares an Apple or
Speaker 1: any other company, can meet up with anybody who wants
Speaker 1: to sell the shares an Apple or any other company. Right,
Speaker 1: so it'd be it would be great if it's just
Speaker 1: one place, and it used to be just one place,
Speaker 1: the New York Stock Exchange. That's that's what that's a
Speaker 1: stock exchange is where buyers and sellers come together to
Speaker 1: trade shares. But what if the buyers can't afford to
Speaker 1: fly all the way too, Well, that's a very good point.
Speaker 1: That can then they used to do is make a
Speaker 1: phone call or even before that, they send a telegram
Speaker 1: or even by mail, say I want to do this,
Speaker 1: and there'd be someone there for them, and that's called
Speaker 1: a stockbroker. It's a really good question because you don't
Speaker 1: want to Who wants to have to fly all the
Speaker 1: way to New York if you want to sell or
Speaker 1: buy your shares or buy shares? But now there's no
Speaker 1: people at the exchange. Now it's just computers. Now it's
Speaker 1: just computers, and like all the orders are going into
Speaker 1: computers because you can't persuade a computer, can't persuade a computer,
Speaker 1: or you can't cheat a computer. Well, that's interesting, how
Speaker 1: do you What do you mean, Well, I mean, unless
Speaker 1: you can hack into it, it's pretty hard to cheat
Speaker 1: your way into getting stock without paying anything. It's funny,
Speaker 1: that is. Mine instantly went there. Mine had two when
Speaker 1: I was his age. I looked inside the little black ledger,
Speaker 1: studied my ten shares of chart House, worth roughly two
Speaker 1: hundred bucks, this unimaginably huge sum, and I noticed a
Speaker 1: line item twenty bucks broker's commission. What's a broker's commission,
Speaker 1: I asked my dad. He explained, a guy charged twenty
Speaker 1: bucks just to pick up the phone and tell someone
Speaker 1: to buy the stock. What's this guy's name? I asked.
Speaker 1: I still remember this feeling of outrage, the sheer unfairness
Speaker 1: of it all, twenty bucks for a phone call. My
Speaker 1: dad told me the stockbroker's name. Then I asked where
Speaker 1: the stockbroker lived, and my father told me that too.
Speaker 1: The guy lived in a great, big house a few
Speaker 1: blocks away from us. Then a where he looked across
Speaker 1: my dad's face. Why do you want to know where
Speaker 1: he lives, he asked, because I'm gonna go egg his house.
Speaker 1: I said, because that's just what you did to grown
Speaker 1: ups who behaved badly. You egged their houses, which is
Speaker 1: to say that when I first learned how the people
Speaker 1: inside the stock market got themselves paid, I was genuinely
Speaker 1: pissed off. I'm Michael Lewis and this is Against the Rules,
Speaker 1: a show about the attack on the authority of the
Speaker 1: referee in American life and what that's doing to our
Speaker 1: idea of fairness. And we're now at the end of
Speaker 1: our season, the final episode in which we try to
Speaker 1: answer the question why on earth would anyone ever want
Speaker 1: to be a referee? Do you want to get in
Speaker 1: front of the battle? You care? Yeah, that's good. This
Speaker 1: is where I'm in a car outside of Dublin, in
Speaker 1: the village of Dalky. God, it's gloomy. Thank you for
Speaker 1: coming and getting us. God, I'm with Am and Ryan.
Speaker 1: He'd spent his career in the nineteen seventies and eighties
Speaker 1: as a civil servant. His job was to encourage foreigners
Speaker 1: to invest in Ireland, which back then seemed a hopeless task.
Speaker 1: In nineteen ninety, the Irish government had moved him and
Speaker 1: his family to the United States to Greenwich, Connecticut. They
Speaker 1: were transported to what was and is ground zero for
Speaker 1: America's money culture, our bond traders and investment bankers and
Speaker 1: hedge fund managers. Did you all enjoy living in the
Speaker 1: States or was it the first months were difficult? What
Speaker 1: did you What made it difficult? It was the people
Speaker 1: were a bit snooty. Yeah, a bit snooty, he says,
Speaker 1: in case you didn't hear it, Well they are, yeah,
Speaker 1: they're there. Yeah. I guess there are places in the
Speaker 1: States where you could have found snoot to your people,
Speaker 1: but not many. I think there farkersies number five yeah, yeah, yeah,
Speaker 1: and sometimes they are yeah. When the Ryans moved from Ireland,
Speaker 1: they had no errors about anything except maybe the fact
Speaker 1: that they had no heirs. Ireland was still a poor country.
Speaker 1: The Ryans weren't fancy and didn't really care to be.
Speaker 1: They weren't inclined to look down on other people or
Speaker 1: look up to them, and were suspicious of anyone who
Speaker 1: did either. In other words, they were Irish desired in Jersey.
Speaker 1: What did he play soccer? Yeah, football, soccer, yeah, just
Speaker 1: there on the other side, and that's his sister. They
Speaker 1: remained in America four years. They sent their sixteen year
Speaker 1: old son, Ronan to Greenwich High School and then on
Speaker 1: to Fairfield University, where Ronan developed a secret love for
Speaker 1: a kind of person his parents never fully understood, the
Speaker 1: American money person. Take me back to the first encounter
Speaker 1: you ever have with the US stock market years ago,
Speaker 1: my junior year in college. They gave us tours of
Speaker 1: the New York Stock Exchange floor. This was in nineteen
Speaker 1: ninety five. That's Ronan, and there was literally thousands of
Speaker 1: people pushing and shoving. And at the end of the day,
Speaker 1: when I'm leaving the office AE five, these guys had
Speaker 1: walked out an hour before. It was flashy cars. They
Speaker 1: were wearing their jackets and the bars. They were kind
Speaker 1: of like the cool kids post college. So I just
Speaker 1: I just thought it was interesting. Actually more than interesting.
Speaker 1: Ronan wanted to be one of them, one of those
Speaker 1: people on the lucky side of America. He had no
Speaker 1: connections and no money and no real reason to think
Speaker 1: Wall Street was waiting for him. And really he wasn't
Speaker 1: much like the Wall Street traders. They were big and
Speaker 1: he was slight. They projected confidence and he projected doubt.
Speaker 1: Yet he insisted that Wall Street was where he was
Speaker 1: going to himself. That is, he didn't dare whisper any
Speaker 1: of this to his parents or his friends, it would
Speaker 1: have sounded phony. He knew his parents would say, going
Speaker 1: to Wall Street, why have you started farting channel number five?
Speaker 1: As Ronan approached college graduation, his interest in being a
Speaker 1: stock market trader became an obset. He wrote dozens of
Speaker 1: letters to every Wall Street firm, even the small ones.
Speaker 1: He received only one reply, a form letter. So I
Speaker 1: graduated in June. My parents had already moved back to Ireland.
Speaker 1: I was living with my friend's mother on the floor
Speaker 1: of her apartment, looking for a job, and it wasn't
Speaker 1: going swimmingly well. And then I got a call one
Speaker 1: day from a guy from MCI. MCI was a phone company.
Speaker 1: He went to work for the phone company, and not
Speaker 1: for the glamorous part of it, And it started off
Speaker 1: as something called a national account support consultant. And they
Speaker 1: shipped me off to Atlanta for a couple of weeks
Speaker 1: and started training me on fiber optic gables and the
Speaker 1: difference between glass and copper, and network switches and voice
Speaker 1: and data. And I was just doing pagers on people's belts.
Speaker 1: I was doing voice, you know, I was working with
Speaker 1: travel agents. You know. I would go up to some
Speaker 1: offices in the Bronx where they literally had phone boots
Speaker 1: for people who wanted to call home to Columbia or
Speaker 1: El Salvador and couldn't afford to a few years later,
Speaker 1: Ronan moved from the phone company to another company called Radiance.
Speaker 1: Radiance was in sort of the same business as MCI.
Speaker 1: It helped people to move their data around, Only Radiance
Speaker 1: was helping people who worked with Wall Street traders, traders
Speaker 1: who wanted to speed up their trades in various stock markets.
Speaker 1: In the early two thousands, all the stock markets, the
Speaker 1: New York Stock Exchange in NASDAC and the others had
Speaker 1: up and moved out of New York City to New Jersey,
Speaker 1: where floor space was cheaper. They had also gotten rid
Speaker 1: of all the human beings who worked on their trading floors.
Speaker 1: The guys Ronan had once found so cool. The stock
Speaker 1: markets were now simply stacks of computers inside New Jersey
Speaker 1: data centers. The old New York Stock Exchange basically became
Speaker 1: nothing more than a stage set for CNBC. One day
Speaker 1: at Radiance, Ronan got a strange call from a trader
Speaker 1: in Kansas City. The guy wanted Ronan to figure out
Speaker 1: why his stock market orders were taking so long to
Speaker 1: reach the stock exchanges in New Jersey, and it's taking
Speaker 1: him forty three milliseconds round trip for these trades to
Speaker 1: be acknowledged. And I remember my inner monologue at the
Speaker 1: time is I don't even know what the hell a
Speaker 1: millisecond is. But I said, Ted, that sounds terrible. I
Speaker 1: think I can help you. A millisecond is one thousandth
Speaker 1: of a second. It takes roughly four hundred milliseconds to
Speaker 1: blink your eye if you do it fast. Ronan knew
Speaker 1: that the guy's biggest problem was that he was in
Speaker 1: Kansas City. Data travels at the speed of light, but
Speaker 1: it still travels. The further you are from the stock exchanges,
Speaker 1: the longer it takes for your trades to get to them.
Speaker 1: So Ronan moved the guy's trading machines into a building
Speaker 1: in New Jersey near the stock exchanges and dropped his
Speaker 1: trading time from forty three milliseconds to three point nine milliseconds,
Speaker 1: or roughly one hundredth of the time it takes you
Speaker 1: to blink your eye if you do it fast. And
Speaker 1: this guy came up to visit his computer, as I
Speaker 1: guess a few weeks later and he was thrilled. And
Speaker 1: you know, according to what he told me, I was
Speaker 1: trying to ask him, I'm like, what's the value of
Speaker 1: a millisecond? I'm very pleased that you, as my client,
Speaker 1: are happy. I just have no idea why you are.
Speaker 1: And his explanation was in the first I believe, he said,
Speaker 1: the first four or five days of trading out of
Speaker 1: New Jersey, same strategy that I was running in Kansas.
Speaker 1: I've made more additional profit than to pay for your
Speaker 1: services for eighteen months. Anyway, words soon got out across
Speaker 1: Wall Street, and if you wanted to make your trades
Speaker 1: go faster, you call Ronan Ryan, and Ronan was soon
Speaker 1: helping all these high frequency traders, as they were called.
Speaker 1: Ronan had no idea how they were making their money,
Speaker 1: but they would use these mysterious terms like sniffing out
Speaker 1: the whale order, and they'd be like, yeah, you know,
Speaker 1: we can see footprints of large orders entering the market,
Speaker 1: and we can you know, basically, if we see there's
Speaker 1: demand of a stock because a big pension firm or
Speaker 1: mutual fund is trying to buy it, we can buy
Speaker 1: it ahead of them and sell it back to them.
Speaker 1: For more, Ronan was running these super straight fiber optic
Speaker 1: lines across New Jersey. He was scoping out the data
Speaker 1: centers that housed the exchanges to find the shortest paths
Speaker 1: from the traders computers to the stock exchange computers. The
Speaker 1: stock exchanges didn't really understand what was going on, at
Speaker 1: least at first, but then high frequency traders started to
Speaker 1: offer the stock exchanges huge sums of money for what
Speaker 1: seemed like absurdly small things like a shorter cable between
Speaker 1: the traders computers and the stock exchanges computers, and they
Speaker 1: all insisted on having their computers inside the same buildings
Speaker 1: in New Jersey. Co location, they called it. The stock
Speaker 1: exchanges became a peculiar kind of landlord. Just the amount
Speaker 1: that they charge these co located clients to connect them.
Speaker 1: You pay it again into the building and then to
Speaker 1: get from your spot in the building to the exchanges
Speaker 1: meet me point is bananas like. They'll charge as much
Speaker 1: as forty thousand dollars a month for a cable. Forty
Speaker 1: thousand dollars a month for a cable that you could
Speaker 1: buy retail for two hundred bucks. Ronan had no clear
Speaker 1: idea why these big shots were throwing so much money
Speaker 1: around inside these New Jersey data centers, But then neither
Speaker 1: did the data centers. The American part of him just
Speaker 1: sort of went along for the ride. Whatever these people
Speaker 1: were doing must be cool and great, just another wonderful
Speaker 1: aspect of American capitalism. The Irish part of him began
Speaker 1: to wonder if that was true? And what is I
Speaker 1: X group? Group? Is a I X is a stock exchange?
Speaker 1: All people have things that set them apart. Would set
Speaker 1: Brad Katziamo apart? Was his refusal to be set apart.
Speaker 1: Ever since he was a little kid in the Toronto suburbs,
Speaker 1: people had been telling him that he was special, and
Speaker 1: he'd been refusing to take them too seriously. When he
Speaker 1: was seven, his mom told him he had been identified
Speaker 1: as gifted and offered a spot at a special school.
Speaker 1: Brad say he'd rather stay in the normal school with
Speaker 1: his friends. When he was fifteen, he ran a forty
Speaker 1: yard dash in four and a half seconds and the
Speaker 1: track coach told him he could be a star. He
Speaker 1: said he'd rather stay on the football team with his friends.
Speaker 1: At seventeen, he could have gone to any university in
Speaker 1: the world. He chose to go to Wilfrid Laurier, west
Speaker 1: of Toronto to stay with his friends. Brad never thought
Speaker 1: much about what he would do for a living, but
Speaker 1: the Royal Bank of Canada found him and hired him,
Speaker 1: and naturally told him he was going to be a star.
Speaker 1: Brad had never set foot in the United States, but
Speaker 1: right after nine to eleven RBC sent him to Wall
Speaker 1: Street to run their stock trading. He was twenty three
Speaker 1: years old, and so when the two thousand and eight
Speaker 1: financial crisis happened, Brad Casiyama was making two million dollars
Speaker 1: a year running US stock market trading for the Royal
Speaker 1: Bank of Canada. But by then, at least to him,
Speaker 1: something was feeling very wrong. The trouble started with a
Speaker 1: computer he used to trade in the stock market. Up
Speaker 1: until early two thousand and eight, the screens on his
Speaker 1: trading desk had always given him real time pictures of
Speaker 1: the market. If he wanted to buy, say, Hewlett Packard stock,
Speaker 1: he checked his computer screens to see how much of
Speaker 1: it was offered. If they said ten thousand shares were
Speaker 1: offered for sale at a certain price, Brad could hit
Speaker 1: a button and buy all ten thousand shares. At that price.
Speaker 1: Then one day he couldn't Basically my just the computer says, okay,
Speaker 1: well you didn't buy ten thousand, you bought eight thousand,
Speaker 1: and so it was bothersome, But you kind of tend
Speaker 1: to rewire your brain to realize that tradings computerized. It's
Speaker 1: a fast moving market. Things are happening. Maybe someone else
Speaker 1: wanted to buy Hewlett Packard at the same time I
Speaker 1: wanted to buy it. The issue is that by two
Speaker 1: thousand and eight the problem got worse. Instead of buying
Speaker 1: eighty percent of what I saw, I'd get sixty percent.
Speaker 1: By two thousand and nine, instead of getting sixty I'd
Speaker 1: get forty percent of what I saw. So I was
Speaker 1: missing entire chunks of stock, millions of dollars worth of stock,
Speaker 1: of essentially just disappearing. Brad isn't buying and selling stock
Speaker 1: just for himself or for the Royal Bank of Canada. Mainly,
Speaker 1: he's acting on behalf of big American and Canadian pension
Speaker 1: funds and mutual funds and the ordinary people whose money
Speaker 1: they managed. His losses are also their losses, and he
Speaker 1: can't figure out why they're mounting. His first thought was
Speaker 1: it was a computer problem. Maybe the buttons on his
Speaker 1: keyboard didn't work or something. The Royal Bank of Canada's
Speaker 1: geek squad turned up at his desk and told him
Speaker 1: the computer buttons work fine. It was Brad who was
Speaker 1: the problem. They said. He wasn't pressing the button fast enough,
Speaker 1: and I'd count to five or seven or ten, whatever,
Speaker 1: nothing would happen. Then I'd press the button, and then
Speaker 1: I'd miss shares in the stock with your hires. It
Speaker 1: was very clear that it wasn't someone else wanted to
Speaker 1: buy Hewlett Packard because I wanted to buy it, and
Speaker 1: something between me pressing the button and my trade actually executing,
Speaker 1: something was happening, but I could never get a real
Speaker 1: answer as to what was happening. Brad figured out that
Speaker 1: whatever was happening had to do with the way information
Speaker 1: had started to travel. By two thousand and nine, the
Speaker 1: stock exchanges were in some weird relationship with these new traders,
Speaker 1: these so called high frequency traders. But Brad hadn't completely
Speaker 1: worked out was exactly what enabled these guys to know
Speaker 1: what he was doing before he even did it. But
Speaker 1: then he heard about this person who helped make high
Speaker 1: speed traders go faster, An Irish guy named Ronan Ryan,
Speaker 1: like people here, Oh, the exchanges are in New Jersey.
Speaker 1: If you don't live in New Jersey, I live in
Speaker 1: New Jersey. I happen to know where Mahwa is. I
Speaker 1: know where Secaucus is. You live in New York. Brad
Speaker 1: lived in New York and the clue where these places wore.
Speaker 1: And these are things that were fairly rudimentary to me.
Speaker 1: Not because I'm smarter than anybody else Wall Street, It's
Speaker 1: just this is the industry that I grew up with.
Speaker 1: Ronan explained to Brad what happened when he pushed the
Speaker 1: button to trade that instantaneous was not instantaneous. The signal
Speaker 1: Brad sent to buy ten thousand shares of Hewlett Packard
Speaker 1: needed to travel from his desk at one Liberty Plaza
Speaker 1: in Lower Manhattan out to the data centers scattered across
Speaker 1: the Jersey suburbs, to the New stock markets full of
Speaker 1: server racks trading stocks. So one press of the button,
Speaker 1: what I thought was an instantaneous action was actually a
Speaker 1: series of action that happened over the course of many milliseconds.
Speaker 1: High speed traders were able to buy technology and data
Speaker 1: from the exchanges to pick up a signal at one
Speaker 1: exchange and race me while my order is in flight
Speaker 1: to the other exchanges to do one of two things. One,
Speaker 1: they wanted to cancel any sell orders they had out
Speaker 1: there because here comes a big buyer. I don't want
Speaker 1: to sell any more because I know there's a buyer coming.
Speaker 1: But two, to actually buy stock ahead of me to
Speaker 1: sell back to me at a higher price. It's called
Speaker 1: front running. It's not really about being an investor yourself.
Speaker 1: It's about finding out what real investors are about to
Speaker 1: buy and buying it before they do so you can
Speaker 1: sell it to them for a higher price. You're only
Speaker 1: buying because you know I want to buy, and you're
Speaker 1: buying not to own shares in a company that you
Speaker 1: think is going to help you know, you know develop,
Speaker 1: you know, an investment return because you understand their business model. No,
Speaker 1: you're buying it just to flip it back to me
Speaker 1: because you know I want to buy it. So Brad
Speaker 1: figures all this out with a lot of help from Ronan,
Speaker 1: after which Brad takes a long look at this guy,
Speaker 1: this oddly wary irishman. Ronan still longed to be a
Speaker 1: big shot Wall Street stock Market trader, and Brad decided
Speaker 1: to make him one. Inside of a year, Ronan was
Speaker 1: earning more than a million bucks. Brad builds this team
Speaker 1: of people inside the Royal Bank of Canada. The team
Speaker 1: consists mostly of immigrants who are running tests on the
Speaker 1: American stock market to see how to unrig it, to
Speaker 1: see if they can make it impossible for their own
Speaker 1: stock market orders to be front run. So they try this.
Speaker 1: Instead of sending one signal to the four New Jersey centers,
Speaker 1: they send four different signals, so they all arrive at
Speaker 1: the four different centers at precisely the same moment each
Speaker 1: signal was in order to buy. However, many Hewlett Packard
Speaker 1: or whatever shares were for sale in just that data center,
Speaker 1: and just like that, the whole problem vanished, at least
Speaker 1: for RBC. Brad was once again able to buy all
Speaker 1: the shares for sale on his trading screen without being scalped,
Speaker 1: without electronic frontrunners in the middle of his trade. But
Speaker 1: the problem still bothered Brad because it was so obviously
Speaker 1: outrageously unfair. The US government had granted licenses to these
Speaker 1: stock changes on the condition that they referee the stock market.
Speaker 1: Winners and losers are no longer determined solely based on
Speaker 1: who understands a company better and fundamentals. It's now based
Speaker 1: on how long my cable is and do I use
Speaker 1: microwave versus fiber optic cable. We've talked about this sort
Speaker 1: of thing before in this podcast. It happened with CEO
Speaker 1: pay consultants and the ratings agencies and art connoisseurs and
Speaker 1: probably all kinds of other referees. The ref got bought.
Speaker 1: In this case, the refs are the stock exchanges. They
Speaker 1: were now providing a slow picture of the stock market
Speaker 1: to ordinary investors while selling a faster picture of that
Speaker 1: same market to a select group of high speed traders.
Speaker 1: That is like finding out the umpire makes more from
Speaker 1: selling things to one of the teams than they do
Speaker 1: from umpiring the game. One thing a lot of people
Speaker 1: don't realize is that right now New York Stock Exchange
Speaker 1: in AzaC, they make more money selling high speed data
Speaker 1: and technology than they do from matching buyers and sellers.
Speaker 1: Back in twenty fifteen, I wrote a book called Flashboys
Speaker 1: about Brad and Ronan and the problem of high frequency trading.
Speaker 1: Because I was as outraged as I had been as
Speaker 1: a kid when my father tried to explain to me
Speaker 1: that some stockbroker had charged twenty bucks to make a
Speaker 1: phone call, and I wanted to egg his house. And
Speaker 1: I assumed that any right thinking person would share my outrage.
Speaker 1: This is what's weird. The computers aren't in one place anymore.
Speaker 1: They're they're all in New Jersey, right outside of New
Speaker 1: York City. But they're in like four or five different
Speaker 1: places in New Jersey. So you see what it says
Speaker 1: that ap that it's called their ticker, and we say
Speaker 1: buy let's say we want to buy one share, we
Speaker 1: want to buy it. Let's buy ten shares? Okay, all right,
Speaker 1: isn't that a lot? You're right with that? Yeah? Um,
Speaker 1: this is gonna how are you get into college? It's
Speaker 1: going to pay my college could if it goes up
Speaker 1: a lot? You want to click it? You can do it. Yeah,
Speaker 1: you sit in my chair. So what you do is
Speaker 1: you go place order Place order. That's it, place order.
Speaker 1: So what does it say. It says right now, it
Speaker 1: says your estimated total amount is one nine dollars fifty
Speaker 1: five cents, and you go down the air place order
Speaker 1: do it. Yeah, so they're not allowed to buy in
Speaker 1: the night. It's closed at night. Oh, so people are
Speaker 1: gonna breaks. People have so people can have breaks, and
Speaker 1: the computers, I would bet and the computers need to
Speaker 1: break too. They probably do. Now I hit him with
Speaker 1: it right between the eyes, the brutal facts of life.
Speaker 1: I explained that when he bought his first Apple shares,
Speaker 1: these other computers get to see what he's doing before
Speaker 1: anyone else, Like there are people out there who get
Speaker 1: to live in the few milliseconds ahead of us. This
Speaker 1: is the funny thing about the start man. I'm trying
Speaker 1: to explain to you, is that you think about You
Speaker 1: understand why stocks exist, You understand why people would want
Speaker 1: to buy them and sell them. But it's harder to
Speaker 1: understand why anybody needs to sit in the middle between
Speaker 1: the people who would buy and sell and be given
Speaker 1: different information from everybody else, better information so they can
Speaker 1: make money off the people who want to buy and sell.
Speaker 1: The reason all this happens is it happens so fast
Speaker 1: that nobody sees it. These signals move at the speed
Speaker 1: of light, which is the second fastest thing. What's the
Speaker 1: first fastest thing? Thought? Thought that threw me for a second.
Speaker 1: I mean, is it true? Do thoughts move faster than light?
Speaker 1: Did I just prove that they don't? I honestly don't
Speaker 1: know or if it matters. But then I realized he
Speaker 1: didn't pick up on what I was trying to tell him.
Speaker 1: Let's see what we got it for. We got it
Speaker 1: one hundred and fifty dollars and forty five cents. Actually
Speaker 1: it's even smaller. See one hundred fifty forty five point
Speaker 1: four cents. That's what we paid for the stock. Someone's
Speaker 1: computer in the one of the exchanges in New Jersey
Speaker 1: was looking at it and seeing that Apple was below that,
Speaker 1: and ah, I can buy it cheaper and sell it
Speaker 1: to that kid in Berkeley, California and steal a few
Speaker 1: pennies from him. It is not illegal for kids to
Speaker 1: buy stock, but their parents have to do it for them.
Speaker 1: That's correct, So we didn't break the law technically, I
Speaker 1: clicked the button. So what we'll never do is buy
Speaker 1: stock drunk. Yeah, it's illegal for kids to buy to
Speaker 1: stock drunk, so never trade stocks while drinking. Even an
Speaker 1: eleven year old senses that with all this money lying around,
Speaker 1: there must be laws involved here, and there are. He's
Speaker 1: required by a law to send his order to a
Speaker 1: stock exchange through a stockbroker, and that stockbroker gets paid
Speaker 1: by the exchanges for those orders, so the stockbroker is
Speaker 1: in on the game too. The game is to maximize
Speaker 1: the kill of the high speed traders so that they
Speaker 1: can afford to pay the stock exchanges, and the stock
Speaker 1: exchanges can in turn pay the stockbrokers. Everyone in the
Speaker 1: middle takes a bite out of the prey. The prey
Speaker 1: is us, and it's all legal because the people who
Speaker 1: make the laws screwed up and they're only now beginning
Speaker 1: to admit it. The parent company that owns the New
Speaker 1: York Stock Exchange is among the few most profitable companies
Speaker 1: in the United States, which is astonishing if you think
Speaker 1: about it, because their business is simply the exchange of
Speaker 1: financial instruments rather than the creation of anything real. That's
Speaker 1: Robert Jackson, who in twenty seventeen was named one of
Speaker 1: the five commissioners that the Securities in Exchange Commission it's
Speaker 1: supposed to oversee the stock exchanges. Think of it as
Speaker 1: the referees. Referee. I totally understand why a car manufacturer
Speaker 1: might be or why an incredibly innovative internet company might be,
Speaker 1: but the idea that the place you go to make
Speaker 1: investments is the most profitable business in America tells me
Speaker 1: that something's wrong. Can you think of any analogy to
Speaker 1: this situation where you've got the companies that are responsible
Speaker 1: for both providing this public good, this public service, or
Speaker 1: this public information and are also competing with it in
Speaker 1: the private sector. I can't, And that just shows how
Speaker 1: backward our system for stock markets are. I can think
Speaker 1: of lots of examples in the American economy and in
Speaker 1: our history where we've had a publicly provided good and
Speaker 1: a privately provided good, and sometimes that you even compete
Speaker 1: with each other. It would be an example of that.
Speaker 1: So there's public transportation that's available in the subway, and
Speaker 1: there's privately available substitutes. But this is a little like
Speaker 1: letting Uber run the subway and being surprised that the
Speaker 1: subway sucks, yeah, Or like having Barnes and Noble run
Speaker 1: the library. That's right, and then it's acting surprised when
Speaker 1: you get to the library and you realize it doesn't
Speaker 1: have that many books. Let's talk just a little bit
Speaker 1: about what it says about fairness in the American economy
Speaker 1: that this has been allowed to happen. Do you worry
Speaker 1: about that subject at all? Here's what I worry about
Speaker 1: that if we stop somebody on the street and said, hey,
Speaker 1: here's what happens when you buy and sell a share
Speaker 1: of stock. It's not that it goes to some central
Speaker 1: place where people figure out what the price should be
Speaker 1: and then give you the best price possible. No, no, no.
Speaker 1: This order bounces around data centers in northern New Jersey
Speaker 1: and then is routed to one of twelve exchanges, where
Speaker 1: the guy who you gave the order too is paid
Speaker 1: best to send it there, and then you're given a
Speaker 1: price that's probably reflective of a second class quality of data.
Speaker 1: If we told that to somebody, I think they'd be
Speaker 1: out But would they I mean, would they really be
Speaker 1: that outraged? I just want to know how this makes
Speaker 1: you feel. Some guy has got a penny or two,
Speaker 1: maybe just a fraction of a penny. Well, it's probably
Speaker 1: a penny or two of your money because the stock
Speaker 1: exchange told him a walker's coming to buy apple stock.
Speaker 1: You can go see if you can get it cheaper
Speaker 1: and sell it to him. You can stand in the
Speaker 1: middle of his trade. You can get between him and
Speaker 1: the person who's actually trying to sell the stock and
Speaker 1: make money. You feel our care about that? I don't
Speaker 1: really care. Why not, because the original order we placed
Speaker 1: we got we that's that was our choice right to
Speaker 1: place it, and if we were willing to do that,
Speaker 1: it really shouldn't have mattered. It was true. He really
Speaker 1: didn't care. It was just a few pennies and it
Speaker 1: wasn't even really his money. He didn't even care when
Speaker 1: I told him that if you added it up across
Speaker 1: the entire market, the theft from all the little kids
Speaker 1: and grown ups, it came to many billions of dollars
Speaker 1: a year. He didn't care that the cost was spread
Speaker 1: across millions of victims while the benefits were concentrated in
Speaker 1: the hands of the rich few. I obviously found the
Speaker 1: situation outrageous. My son did not. It's like the lottery.
Speaker 1: You're happy when if you win it and just stick
Speaker 1: with that, and you don't really care about where the
Speaker 1: lottery is fair enough if you want, and if you lose,
Speaker 1: you just let go. Well, well, if people are really
Speaker 1: addicted to it and they know if that they're gonna lose,
Speaker 1: but if they win, they're like Hallie Ella's go home,
Speaker 1: let's go. It crossed my mind, and not for the
Speaker 1: first time that about the best joke life might play
Speaker 1: on me is from my son to end up a
Speaker 1: Wall Street trader. He already seems to have a useful
Speaker 1: character trait, a sense that the game is not about
Speaker 1: right and wrong, but about winning and losing a certain
Speaker 1: shall we say, lack of interest in the moral question. Hi,
Speaker 1: I'm Beth. I'm a senior studying social studies with a
Speaker 1: focus on Brazil, and I'm from Sacramento, and I'll be
Speaker 1: returning to Bank of America in a sales rolera. I'm
Speaker 1: a senior at the College I studying math and computer science,
Speaker 1: and I'll be returning to Goldman in a trading role.
Speaker 1: We're at Harvard in a seminar mainly juniors and seniors. Anyway,
Speaker 1: they're all older than eleven years old and supposedly interested
Speaker 1: in fairness, since that's what the class is about. My
Speaker 1: name is Michael Sandel, and I teach political philosophy at
Speaker 1: Harvard University. He teaches a course called Justice. It's one
Speaker 1: of the most sought after courses at Harvard. This seminar,
Speaker 1: called Casino Capitalism, is its first cousins. Oh, Vinnie, all right,
Speaker 1: we'll wait till three. Is this Vinnie? Yeah, welcome Vini.
Speaker 1: It's a chance for thirteen hand picked students to discuss
Speaker 1: the fairness of a lot of real world situations, especially
Speaker 1: real world situations on Wall Street. Many of the students
Speaker 1: have already worked on Wall Street and planned to return. Well,
Speaker 1: why don't we begin. I'm delighted that Michael Lewis and
Speaker 1: Brad katzi im I could join us for the discussion
Speaker 1: of Flashboys. Shall we go around you? Yeah? So, I'm
Speaker 1: Michael Lewis. I'm the author of Flashboys and a bunch
Speaker 1: of other books and working on this podcast, which gonna
Speaker 1: be called Against the Rules. I remember classes like this,
Speaker 1: the semi preparedness, the homework half done, the thoughts half baked,
Speaker 1: the warrior that today I'm going to be found out.
Speaker 1: Although today that's not the problem. I'm the homework. So
Speaker 1: is Brad. Brad Katsiamma. I'm CEO, one of the co
Speaker 1: founders of IX. Obviously, I work in finance. That's fortunately
Speaker 1: or unfortunately, originally Canadian from just outside of Toronto, living Darren, Connecticut. Now,
Speaker 1: after Brad figured out how the stock market got rigged,
Speaker 1: He set out to fix it. He quit his two
Speaker 1: million dollars a year job as the head of stock
Speaker 1: market trading at the Royal Bank of Canada. He took
Speaker 1: no pay and lots of abuse from Wall Street as
Speaker 1: he set out to create a fair stock exchange, the
Speaker 1: Investors Exchange. He called it I e X. What's interesting
Speaker 1: is that never in my life have I been a
Speaker 1: controversial person or looking to fight against the system. I
Speaker 1: guess in a way, that was the first time I
Speaker 1: think I was motivated to fight against the system. Did
Speaker 1: everyone come away from reading the book believing that Wall
Speaker 1: Street is rigged? Yes, say, rate your handed. You did
Speaker 1: all but a few hands go up. And those of
Speaker 1: you who who do not think it's trigged, Kade Marius
Speaker 1: Shara is not sure. That's how you don't think it's rigged,
Speaker 1: even having read Flash Boys, Well, I'm so here. I'm
Speaker 1: a little like vacillating, only for the fact that maybe,
Speaker 1: like I didn't understand it as well as I could have.
Speaker 1: But in my mind, it seems to be like a
Speaker 1: trade gets executed. Someone catches on the trade and just
Speaker 1: gets to make a better price because they get to
Speaker 1: dump it out. Real quickly, and in my mind, why
Speaker 1: is that a problem? A moral problem? I mean, when
Speaker 1: Lebron James goes to dunk a basketball and Jalen Brown
Speaker 1: stops him and then passes it to Tatum on the
Speaker 1: other side and he dunks it, no one says anything.
Speaker 1: It kind of sounds like to me, this is the
Speaker 1: same thing. You gotta love him just for giving it
Speaker 1: a whirl, but most everyone else seems to disagree with him.
Speaker 1: The Dutch student Marius is the only one who expresses
Speaker 1: anything like outrage at Bay. I think what I found
Speaker 1: very surprising is when you talk with traders that had
Speaker 1: been active in the fifties sixteen seventies, when they were
Speaker 1: still like runners around and phone calls, everyone will say, yes,
Speaker 1: there was also a use of arbitrage, and there was
Speaker 1: people like taking their bit out of the market, but
Speaker 1: it was clear, it's clear for everyone that was an
Speaker 1: illegal action, and it was kind of still frowned upon
Speaker 1: but tolerated. But I feel like in this book it
Speaker 1: sounds like the same thing as happening only on an
Speaker 1: institutionalized scale with those high frequency traders. But yet still
Speaker 1: it's not illegal, or it's not really frowned upon. Or
Speaker 1: not properly regulated. I feel like there's like a moral
Speaker 1: decay from back then to appear even though the whole
Speaker 1: problem has increased in scale. It's a great point because
Speaker 1: I think people are willing to do things behind a
Speaker 1: computer screen they might not be willing to do in person.
Speaker 1: And I think because you don't have that interface with
Speaker 1: the person that, let's say you're taking advantage of it
Speaker 1: kind of lets you tell yourself a lot of lies
Speaker 1: about what you do when you are not getting that
Speaker 1: direct feedback. Morally, the story Brad tells is as black
Speaker 1: and white as it gets. The students see that, they
Speaker 1: argue some about who deserves the most blame for the situation.
Speaker 1: Who's the biggest villain, the high speed traders, the people
Speaker 1: like Ronan Ryan who wants helped the high speed traders,
Speaker 1: or maybe it's the SEC. Brad says, none of the above.
Speaker 1: It's like sitting in a casino with a broken slot machine.
Speaker 1: You know, either person that puts your hand up and
Speaker 1: says it's broken, or do you drain it of all
Speaker 1: it's you know, you know money, it's you know they're capitalists.
Speaker 1: But the exchange is I think broke the system on
Speaker 1: purpose to make money by selling people, the ability to
Speaker 1: take advantage of that system, the fact that they're villains
Speaker 1: on Wall Street, Well, that turns out to be not
Speaker 1: all that interesting. At Harvard, the students know too much
Speaker 1: to be upset. They've long since adapted to this world.
Speaker 1: They don't want to talk about corruption of the refs,
Speaker 1: or the elaborate system of bribes and kickbacks, or what
Speaker 1: it all says about modern life. They want to talk
Speaker 1: about the person who strikes them as the freak of
Speaker 1: the story. Brad katze Yama, a student named Keller, kind
Speaker 1: of puts his finger on it. I think it's extremely
Speaker 1: impressive that you guys were able to figure out the
Speaker 1: problem and then march right against it. You guys were
Speaker 1: able to say no to the broken slot machine. It
Speaker 1: would have been very easy to make a lot of
Speaker 1: money understanding the market this way. But and then he
Speaker 1: says the pronoun he referring to you just chose not to.
Speaker 1: And so I was wondering, you know, like why and how?
Speaker 1: Because I know and even with my positions about finance,
Speaker 1: I think it would have been extremely difficult for me
Speaker 1: to walk away from a broken slot machine that was
Speaker 1: paying out. So heavily. Yeah, Michael and I obviously talked
Speaker 1: a lot about this. Of course we had, because he
Speaker 1: begs the question why you Why would any big time
Speaker 1: Wall Street trader rebel against his industry? Why would anyone
Speaker 1: quit him multimillion dollar job to become a referee? Have
Speaker 1: you come away from this experience thinking that maybe you
Speaker 1: care more about fairness than a lot of people. I
Speaker 1: think this is a complicated subject, and we're fighting a
Speaker 1: system who are trying to confuse people into thinking the
Speaker 1: world works one way, and we're trying to explain it
Speaker 1: in a different way. And to figure out who's right
Speaker 1: or wrong, you have to put in the work to
Speaker 1: actually understand the details to come to the conclusion that
Speaker 1: the market is not fair. And so I don't think
Speaker 1: it's necessarily I care more about fairness than others. I
Speaker 1: think it's I've put in the work to understand what's
Speaker 1: fair or not. Brad katsa Yama is great at explaining things.
Speaker 1: The one thing he can't seem to explain is himself.
Speaker 1: Good people don't like to explain to you why they're
Speaker 1: good people, So that these questions he will not I
Speaker 1: could promise you he will never answer this question to
Speaker 1: your satisfaction. No, he actually won't because because he's not righteous.
Speaker 1: He's not self righteous. He's actually just a great guy.
Speaker 1: And the people who follow him follow him because they
Speaker 1: sense that he's thinking more about their well being than
Speaker 1: his own. And it's a it's a rare quality. I
Speaker 1: associate it with being a Canadian. So the simple answer
Speaker 1: is he's just a Canadian. And then if he was
Speaker 1: an American, there's no chance he would have ever done
Speaker 1: any of this. If I were you, I wouldn't say
Speaker 1: a word brat. But you know what, even as I
Speaker 1: said it, I realized I was wrong or anyway that
Speaker 1: I'd let my mind come to rest before it should.
Speaker 1: But you know, it's was peculiar about your situation and
Speaker 1: character was It's it's odd to find someone get as
Speaker 1: deep into Wall Street as you got before experiencing extreme
Speaker 1: moral revulsion. So it's the combination of the power of
Speaker 1: the feeling you had and how far into it you
Speaker 1: were when you had it that the kind of person
Speaker 1: who's going to be you got a long way into
Speaker 1: it before they offended your sensibilities, and then they offended
Speaker 1: it in a big way. Yeah, So that that's actually
Speaker 1: that's a fair point. So this is the piece where
Speaker 1: you know, I don't use this as a place to
Speaker 1: try to take the moral high ground because I did
Speaker 1: tolerate a lot of stuff. I saw a lot of
Speaker 1: stuff that I just did not think was good. Um,
Speaker 1: and I just I just like looked at it. That's
Speaker 1: really screwed up, and I moved on. So what was
Speaker 1: it about this particular situation that led him to turn
Speaker 1: his back on money and risk it all to make
Speaker 1: the world fair. Brad's decision was hard for the Harvard
Speaker 1: students to understand. Ronan Ryan's would have been utterly incomprehensible.
Speaker 1: It's right, it's right that it's in this building. They
Speaker 1: and the Hey, they have direct fiber optic connections to
Speaker 1: every NBA arena from here. Uh. Crazy, it is crazy,
Speaker 1: and it's right. It's right. And see see the NBA logo.
Speaker 1: Oh yeah, that's funny. Because you know the lady who
Speaker 1: wanted me to meet you like this, nobody shoot them.
Speaker 1: The NBA Replay Center is where this podcast began. It's
Speaker 1: also just down the road from where Ronan's career collided
Speaker 1: with Wall Street. The whole area looks as if it's
Speaker 1: waiting for someone to replace the rock on top of
Speaker 1: it that they wish they'd never removed. But a lot
Speaker 1: happens here. Let's see, wonder can we just pull in here?
Speaker 1: There you go. It takes us five minutes to drive
Speaker 1: from the replay center to the first Wall Street data
Speaker 1: center where Ronan worked for Radiance. It could be a
Speaker 1: self storage facility except for one thing. There's a tower
Speaker 1: on top festooned with satellite dishes. Look where we're sitting
Speaker 1: right now, Michael. We're in a crappy park lot across
Speaker 1: the street from one of the most important capital market
Speaker 1: building on the globe. On the globe, you just wouldn't
Speaker 1: picture the epitome of markets being here. It's it's a
Speaker 1: very curious situation. And if CNBC was being honest, they
Speaker 1: just have a camera on that building the whole time
Speaker 1: while they're talking about what's going on in the stock market. Yeah, yeah,
Speaker 1: because that's where it is. Yeah, eight trillion dollars of
Speaker 1: stocks traded inside this place in the last year, and
Speaker 1: it would occur to no one to visit it to watch.
Speaker 1: You know, you look up. You just take for granted
Speaker 1: the massive number of wires and power cables and all
Speaker 1: the way stuff, and you don't never ask what the
Speaker 1: hell they are. All of those towers up there are
Speaker 1: microwave towers. You have to pay them from a cable
Speaker 1: from your computers up onto the roof, and they sell
Speaker 1: you roof rights and roof rights basically means they'll bolt
Speaker 1: on your satellite dish, your your microwave dish. Yeah. Ronan
Speaker 1: taught Brad about all this new technology inside the stock market,
Speaker 1: and he did it so well that Brad created a
Speaker 1: stock exchange that might put the entire racket out of business.
Speaker 1: Brad taught Ronan how to trade stocks so well that
Speaker 1: when Brad ditched his job, the Royal Bank of Canada
Speaker 1: wanted Ronan to replace him, which is to say that
Speaker 1: Ronan Ryan, finally, after fifteen years, got the job offer
Speaker 1: he had dreamed of that, a big shot Wall Street
Speaker 1: trader making millions of dollars a year. But when Brad
Speaker 1: left to start I e X, Ronan left with him
Speaker 1: to build the fair exchange, to create the honest ref
Speaker 1: And they didn't do it in the American way by
Speaker 1: getting outraged or appealing to a higher authority or electing
Speaker 1: a crazy person. They just did an end run around
Speaker 1: the whole problem of high frequency trading. Inside the same Bland,
Speaker 1: New Jersey warehouse, I e X coiled miles of fiber
Speaker 1: optic cable and stuck it in a box. Then they
Speaker 1: announced that anyone who traded on I ex would have
Speaker 1: to send their orders through this box. The magic shoe box.
Speaker 1: Ronan called it. It's slowed down the high speed traders
Speaker 1: just enough. Explain in the simplest way that you could
Speaker 1: resume mom could explain what the speed bump does. It's
Speaker 1: literally coiled cable, thirty eight miles of cable, which takes
Speaker 1: the light signal three hundred and fifty millions of a
Speaker 1: second to go around it. So we're not talking about
Speaker 1: slowing things down dramatically. But what that allows us to
Speaker 1: do as an exchange is it gives us the exchange
Speaker 1: the clearest picture on what's going on in the market,
Speaker 1: whereas other exchanges, because they're slower than the people trading
Speaker 1: on their market, they're printing trades without a clear picture
Speaker 1: of what's going on. The magic shoebox is a machine
Speaker 1: for slowing things down in a speeded up world, an
Speaker 1: engine of fairness. There's been a bunch of studies about
Speaker 1: its effects. It saves investors somewhere between one and twelve
Speaker 1: basis points. A basis point is one hundredth of a percent,
Speaker 1: which sounds like a tiny amount, right, But across the
Speaker 1: American stock market, each basis point comes to seven billion
Speaker 1: dollars a year. If the entire stock market traded on IX,
Speaker 1: investors would be spared being ripped off somewhere between seven
Speaker 1: and eighty four billion dollars a year. This shit adds
Speaker 1: up in Jersey. The skimming of the American investor isn't
Speaker 1: a street mugging. It's fantastically complicated and at bottom a
Speaker 1: little boring. There was no reason Ronan had to leave
Speaker 1: his dream job to step in between Wall Street and
Speaker 1: its investors and say stop, you're not doing this anymore.
Speaker 1: I think had I not worked at RBC for a
Speaker 1: couple of years, I might have thought this was a
Speaker 1: great business opportunity. But the level of full of shitness
Speaker 1: on the people that we were meeting was just making
Speaker 1: me more and more angry. So it was more like
Speaker 1: a challenge to make this fair because people What was
Speaker 1: most annoying is people are saying it's already fair. Nothing
Speaker 1: to see here, Ronan could have walked away from his
Speaker 1: middle class Irish self and acquired whatever he wanted, including airs. Instead,
Speaker 1: he flew to Ireland. His parents still had no real
Speaker 1: idea what their son did for a limit, but he
Speaker 1: wanted to talk to them about it because somehow they
Speaker 1: were still important to him. Their voices were still in
Speaker 1: his head, hanging over a chair, maybe he said, okay, okay,
Speaker 1: that's why I'd gone to visit Ronan's mom and dad
Speaker 1: just outside of Dublin, in the village of Dalkey, to
Speaker 1: hear their voices. What did you think when he told
Speaker 1: you was making a million dollars a year? Holy shit, No,
Speaker 1: it's hard to believe, you know, I couldn't kind of think.
Speaker 1: You know, they're saying every business deal there are two people.
Speaker 1: There's a Funk and Fucky and a new Ronan could
Speaker 1: be the funker, you know, so that's see. Yeah, how
Speaker 1: do it feeling? How it feeling about him? And then,
Speaker 1: in the same breath that Ronan revealed his new Wall
Speaker 1: Street power and wealth, he confessed that he was thinking
Speaker 1: of walking away from it all, plus tossing a match
Speaker 1: over his shoulder to burn the place down in a
Speaker 1: way that would make it virtually impossible to go back
Speaker 1: as a regular trader on Wall Street. And for Ronan's dad,
Speaker 1: here was the kicker. His son was leaving the playing
Speaker 1: field to become a referee. It all struck me that
Speaker 1: if you see referees, that was kind of skinny legs,
Speaker 1: and they're always popping around the place. And I was thinking,
Speaker 1: you know, those who can do, those who can't teach.
Speaker 1: You know, those who can kick the ball, play football,
Speaker 1: those can't referee. And it just sort of thoughts strange.
Speaker 1: You know that anybody would want to be one? Why
Speaker 1: would you want to be one? Why would you want
Speaker 1: to be a trap? Why would you want to be
Speaker 1: a policeman? Gona making people miserable every day? I X
Speaker 1: did not so much open for business as explode. After
Speaker 1: its opening, Wall Street's biggest banks were fine hundreds of
Speaker 1: millions of dollars for cheating ordinary investors. I X itself
Speaker 1: as a target of an expensive and mendacious political media
Speaker 1: campaign bought and paid for by the exchanges and high
Speaker 1: frequency traders. Brad and Ronan were threatened and slandered. They
Speaker 1: needed bodyguards. It took them two years to get the
Speaker 1: SEC's approval to open for business more than four times
Speaker 1: as long as it took an exchange built by high
Speaker 1: frequency traders, all because they were doing the most seditious
Speaker 1: thing that you could do. At the heart of American
Speaker 1: capitalism introduced fairness. Right, Yeah, fathers never know their sons
Speaker 1: are like my father, nephy knew a job I had,
Speaker 1: he taught I'd worked for since HSIPOL chargeable organization give
Speaker 1: them money to companies. He didn't understand inward investment. But
Speaker 1: I didn't fully understand for Ronan was that Ronan Ryan.
Speaker 1: I don't think he particularly even wanted to be a referee.
Speaker 1: It just so happened that the place he landed, Wall Street,
Speaker 1: couldn't accommodate both his ambition and his character. His Mama
Speaker 1: and daddy raised him a certain way, and he couldn't
Speaker 1: quite forget it. They raised him to see other people
Speaker 1: as just people who are either full of shit or not.
Speaker 1: It turned out that Wall Street had a crying need
Speaker 1: for someone who is not full of shit, and Ronan
Speaker 1: Ryan had a serious talent for it. Now right, I did,
Speaker 1: I got everything. Why do people become referees actual refs,
Speaker 1: I mean, not the ones who get into it because
Speaker 1: some powerful player has bribed them to play the role.
Speaker 1: I don't think there's a single simple reason the refs
Speaker 1: in the NBA may there, mainly because they love the
Speaker 1: game and it's their way into it. Ken Feinberg, he
Speaker 1: discovered in himself a gift for a kind of ferocious neutrality,
Speaker 1: found ways to exercise that gift, and discovered that our
Speaker 1: society just now desperately needs it. Let's pause a moment
Speaker 1: to thank our refs, the honest ones. We can tell
Speaker 1: ourselves that they're doing what they're doing for the same
Speaker 1: self serving reasons the rest of us do what we do.
Speaker 1: But there really are people who step up in certain moments,
Speaker 1: in certain situations to insist on fairness, even if their
Speaker 1: fathers never fully understand what they do, and even though
Speaker 1: the world never fully appreciates it. All right, consider it
Speaker 1: a birthday present. Ten shares of Apple, all right, all right,
Speaker 1: give me Apple screws us. Not my fault, if not
Speaker 1: your fault, Thanks for being Thanks for being my getting paid.
Speaker 1: You're a good podcast job. Do you think in the
Speaker 1: olden days just is very off topic, But it's about money.
Speaker 1: When money was like a dollar, you could buy a
Speaker 1: lot of stuff. M Do you think in the olden
Speaker 1: days people called people with over one hundred dollars hundred nays,
Speaker 1: one hundred air as opposed to a millionaire. Yeah, and
Speaker 1: then a thousand air. They must have had a word
Speaker 1: before a millionaire, right, Yeah, it was called rich because
Speaker 1: they're rich. They're just a rich I'm Michael Lewis. Thanks
Speaker 1: for listening to Against the Rules. Against the Rules is
Speaker 1: brought to you by Pushkin Industries. The show is produced
Speaker 1: by Audrey Dilling and Catherine Girdo, with research assistance from
Speaker 1: Zoe Oliver Gray and Beth Johnson. Our editor is Julia Barton.
Speaker 1: Mia Lobelle is our executive producer. Our theme was composed
Speaker 1: by Nick Brittell, with additional scoring by Seth Samuel, mastering
Speaker 1: by Jason Gambrel. Our show was recorded at Northgate Studios
Speaker 1: in Berkeley by Tofa Ruth Special thanks to our founders
Speaker 1: Jacob Weisberg and Malcolm Gladwell. That's not Yours