Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisental and I'm Tracy all Away. So, Tracy,
Speaker 1: one topic that we actually don't talk about that much
Speaker 1: that we have a few times is like Wall Street itself,
Speaker 1: Like we talked about markets all different kinds of talk
Speaker 1: a lot about e cons and like theoretical finance like
Speaker 1: actual Wall Street banking, etcetera. We probably could talk about
Speaker 1: it more. I feel like we do quite a few
Speaker 1: markets structure episodes, but you're right, we don't get so
Speaker 1: much into I guess the experience of actually working in
Speaker 1: those markets. No, we don't um And of course it's
Speaker 1: an interesting time. I mean it's always an interesting time.
Speaker 1: But so many of the banks are doing extraordinarily well.
Speaker 1: And I feel like for both of us our careers
Speaker 1: post Great Financial Crisis, we like I think the standard
Speaker 1: thing is like each year it's like a bonuses are
Speaker 1: down at this bank or trading is down or left,
Speaker 1: and it feels like that, at least right now for
Speaker 1: the moment, it's a very lot of up arrows on
Speaker 1: Wall Street. But I do feel like there's a weird
Speaker 1: dichotomy at the moment in the sense that the banking
Speaker 1: and trading results have been excellent and it's definitely boom
Speaker 1: times for Wall Street. But on the other hand, a
Speaker 1: lot of people are expressing unhappiness about the actual job
Speaker 1: at the moment. Right, you have a lot of younger
Speaker 1: bankers especially who just don't seem that into Wall Street
Speaker 1: at the moment. No, you know, they all want to
Speaker 1: go work on Crypto there. You know, they're the probably
Speaker 1: everyone else is traveling and working from saloom or something
Speaker 1: like that, and their bosses are telling them to come
Speaker 1: into the office and they're not having as much fun.
Speaker 1: And so, yes, there was a great our. Colleague Max
Speaker 1: Sableson wrote a great piece recently, is or It's like
Speaker 1: everyone's making a lot of money on Wall Street, but
Speaker 1: no one's having at any fun. Yeah, exactly. So today
Speaker 1: we are going to get into the actual experience of
Speaker 1: working on Wall Street and how it's changed and why
Speaker 1: fewer people seem to be enjoying it and why everyone
Speaker 1: wants to go into Crypto I guess. Yeah. So we
Speaker 1: have an amazing the perfect guest for it. We're going
Speaker 1: to be speaking with the author Michael Lewis. Of course,
Speaker 1: he is the author of numerous books. But of course
Speaker 1: one of his most famous liars Poker about Wall Street,
Speaker 1: came out in the most recent book is The Premonition.
Speaker 1: He's he also has his own podcast Against the Rules,
Speaker 1: and he's also, while we're talking about Liars Poker, done
Speaker 1: a new audio book and come out with a new
Speaker 1: sort of five episode mini series podcast sort of that
Speaker 1: goes along with it called Other Pupil's Money. So really
Speaker 1: just a real treat to have him on. Let's get
Speaker 1: right to it, Michael, thank you so much for coming
Speaker 1: on a lot. Hey guys, thanks thanks for having me.
Speaker 1: So why why now to revisit Liars book? So two
Speaker 1: things happened at once. One was the audio rights of
Speaker 1: the book reverted to me. They reverted to me at
Speaker 1: a time when I've been because of the podcast, I've
Speaker 1: been talking to my podcast company, Pushkin Industries, about how
Speaker 1: we would do audio books, informed by what we've learned
Speaker 1: about podcasts, like the audio books typically are just you
Speaker 1: just read them and nothing nothing else is going on.
Speaker 1: And they really are starting to produce audio books, and
Speaker 1: we were looking for an excuse to do a fun,
Speaker 1: a more fun audio book, and this thing never got done,
Speaker 1: I mean never even you know, back when Liars Booker
Speaker 1: was published, there was really not a market. There was,
Speaker 1: like they sent out these cassettes, you know, and it
Speaker 1: was it was an abridged, very abridged version. So the
Speaker 1: fact that it hadn't been done that so many more
Speaker 1: people are kind of listening than reading it just seemed
Speaker 1: like And the thing still sells, like, I don't know
Speaker 1: how many copies a year, it's still so they still
Speaker 1: was a market for it. But the other thing that
Speaker 1: happened was my eldest child is a junior in college,
Speaker 1: and she has now three times said my friend just
Speaker 1: came back from an internship on Wall Street and they
Speaker 1: were made to read Liars Poker to understand the which
Speaker 1: makes no sense. But the fact that this thing is
Speaker 1: being now handed out as sort of like a work
Speaker 1: manual it interested me. And I just thought, plus the
Speaker 1: asterix to all this was I never read the book again.
Speaker 1: I mean, I wrote it, and I published it. I
Speaker 1: guess I wrote read little bits and pieces when I
Speaker 1: was on book tour back then, but apart from that,
Speaker 1: I've never picked it up. And so it's just like
Speaker 1: I was curious what was in it, and and when
Speaker 1: I started reading it, I had all these reactions, and
Speaker 1: the reactions led to the little podcast series that's alongside
Speaker 1: of it. They were just kind of things I wanted
Speaker 1: to do, like go talk to the people who were
Speaker 1: characters in the book to see what they, you know,
Speaker 1: when they look back on their lives, what they saw.
Speaker 1: So all that's why there's no there's like, no real reason.
Speaker 1: Nothing that just happened on Wall Street's triggering my interest
Speaker 1: in my own old book. So I gotta say so,
Speaker 1: I love audio books. I'm really looking forward to this,
Speaker 1: and I really only started listening to them in the
Speaker 1: past year, so I'm basically doubled my reading, which is awesome. Secondly,
Speaker 1: I mean you mentioned the idea of Liars Poker being
Speaker 1: like the go to book for people who are interested
Speaker 1: in finance and economics, and it was certainly one of
Speaker 1: the first books that I read when I first went
Speaker 1: into financial journalism. I remember that many many years ago.
Speaker 1: But as you said or suggested, Wall Street has changed
Speaker 1: quite a bit since the nineteen eighties. Why do you
Speaker 1: think Liars Poker seems to have this enduring legacy or
Speaker 1: why are people still so interested in it and still
Speaker 1: reading it as the first thing you know on their
Speaker 1: reading list when they start thinking about Wall Street. It's
Speaker 1: a really good question, because it's bewildering to me. I thought,
Speaker 1: you know, when I wrote it, I thought it was
Speaker 1: going to be dated at any moment, uh, And that
Speaker 1: it was written as kind of like a message in
Speaker 1: the bottle to people a hundred years from who would
Speaker 1: never believe what happened on Wall Street in the nine
Speaker 1: It was like this discreet period of insanity that was
Speaker 1: coming to an end. So I think that there's two
Speaker 1: answers to the question, and there's slightly contradictory. The first
Speaker 1: answer is when you read the book, as I just
Speaker 1: did and was reminded of all this stuff, I was
Speaker 1: struck by just how much of what Wall Street became
Speaker 1: was seated back then, like things that things that were
Speaker 1: just starting to happen back then, we're telling you where
Speaker 1: this place was going. I had no idea, but you know,
Speaker 1: in retrospect, so the intellectualization of finance, that all of
Speaker 1: a sudden, like we had a PhD in physics on
Speaker 1: the trading floor and everybody thought, how bizarre is that.
Speaker 1: Then there were a few PhD s, and then the
Speaker 1: PhD s were actually in charge of most of them
Speaker 1: were in trading decisions. I was just talking to someone
Speaker 1: who graduated not that long ago from m I t
Speaker 1: in the physics department, and he said, without thinking it
Speaker 1: was even interesting, he said, Oh, my whole department just
Speaker 1: goes to wall went to Wall Street. Everybody in my
Speaker 1: CLA physics departed in anamity everybody. And he said, I said,
Speaker 1: don't some of them like become physicists And he says, physics,
Speaker 1: Physics isn't interesting anymore. It's it's uh so it's just
Speaker 1: understood that this is the path and that that I mean,
Speaker 1: so that starts back then, finance starts to get sufficiently
Speaker 1: complicated that it rewards that kind of intellect and drives
Speaker 1: out a different kind of person. So like that's one
Speaker 1: thing that you can see just starting to happen. The
Speaker 1: hold the place has on the imagination of young people.
Speaker 1: Like it wasn't if you go back to like the sixties, fifties,
Speaker 1: sixties seventies, it wasn't the best and the brightest from
Speaker 1: the best schools who went to Wall Street. It was
Speaker 1: like the c student from Yale and guy's name Vinny
Speaker 1: from Staten Island, who I mean, it was the trade.
Speaker 1: You know, it paid well, but the status it didn't
Speaker 1: have that same status. And then it's persisted, even though
Speaker 1: the jobs have gotten i think probably even more horrible
Speaker 1: in some ways, it still has this grip on the
Speaker 1: imagination young people. Like it's if you went to Harvard,
Speaker 1: the next thing you do that's a similar thing to
Speaker 1: getting into Harvard is getting into Goldman's acts that that's
Speaker 1: amazing to me. But that was amazing to me then,
Speaker 1: So there's like there's some things like that. There are
Speaker 1: other things like that, just the financialization of the economy,
Speaker 1: which is related to the other two things that it's finances,
Speaker 1: you know, it's it's never stopped growing as a part
Speaker 1: of as a sharing the kind of all that's happened.
Speaker 1: So these mega trends kind of thing make it feel
Speaker 1: make the book feel like, uh, there's a little relevance here.
Speaker 1: It's not completely dated, but I think this is other
Speaker 1: thing that's going on. And I was when I was reading,
Speaker 1: and I thought, this is why people reading Wall Street's
Speaker 1: gotten so dull. I mean, just personally, don't it is
Speaker 1: it's essentially, you know, a tech job. You go into
Speaker 1: one of these places and it's totally silent. It's people
Speaker 1: sitting at terminals, just in a little in a in
Speaker 1: a bubble. For better or worse. It's lost a lot
Speaker 1: of its color, and it's very hard to persuade a
Speaker 1: young person that this is the fun job job. I mean,
Speaker 1: it's a job that pays you well and it gives
Speaker 1: you an answer to the question what are you doing
Speaker 1: after you got out of Harvard. It's just like even
Speaker 1: more soul deplating than it was. And I think the book,
Speaker 1: you know, I didn't intend for this to happen, but
Speaker 1: I was having so much fun writing it, and the
Speaker 1: experience was there were aspects of it they were just funny,
Speaker 1: you know, just it was. It was alive, people screaming
Speaker 1: each other on a trading floor, people behaving in ways
Speaker 1: that were outrageous. It was human and wet, and I
Speaker 1: think that is part of the reason the book persists.
Speaker 1: It's like, you can't write anything interesting about it now.
Speaker 1: It's much harder. I mean, if you look at the
Speaker 1: books I've written since, they're about Wall Street, Big Short
Speaker 1: and and Flashboys, both those books. I mean, part of
Speaker 1: it is a function of where I sit in relation
Speaker 1: to Wall Street, but both those books dependent on kind
Speaker 1: of outsiders crashing in on the system. It would have
Speaker 1: been very hard, I felt, and I reported pretty heavily
Speaker 1: inside the system to have brought the system itself to life,
Speaker 1: because it felt kind of in funny ways dead, even
Speaker 1: if it was making a lot of month, whereas long
Speaker 1: as poker was sitting, you know, that was the right
Speaker 1: at the heart of the system. How much of this
Speaker 1: sort of more inert Wall Street is has to do with,
Speaker 1: you know, the rise of technology, the fact that it's
Speaker 1: not as much people necessarily streaming into phones and as
Speaker 1: much of a people business, and how much would you say,
Speaker 1: you know, how much is the last twelve or thirteen
Speaker 1: years and the sort of like, however many this sort
Speaker 1: of de risking of the banking system that occurred over
Speaker 1: after the Great financial crest, So that's part of it.
Speaker 1: That's definitely a part of it. Right that if you
Speaker 1: are going to a big bank is no longer the
Speaker 1: place where you're taking the big interesting risks. So you're
Speaker 1: gonna if you're gonna take the big interesting risks, you're
Speaker 1: gonn to be at a hedge funder. You're gonna be
Speaker 1: at a venture capital funder. You're gonna be in private equity,
Speaker 1: and and the and the rewards also have moved outside
Speaker 1: of the kind of the heart of the system. I mean,
Speaker 1: the highest paid people on Wall Street when I was there,
Speaker 1: I'm trying to think, what I'm sure that sure, this
Speaker 1: is not completely right. But they were barely hedge funds,
Speaker 1: you know they were there were people, there were people
Speaker 1: effectively doing what hedge funds did, but the compensation was nothing,
Speaker 1: and the size was nothing. Was like today, and you know,
Speaker 1: John good Friend making whatever three million dollars or five
Speaker 1: million dollars or eight was considered just amazing. Uh. And
Speaker 1: then and Milk and you know, milk and made a
Speaker 1: billion dollars right inside of the bank. So I think
Speaker 1: the actions moved outside of the banks too. It's it's
Speaker 1: so that's happened. So the other things happened. I mean,
Speaker 1: is that I'm probably partly responsible over this in a
Speaker 1: small way. Is this must liars poker? That earraw must
Speaker 1: have been the last time that someone like me could
Speaker 1: roll in to a big bank without signing non disclosure agreements,
Speaker 1: without having lawyers looking at everything you do, without being terrified,
Speaker 1: everybody being terrified of everything they put in their emails
Speaker 1: and all that, and where people didn't behave as if
Speaker 1: they were being watched, where even the boss is kind
Speaker 1: of thought. I mean when I walked out, I told
Speaker 1: him I was writing a book about Wall Street, and
Speaker 1: they didn't. They couldn't have cared less. It was like
Speaker 1: they worried. They were worried about my sanity in leaving
Speaker 1: a really lucrative job for what they thought was penury.
Speaker 1: But they didn't, you know, go write a book about
Speaker 1: Wall Street? Who cares? Was kind of the attitude, the
Speaker 1: access to un self conscious behavior it's got, it has
Speaker 1: definitely shrunk. I mean that's another reason I think I
Speaker 1: got the material was just sort of like that is
Speaker 1: the last time it really had a lot of flavor
Speaker 1: to it and you had total access to it and
Speaker 1: you could write it up. I mean, there have been
Speaker 1: other accounts from inside of Wall Street, but it's just
Speaker 1: not as interesting. Were there. Do you think there were
Speaker 1: any benefits to that type of culture, because nowadays we're
Speaker 1: used to looking back at the nighteen eighties as this
Speaker 1: era of excess. You know, you described in the book
Speaker 1: basically like how much of a nightmare a lot of
Speaker 1: the traders were. And I remember the trainees like sitting
Speaker 1: in the back room and throwing things at the speakers
Speaker 1: and stuff like that. So everyone looks back at that
Speaker 1: sexism as well and thinks, wow, this was terrible. But
Speaker 1: was there any upside to having this sort of unfettered Um,
Speaker 1: I guess culture. I'm gonna give you not my answer
Speaker 1: but the answer of one of the subjects of the
Speaker 1: Companion podcast and Clark Wolf, who has just started she
Speaker 1: started an investment bank, has been dubbed Solomon Sisters. She
Speaker 1: was a Solomon Brothers when I was the Solomon Brothers.
Speaker 1: She would she was there right when the book was
Speaker 1: coming out. Rather, she said to me something that sort
Speaker 1: of was on the tip of my brain, and I
Speaker 1: was asking her. I was trying to get her basically
Speaker 1: say how horrible it was for women, right because from
Speaker 1: my point of view, it was appalling. I mean, you will,
Speaker 1: it's hard for you to believe, but here's a place
Speaker 1: of work and it is routine and acceptable to call
Speaker 1: a stripper in and have her take all her clothes
Speaker 1: off on the top of a trading desk while everybody cheers,
Speaker 1: or or to swat women on the rear end as
Speaker 1: they're walking by your desk or I mean, it was
Speaker 1: just one thing after another. I mean, it was just
Speaker 1: outrageous sexual harassment, nothing subtle about it. And it bothered me,
Speaker 1: you know. And it's that that it bothered me. Was
Speaker 1: was behind between the lines of the books in places,
Speaker 1: and I thought I would get someone on to talk
Speaker 1: about this who actually endured it. And instead of saying
Speaker 1: what I wanted her to say, or thought I wanted
Speaker 1: her to say, she said, now, you got it wrong.
Speaker 1: Now this is just one woman's perspective. But she said, yeah,
Speaker 1: there was that kind of stuff, but women could advance.
Speaker 1: There might be that kind of stuff going on at
Speaker 1: the same time. You got moved up if you were good,
Speaker 1: and it was very open. There was there was a
Speaker 1: kind of openness about it, like everybody wore their attitudes
Speaker 1: on their sleeve up, but they kind of some to
Speaker 1: move past those attitudes. And she said she found as
Speaker 1: Wall Street kind of became more sanitized, the difficulty women
Speaker 1: had moving up got worse. This is her talking to me.
Speaker 1: But it was an interesting perspective, she said. And she said,
Speaker 1: you know, one of the things that's happened is that
Speaker 1: the male Wall Street person's fear of being in a
Speaker 1: compromised situation with a female Wall Street has completely eliminated
Speaker 1: the kind of mentorship that leads to uh, that leads
Speaker 1: to people moving up. And I thought, wow, I mean
Speaker 1: I've never heard that before. That was completely like no
Speaker 1: to me. I thought, well, maybe it's more complicated than
Speaker 1: I thought at the time. I thought, one of the
Speaker 1: nice things about this place is that nobody's pretending to
Speaker 1: be anything but what they are. That there's no that
Speaker 1: that whatever vices there are here and their virtues and vices,
Speaker 1: there's very little hypocrisy. And and it was refreshing and
Speaker 1: it was filled. So this is related to this the
Speaker 1: diversity of the characters which made the book work much better.
Speaker 1: It wasn't all the same person there were there were
Speaker 1: a lot of It was a huge variety of personality,
Speaker 1: character types. It was sort of like a pool, a
Speaker 1: random pool of talent. So that's kind of an appealing
Speaker 1: trait in a place at the tolerance of a range
Speaker 1: of a range of kinds of people. That's an argument
Speaker 1: for how it used to be. I'd say the one
Speaker 1: other argument, but this is kind of like what was
Speaker 1: ending when I was there is there was this wet
Speaker 1: relationship between the firm and its employees. It wasn't just
Speaker 1: a corporate relationship. There was a residue of the partnership
Speaker 1: and the spirit of the partnership, the idea that you know, yeah,
Speaker 1: you worked in the mail room, but if you're if
Speaker 1: your wife got sick and you couldn't afford to pay
Speaker 1: the household bill, some partner just came in to pay them,
Speaker 1: because that was just how you did it. That was
Speaker 1: that glue was was loosening while I was there, because
Speaker 1: it didn't cease to be a partnership and become a corporation,
Speaker 1: and it was becoming what it would become a kind
Speaker 1: of a much a much less kind of wet and
Speaker 1: cohesive place and much more corporate. But that old, that
Speaker 1: old feeling of like an emotional connection. I bet people
Speaker 1: miss that. I bet I bet people who work on
Speaker 1: Wall Street now just miss that. There's no pretense that
Speaker 1: you have like love of the firm, and the firm
Speaker 1: doesn't love you. So there's there are things to be
Speaker 1: said about that era, probably more things that you said
Speaker 1: against it and said things to be said for it.
Speaker 1: You kind of anticipated or my next question, But this
Speaker 1: idea of like Wall Street Banks becoming more like corporate
Speaker 1: or maybe interchangeable, where an executive at a major bank
Speaker 1: could leave and go work at Google or Nike or
Speaker 1: FedEx or something like that. Why does that? Why did
Speaker 1: that happen? I mean, like it feels like that. And
Speaker 1: you know, obviously in the intro we talked about, yeah,
Speaker 1: they're making a ton of money, but they it seems
Speaker 1: like they're having less fun. And they're certainly not having
Speaker 1: a lot of fun these days. Like why did why
Speaker 1: why do these banks? Why are they just sort of
Speaker 1: corporations in a way that they didn't used to me? Well,
Speaker 1: because they weren't corporations, right, so they they I mean
Speaker 1: I think that's the that was the thing that was happening,
Speaker 1: you know. Again, like that gets back to why this
Speaker 1: book still gets read. Part of it is just like
Speaker 1: the moment in financial history captured. I walked into a
Speaker 1: firm that was the first big investment bank to turn
Speaker 1: itself to go public, and it was regarded as a
Speaker 1: great active betrayal when it did to the two old
Speaker 1: partners to the idea of the firm. There's a lot
Speaker 1: of anger in the air even inside the firm when
Speaker 1: I was there, And this has happened, and it But
Speaker 1: what that does is it changes the relationship of the
Speaker 1: employee to the place the employee is. The people who
Speaker 1: run it are much less likely to be exposed to
Speaker 1: its failure in a big way. They're they're they're much
Speaker 1: less likely to be It's not a sticky relationship. People
Speaker 1: more of their wealth comes in the form of of
Speaker 1: just their annual bonus and less in the ownership of
Speaker 1: the firm. So people just didn't stay as long. And
Speaker 1: so what you had happened was free agency. That was
Speaker 1: the period where you started to get the free agent
Speaker 1: trader guys, you know, leaving from Marroll Lynch for three
Speaker 1: million bucks that and that was regarded it was interesting
Speaker 1: that would not know bat and I at that now,
Speaker 1: right if some if you're a goldman and Morgan Stanley
Speaker 1: offers you twice as much money, everyone going probably just says,
Speaker 1: well you should just take it, you know, or vice versa.
Speaker 1: At the time, it was regarded as a betrayal. It
Speaker 1: was regarded you would say that people were treated as
Speaker 1: if they were traders if they left the firm for
Speaker 1: a more higher paid job somewhere else. What you were
Speaker 1: saying there was the residue of the partnership ethic and
Speaker 1: their firms on Wall Street they are still you know
Speaker 1: Brown Brothers. There there little firms that have kind of
Speaker 1: kept the old structure and it really works for what
Speaker 1: it does. It creates a lot of stability. It doesn't
Speaker 1: work for big risk taking. Much better to be playing
Speaker 1: with other people's money. So this is a very um,
Speaker 1: I guess, guyste question. But you know, we're talking about culture,
Speaker 1: and you mentioned this idea of Wall Street firms having
Speaker 1: much um more cohesiveness during this era. You called it wetness.
Speaker 1: And I guess nowadays there's this big push on Wall
Speaker 1: Street to get everyone back into the office. Everyone went
Speaker 1: to work from home during the pandemic. And I guess
Speaker 1: two things here, Why do you think it's such a
Speaker 1: big deal for a lot of the banks to have
Speaker 1: people in the office. And then secondly, is there attention
Speaker 1: between a work from home model and a business like trading.
Speaker 1: Do you have to actually be physically present talking to
Speaker 1: you know, your peers, your colleagues in order to make
Speaker 1: it work or is it something that can be done
Speaker 1: remotely nowadays? Well you probably know the answer this is
Speaker 1: better than I do. But my, my sense. My sense
Speaker 1: is that there's much less reason to actually have to
Speaker 1: be there. It would have been bizarre not to be there.
Speaker 1: In you wouldn't you couldn't have functioned. Everything was happening there,
Speaker 1: and it was personal interaction that was driving a lot
Speaker 1: of the decisions, and and you were watching the markets
Speaker 1: in when you were watching the traders. That's not true anymore.
Speaker 1: I'm trying to think of what couldn't be done remotely
Speaker 1: that's important, that would force people into the office. I mean,
Speaker 1: for a lot of this, you don't even need really people.
Speaker 1: You need algorithms. You know, the New York Stock Exchange
Speaker 1: used to be people. It's now servers in New Jersey.
Speaker 1: There are people on the New York Stock Exchange, but
Speaker 1: they're essentially a television set. They're not doing anything important.
Speaker 1: I think the way finances evolved, I can see why
Speaker 1: this pressure to not go back to the office, But
Speaker 1: you don't really need to be there. I think I
Speaker 1: get the sense I could be wrong about this. I
Speaker 1: get the sense that like bosses are much more interested
Speaker 1: in having their their employees there, then the employees are
Speaker 1: interested in being there. And then so there's some like
Speaker 1: status stuff probably going on where it's you know, nice,
Speaker 1: you probably feel and you probably feel like you can
Speaker 1: monitor your employees better if they're physically present. But I'm
Speaker 1: not even sure that's true. So no, I can't see
Speaker 1: any reason. I don't I don't know why you need
Speaker 1: a trading floor now, why can't be distributed? Even back then,
Speaker 1: there are people who did real well sitting in a
Speaker 1: room by themselves. They weren't, you know, not not people
Speaker 1: who work for the banks, but people traders, catch fund types.
Speaker 1: In fact, if you want to make the argument, you
Speaker 1: know what succeeds in the financial markets, you know, independent thinking,
Speaker 1: taking a view that's slightly apart from the crowd. All
Speaker 1: that may be easier to do if you aren't in
Speaker 1: a room full with other people who are all doing
Speaker 1: the same thing. So to answer, so I would I
Speaker 1: would have thought that it's going to be hard to
Speaker 1: get everybody back, because you're not gonna You're not gonna
Speaker 1: be any better with everybody back. It's not gonna there's
Speaker 1: not gonna give you a huge competitive advantage. The exception
Speaker 1: is that what you're dealing with, you actually have face
Speaker 1: to face interactions with clients. People are more persuaded by
Speaker 1: personal encounters, and so there's some there's still slices of
Speaker 1: the business like that. I mean, I bet it would
Speaker 1: be hard to be a I don't know, m and
Speaker 1: a advisor without being able to be with people. But
Speaker 1: those people are not your colleagues. Those people are like
Speaker 1: some CEO somewhere. So you think that's wrong. I could
Speaker 1: be wrong. Do you think what's the give me the
Speaker 1: argument for why you would go back to work. I
Speaker 1: don't know, Tracy. I hate I hate doing this because
Speaker 1: I'm on the record as a big work from home fan.
Speaker 1: But it's culture and spontaneous cooperation, the kind of spontaneous
Speaker 1: cooperation and synergies you get from running into someone. How
Speaker 1: often has that happened to you? Actually, well, it does occasion,
Speaker 1: I have to say, Like it does occasionally you do
Speaker 1: run into people and say, oh, hey, what are you
Speaker 1: working on? You know, and maybe they ask you for
Speaker 1: help or something like that. But I do think nowadays
Speaker 1: there are a lot of spontaneous interactions that can happen
Speaker 1: in just through you know, instant messaging and stuff like that.
Speaker 1: I just wanna I I totally agree, and I you know,
Speaker 1: I love most of the most of the interactions I
Speaker 1: have in the world are clearly digital. I really liked
Speaker 1: this sort of like three or four people that sit
Speaker 1: in proximity with me in the office, and I really
Speaker 1: genuinely enjoy coming in and just sort of chatting verbally
Speaker 1: or so I would miss it. I liked the news
Speaker 1: or energy and just sort of joking around and talking
Speaker 1: news with the people who are sitting here me. So
Speaker 1: I'm a little bit more office of a sympathetic perhaps
Speaker 1: than the Tracy is speaking of zeitgey as you think
Speaker 1: so literally, it's every time some crazy story happens in
Speaker 1: the crypto world, I see people like I can't wait
Speaker 1: to read the Michael Lewis book about this event. And
Speaker 1: of course there's gonna be a Michael Lewis crypto book
Speaker 1: at some point. There has to be right this chance. Um,
Speaker 1: you know, it's funny. I've been told by a lot
Speaker 1: of people I need to write such a book, and
Speaker 1: that's a persuasive But the it is true. What I
Speaker 1: think is true is if you asked, like, what's the
Speaker 1: version of Liars Poker? Now? Where is Liars put the
Speaker 1: Liars Poker like story happening? It's the it's crypto, it's
Speaker 1: it's it's that's where there is this shocking and unprecedented
Speaker 1: behavior and events, and people are trying to make sense
Speaker 1: of something that's completely new. Our feels completely new where
Speaker 1: massive disruption is occurring. I mean that what Solomon by
Speaker 1: this training floor and Michael Milken's Drexel bond department, we're
Speaker 1: really like turning the financial world on his hand at
Speaker 1: that time. And that was part of the excitement of
Speaker 1: the story. So the same maybe true of crypto. The
Speaker 1: problem with crypto so far from me is I'm gonna
Speaker 1: get slave for this, but taking it seriously. So I
Speaker 1: had this encounter and it's like it's a little powable
Speaker 1: to microcosm of a bunch of similar encounters I've had.
Speaker 1: I got a call. This was like six years ago,
Speaker 1: so kind of early in the whole thing. Bitcoin is
Speaker 1: like people are starting to look like they were smart
Speaker 1: to own some bitcoin, and there were like the great
Speaker 1: and the good of bitcoin. I was told we're gathering
Speaker 1: in a house in Silicon Valley and I should come
Speaker 1: down and just meet him. And the guy who asked
Speaker 1: me actually said, if you come down, you meet Satoshi.
Speaker 1: And I thought, well, I don't care all that much,
Speaker 1: but I'm curious. So I drove down. I got in
Speaker 1: my car and drove all the way to palahout though,
Speaker 1: and I could smell the weed from like two blocks away,
Speaker 1: you know. It was just like the weed was coming
Speaker 1: out of the the chimney, and and there was it
Speaker 1: was a funny scene. It was like twelve rooms and
Speaker 1: sleepy bags in all the rooms, and some of the
Speaker 1: people actually there were there were future billionaires in that house.
Speaker 1: But they were trying to persuade me that this was
Speaker 1: the money of the not the money of the future.
Speaker 1: And and it did feel like when they when I
Speaker 1: came to understand what this money was. But if this
Speaker 1: had been the money of the present and someone invented
Speaker 1: actual dollar bills, people would say, what, wow, this is
Speaker 1: a fantastic revolution. And they took me so I said,
Speaker 1: I still believe. I just don't believe this in money.
Speaker 1: I don't believe this is gonna work. I think the
Speaker 1: kind of things you need to do to make this
Speaker 1: money are gonna undermine the things you love the most
Speaker 1: about it. And they said, no, no, come on with us.
Speaker 1: We're gonna show you that you can spend this already.
Speaker 1: And we walked into pala Alton when there was a
Speaker 1: coffee shop and sure enough it said we accept bitcoin.
Speaker 1: And we sat there for I don't know, twenty minutes
Speaker 1: trying to pay for a cup of coffee with bitcoin
Speaker 1: until fine and no, and they couldn't do it. I
Speaker 1: finally pull out a five dollar bill and it worked
Speaker 1: just beautifully, And I just, you know, the first problem,
Speaker 1: like what this is apart from a speculative instrument? Put
Speaker 1: me off. Now, of course there's now everybody has a
Speaker 1: Now everybody has a smarter story. The smartest story is
Speaker 1: it's the new goal. It's better gold. It's not it's
Speaker 1: not a currency, it's it's a better gold, you know.
Speaker 1: I mean, it's a better argument. It's you don't have
Speaker 1: to store it. Really, it's cheaper to store, easier to lose.
Speaker 1: But gold has this like millennium of faith behind it.
Speaker 1: And you're asking people to believe that people believe in
Speaker 1: bitcoin the way they believe in gold, and I just don't.
Speaker 1: Maybe that happens, maybe it doesn't. I think it's a
Speaker 1: funny end game where the in the end there is
Speaker 1: no bitcoin because all of it's lost. There's so much
Speaker 1: of this stuff is already lost. Just amount of time
Speaker 1: before the last you know, you know, bitcoin key is gone.
Speaker 1: It's inconvenient in many ways, but the cultural stuff would
Speaker 1: interests me the most about it is just like the
Speaker 1: cultural disruption it causes. The fact you have n people
Speaker 1: who randomly have three or four billion dollars now because
Speaker 1: they bought some bitcoin, the fact that you've got people
Speaker 1: who have lost half a billion dollars of bitcoin and
Speaker 1: can't find their key. What people are doing with the
Speaker 1: wealth that kind of like landed in their lap. So anyway,
Speaker 1: it interests me. It all interests me. For me to
Speaker 1: have something that is worthy of a okay, it requires
Speaker 1: what I had in Liars Poker and Flashboys and the
Speaker 1: Big short of the financial books. People I wanted to
Speaker 1: be with. If I find a character who can walk
Speaker 1: me the reader through that world in an interesting way
Speaker 1: and and teach us all what it is and give
Speaker 1: us the pleasure, kind of pleasure of fiction and that
Speaker 1: you get from a character that would that would draw
Speaker 1: me to the subject. It's got me. You're right, it's
Speaker 1: got the ingredients, it's got like stuff. But I just
Speaker 1: didn't I didn't buy the original argument for why I
Speaker 1: should be interested, And and I haven't really found the character.
Speaker 1: So I guess you didn't meet Satoshi in Palo Alto
Speaker 1: her No, it was that was that was a ruse.
Speaker 1: Maybe I did meet him, you know, It's possibly he
Speaker 1: was there and he took one look at me and
Speaker 1: said he's not worthy. Sort Of on a related note,
Speaker 1: but what do you think is the attraction for people
Speaker 1: who are in finance or have been in finance who
Speaker 1: are making the transition to crypto. Is it purely a
Speaker 1: money making exercise eyes Is it just the next big
Speaker 1: speculative asset that they see kind of, you know, a
Speaker 1: bubble inflating in front of them and they can get in,
Speaker 1: make their money and get out. Or do you think
Speaker 1: there's a a genuine adherence to some of the belief
Speaker 1: systems and culture and systems around crypto. I think it's
Speaker 1: a mix. I think I've met both kinds. I haven't
Speaker 1: done that much work in this area, but I've met
Speaker 1: both kinds. Um I've met people who were attracted to
Speaker 1: the the libertarian utopia and who were there for those
Speaker 1: sort of reasons. But those my senses, that was there
Speaker 1: at the beginning, and as bitcoin became more and more
Speaker 1: of an attractive speculative asset. It attracted a different kind
Speaker 1: of person. And I think there's like any goal rush,
Speaker 1: why do people why do people come out and mind
Speaker 1: come out to San Francisco During the gold rush, they
Speaker 1: were well, there were some people who were here who
Speaker 1: were like adding add a better idea about where to
Speaker 1: find the gold, and they went and found gold and
Speaker 1: got rich. There are some people who were just there
Speaker 1: because everybody else was there and they thought they'd get
Speaker 1: lucky and it didn't workout. But there's a whole class
Speaker 1: of people who made blue jeans and sold them to
Speaker 1: the minors and that, and I think that's that class
Speaker 1: of person is now the whole crypto has got so big,
Speaker 1: there is that that kind of person who's figured out
Speaker 1: how to be the blue jeans salesman and actually is
Speaker 1: kind of agnostic on the subject of crypto, doesn't believe
Speaker 1: in it or disbelieve in it, doesn't care one way
Speaker 1: or the other, just as long as people are trading it.
Speaker 1: I don't think. I think we're kind of past the
Speaker 1: point where people think there's easy money just buying bitcoin.
Speaker 1: I don't think that exists anymore. I mean, it's just
Speaker 1: it feels it feels pretty scary. So, you know, we
Speaker 1: just have a couple of minutes, but there's actually I
Speaker 1: kind of want to sort of pivot a little bit.
Speaker 1: You mentioned San Francisco and you men, you've been talking
Speaker 1: about the Three Wall Street books. We also wrote a
Speaker 1: tech book in The New New Thing, talking about James Clark,
Speaker 1: among other things. The Netscape co founder Dad obviously came
Speaker 1: out very close to the peak of the dot com bubble,
Speaker 1: and then it felt like, you know, that captured everyone's attention,
Speaker 1: and so I feel like Silicon Valley went dormant for
Speaker 1: a few years, and now obviously it's just everything. I'm curious,
Speaker 1: you know, how how your perception of tech right now
Speaker 1: feels compared to nine because obviously we've had this little
Speaker 1: sell off in tech stocks lately. People wonder how it's different,
Speaker 1: how it's similar. Does it feel like there was a
Speaker 1: bubble that has to cool at some point? Like, how
Speaker 1: does it? How does tech look to you right now
Speaker 1: versus when you wrote that book, it's a much more
Speaker 1: thoroughly developed and articulated religion. Um, what was happening in
Speaker 1: the world didn't have it, This world didn't have its
Speaker 1: story completely straight. Look at that look what's happened since then.
Speaker 1: Jim Clark, the hero of my book, The New New Thing,
Speaker 1: who I put at the center because he had been
Speaker 1: this constant disruptive force and was in the middle of
Speaker 1: the Internet bubble too with Netscape. Jim Clark, who lived
Speaker 1: for innovation, who knew as much about Silicon Valley in
Speaker 1: the tech world as anybody. At the end of that book,
Speaker 1: he flees California and gets out of tech and venture
Speaker 1: capital because it's all gotten too insane, because Klanet Perkins
Speaker 1: has given twenty five million dollars to this startup called Google,
Speaker 1: which he is sure is just nonsense. Now he sees
Speaker 1: like that's for him, that was the sign that bubbles
Speaker 1: about the burst. I mean, we're now sitting here with
Speaker 1: the biggest corporations in the world having grown out of
Speaker 1: that period. They create their own dynamic, barring a concerted
Speaker 1: government effort to like bust them up. You know, it's
Speaker 1: very hard to admagin how there's not just a bubble
Speaker 1: there obviously, right, there's a lot else going on. The
Speaker 1: religion has gotten I mean, it's just many more people
Speaker 1: have come to accept that we live in a world
Speaker 1: that's defined by constant innovation, and their wealth is innovation.
Speaker 1: And the financial sector has real configured itself around this idea,
Speaker 1: so that there's huge amounts of capital thrown at people
Speaker 1: who will innovate. That it's a buyer's market if you
Speaker 1: were an innovator. And I don't really see that changing
Speaker 1: because at the bottom of it is something that is true.
Speaker 1: It is that wealth and innovation are very closely linked,
Speaker 1: that we get richer as a society as we innovate,
Speaker 1: and that it pays us, it pays, it pays everybody
Speaker 1: to encourage this kind of behavior, to encourage total constant disruption.
Speaker 1: It feels a lot less. It felt kind of thin
Speaker 1: back then. There are a lot of companies that just,
Speaker 1: you know, they just didn't You really couldn't see how
Speaker 1: they're gonna work, and everybody said they're gonna work, and
Speaker 1: then they didn't work. It doesn't feel quite like that
Speaker 1: to me. I mean, of course, it's it's frothy right now.
Speaker 1: But I do I think it would be smart to
Speaker 1: like pull out of venture capital right now. No, do
Speaker 1: I think it might be smart to get out of
Speaker 1: some stocks in the stock market, maybe for a while,
Speaker 1: But but it doesn't it feels like there's more of
Speaker 1: a solid foundation under it all to me. Um. You
Speaker 1: mentioned at the beginning of this conversation that you went
Speaker 1: back and you read Liars Poker as part of this project.
Speaker 1: UM and I tried to do the same thing before
Speaker 1: this conversation, and there was one bit in it about
Speaker 1: Paul Volker sort of inadvertently giving birth to the big
Speaker 1: bond business of the nineties by allowing interest rates to float,
Speaker 1: and that introduced price volatility into the market. And that
Speaker 1: was kind of surprising to me because nowadays you think
Speaker 1: Paul Volker and you kind of think Volca rule and
Speaker 1: that he, you know, essentially castrated the big swinging dicks
Speaker 1: of the era and it was all because of him.
Speaker 1: As you were rereading, was there anything that surprised you
Speaker 1: or that unexpected or ironic with the benefit of hindsight, Well,
Speaker 1: the first thing, it was a big chunk of the book.
Speaker 1: It's about the creation of the mortgage bond market. Even
Speaker 1: I at that moment have no sense that this is
Speaker 1: that Frankenstein's monster is being created, that this that that
Speaker 1: the way risk was going to be allocated would create problems.
Speaker 1: I saw nothing but good in that. I thought, and
Speaker 1: it wasn't very At the moment, it seemed great. It
Speaker 1: was like, you're opening up, You're you're knocking down a
Speaker 1: wall between capital and homebuyers, and it was going to
Speaker 1: make buying a home cheaper for everybody, to give everybody
Speaker 1: cheaper access to capital. It was seemed like a great efficiency.
Speaker 1: But the complexity of the instruments was going to make
Speaker 1: something possible that I never would have imagined coming. So
Speaker 1: that was one thing. It was like, huh, didn't go
Speaker 1: so well, right? I mean, we were well and we
Speaker 1: were in the beginning, but it didn't go in the end,
Speaker 1: it didn't go so well. So it was my own
Speaker 1: naive at the time basic approval of financial innovation. I
Speaker 1: was doing it. I thought it was cool. I thought
Speaker 1: it was making everything more efficient. It didn't occur to
Speaker 1: me at the time. The complexity was the new opacity
Speaker 1: that no matter how supposedly transparent these businesses were, and
Speaker 1: you knocked down the wood panel walls and put up
Speaker 1: glass walls and everybody could see what everybody else was doing.
Speaker 1: It was complicated enough people would be able to do
Speaker 1: all kinds of nefarious stuff because no other people wouldn't
Speaker 1: understand and I didn't completely see that, and you when
Speaker 1: I'm reading the book, I can I can tell I
Speaker 1: didn't see that. I mean I was kind of on
Speaker 1: the side of the innovator. So that's that's the most
Speaker 1: obvious thing that leaps to mind. The other thing reading
Speaker 1: the book that was just shocking to me was me,
Speaker 1: I mean, seven year old me was I mean, I
Speaker 1: guess I could have stood to have a drink with
Speaker 1: that person, but I wouldn't want to stay for dinner.
Speaker 1: My appetite for my own company of my with my
Speaker 1: own twenty seven year old me was much the more limited.
Speaker 1: And I thought it would be like, was I really
Speaker 1: this insufferable? It was? There was, There was that, But
Speaker 1: that's I think that's kind of true. And we explore
Speaker 1: this in the little podcast, like when you go back
Speaker 1: to stuff you did when you were real it's jarring, Michael.
Speaker 1: I think that's a great place to leave it. This
Speaker 1: is a real treat. Very excited about checking out the
Speaker 1: new audiobook and the new podcast series. And thank you
Speaker 1: so much for coming on od luck, thanks for having
Speaker 1: me see you guys. That was really fun, Tracy. I
Speaker 1: feel that was a real treat getting to chat with
Speaker 1: a legend in our industry totally. And I mean, like
Speaker 1: I said, I remember reading Liars Poker as one of
Speaker 1: the first things before I joined the Financial Times, or
Speaker 1: even I think before the interview something like that. So
Speaker 1: really great to actually meet Michael in person and speak
Speaker 1: to him. So first of all, he has to do
Speaker 1: a crypto book, right of course. Yeah, But secondly, I
Speaker 1: know we were talking a lot about how much has
Speaker 1: changed on Wall Street, but I kept going back to
Speaker 1: um the idea that a couple of things haven't really changed,
Speaker 1: and one is the bond market. I guess it's not
Speaker 1: quite like it was in the eighties, but we've discussed
Speaker 1: this on the podcast. It's still not standardized. There's still
Speaker 1: no price transparency and so you can still make a
Speaker 1: lot of money from from trading debt. Yeah, no, that
Speaker 1: that's true. Like that is one area that is still
Speaker 1: like on some level, pretty chaotic. I think it was
Speaker 1: like really cool, Like there aren't many people with his perspective.
Speaker 1: And I'm thinking also like obviously both Liars Poker, but
Speaker 1: also um his cover, you know, writing about Tech nine
Speaker 1: with the new new thing. Who have seen these like
Speaker 1: huge industries like can sort of look at it with
Speaker 1: both ends, like how many people do we talk to
Speaker 1: like huge arcs of history, And so I thought, and
Speaker 1: you know, hearing him that last answer, and I thought
Speaker 1: that was a great question you asked, Like the fact,
Speaker 1: you know he wrote a book is like it's cool
Speaker 1: at the mortgage bond market and like the beginning and
Speaker 1: so being able to look back and obviously have no
Speaker 1: idea that I guess essentially literally, I guess twenty years
Speaker 1: later that would be at the heart of this major
Speaker 1: international financial blow up. Yeah. But again, it's funny how
Speaker 1: you know, things kind of change, but they also stay
Speaker 1: the same. Because I mentioned that I was rereading it
Speaker 1: or trying to before this this recording. But um, there's
Speaker 1: a bit in there about Henry Kaufman talking about like
Speaker 1: the financialization of the economy and how the US is
Speaker 1: borrowing so much money and debt's going to be an issue.
Speaker 1: And this was you know, in the late nineteen eighties
Speaker 1: and fast forward thirty years and we're still kind of
Speaker 1: having the same conversation. It feels like, Yeah, and I
Speaker 1: thought that was interesting, Like your point, like Vulcar these
Speaker 1: days known for like the Vulcan rule and sort of
Speaker 1: like this, like but like he's era, like the era,
Speaker 1: and he was like, this is where it all came from,
Speaker 1: Like that was it? So that was that is interesting. Anyway,
Speaker 1: I really enjoyed that conversation totally. And uh yeah, I
Speaker 1: enjoyed getting an excuse to reread Liars Poker, especially because
Speaker 1: I'm now in New York. It's a very good, like
Speaker 1: New York book, Welcome, Welcome back to New York, Tracy.
Speaker 1: This is very exciting. It is great, great to have
Speaker 1: you here that I'm excited about all the recordings we're
Speaker 1: going to do at the same time. So yeah, I
Speaker 1: feel like this was an auspicious start to the New
Speaker 1: York era. Although I should just say for any All
Speaker 1: Loots listeners, this is not going to be our permanent
Speaker 1: audio setup. It's gonna get it's gonna get better. But yeah,
Speaker 1: talking to Michael Lewis about Wall Street in the nineteen
Speaker 1: eighties and Liars Poker is a great way to aig
Speaker 1: in the new All Thoughts era sounds good. I like it.
Speaker 1: We're back. We leave it there, Let's leave it there.
Speaker 1: All right. This has been another episode of the All
Speaker 1: Thoughts podcast. I'm Tracy Alloway. You can follow me on
Speaker 1: Twitter at Tracy Alloway and I'm Joe Why Isn't Though
Speaker 1: you can follow me on Twitter at The Stalwart. Follow
Speaker 1: our producer Laura Carlson. She's at Laura M. Carlson. Followed
Speaker 1: the Bloomberg Head of podcast Francesco Levi at Francesca Today,
Speaker 1: and check out all of our podcasts at Bloomberg under
Speaker 1: the handle at podcasts. Thanks for listening one