Flash Boys Review- From someone who has actually read the book

It’s pretty amusing, and alarming, to read the reviews of Flash Boys: A Wall Street Revolt from people who have not actually, you know, read it.  The cynicism and snobbery just oooooozes.  I’m not sure where this is coming from.  Yes, everyone knows the stock market is rigged.  Yes, we all know that the bonus class is busily finding even newer and more clever ways to rig the system.  But I think the non-reading reviewers have missed the bigger themes- because they haven’t bothered to read Lewis’s books.

Now, I’m no expert on the stock market but having been in the research industry for a couple of decades, I have come to terms with the fact that even PhDs don’t know everything.  (Particularly PhDs.)  To paraphrase Douglas Adams, science is big.  Really big. You just won’t believe how vastly hugely mindbogglingly big it is.  People have to specialize. You become an expert in one sliver of an area and some of the rest of your expertise begins to atrophy.  Not that you can’t get it back but, just like anything else, it takes practice.  So, it is possible to be a wizard with protein structure and be a complete idiot when it comes to some new reaction mechanism.  There’s only so much gray matter real estate.

So, it is with people in the financial industry.  It’s possible to be good at concocting collateralized debt obligations to screw pension funds out of billions, for example, while being a complete moron when it comes to High Frequency Trading (HFT).  As it turns out, the protagonist of Flash Boys, Brad Katsuyama, runs a trading department of the Royal Bank of Canada.  He describes the departments of his bank as highly compartmentalized.  This compartmentalization is one of the themes running through the book and we shouldn’t be surprised that it exists and serves the purposes of the predators.  The finance industry is all about competition.  Information is on a “need to know” basis. Asymmetric information can give you an edge to make you billions.

To make a long story short, Brad figures out what the HFT guys are up to and deconstructs their mechanisms of predation to ensure that the new stock exchange he creates, IEX, eliminates as many loopholes for exploitation of the investor as possible.  This theme of the book, the self correcting nature of the market, is both promising and depressing.  It’s promising because there are still people out there who realize that their own self interest is better served when trust and accountability is restored to the stock market.  It’s depressing because it demonstrates how completely compromised the major stock exchanges are and how the government regulatory agencies have adopted a laissez faire attitude towards predation and exploitation.

And let’s make it clear that we are talking about major investors who were the prey.  The people who were screwed by these middle men HFT’s were big pension funds as well as everyone else.  Everyone is in on the take from the stock markets that lease space in their data centers to HFTs to benefit from colocalization, to the big banks that kick back money to the HFTs trading in their “Dark Pools” to the fiber optic companies that supply the speed.  If big players can be brought down like slow antelope, the small day traders haven’t got a prayer.

But there’s another theme in this book that feels eerily familiar to a former Big Pharma researcher.  It turns out that the financiers see technologists as something akin to day laborers.  They’re a lower status class of employees.  Not only are they not respected, it seems like it’s perfectly Ok to ruin their lives to prevent their expertise from being used by other people.  Lewis’s account of what happened to computer science genius Sergey Alenyikov isn’t getting nearly enough attention but the result of Goldman Sachs’ relentless prosecution of Alenyikov is chilling.  It has a damping effect on innovation since the consequence of ruining Alenyikov’s reputation is that other companies may be wary to hire him to do coding of any kind.

Michael Lewis is a gifted writer.  You may have little or no expertise in the financial industry but he lays out the strategies and game in such precise detail that even the novice will “get it”.  The characters in this book are not ivy league grads with pedigrees.  They’re insiders from the gray area between technology and the front office.  And what makes them able to beat the predators is the ability to sit on their own egos and work as a team.  That might be one of the secrets to surviving predation.

One complaint I have about this book is it is almost completely devoid of women.  There is one mention of a woman on Brad’s team, his personal assistant.  She gets about a paragraph.  Brad tries to discourage her from leaving RBC to join him at IEX because he can’t afford to pay her.  What’s weird about that is he manages to recruit other people with modest salaries so why is it so hard for him to justify paying the only woman in his group a living wage until he got IEX up and running?  It’s a conspicuous little nugget to have survived the editing process.

Lewis ends the book on an ominous note.  Technology will advance and we will all need to be vigilant to keep one step ahead of it.  It’s pretty clear that the current administration is not going to stop the predators.  We need to protect ourselves from exploitation or elect people who will crack down.

They’re going to have to be a lot more clever and less self serving than the current crew in government.

Five sponges.

 

Good-Bye Ugly Kitchen

70's Glam Kitchen

70′s Glam Kitchen

I’ve lived with the kitchen for a year.  It was hideous.  The cabinets were dark brown laminate and when we took them down, we discovered that they had been installed on May 16, 1973.  The date was scrawled on the back of them in black wax crayon.  They didn’t even have Sharpies back then.  I couldn’t wait to remove those horrible traffic orange countertops.  The sink was beyond disgusting.  No, you don’t even want to know.  Initially, I was only going to do a paint job and replace the countertop and sink but the insides of the cabinets started to fall apart and it became clear that the whole kitchen had to be replaced.

I had a $5000 budget for this job and not a lot of options. So, I designed and ordered an Ikea kitchen last July but there was so much craziness going on last year (you have no idea) that I couldn’t get it installed.  I didn’t think I could do it myself and contractors take F-O-R-E-V-E-R to come to your house, assess the situation and write up a quote.  The quotes were all over the place.  One turned out to be twice as much as the cabinets and countertops (butcher block, in case you’re wondering what I went with).  I don’t know what contractors base their numbers on but they didn’t make much sense.

Then my cousin Steve moved back from Texas.  He did some contracting work down there and I hired him.  We’re learning all about installing Ikea on the job.  It’s not as hard as I thought.  The microwave cabinet has been the trickiest installation so far.  The design looks good, if I do say so myself, but we’re only half way through the process. (Have a professional measure your kitchen for the best fit.) Today, we’re doing the base cabinets and with a little luck, I’ll have a working faucet and garbage disposal on the brand new sink by the end of the day.

 

 

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Ms. Triggs, the Supervisor

Post Demo

Post Demo

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And Microwave is UP!

 

More to come…

Rupert, Guinness and the Potato Famine

Sláinte!

Happy Saint Paddy’s Day!

In honor of this day, Rupert Murdoch is promoting Guinness in a reverse psychology PSA.  I had almost completely forgotten about stocking up today so, thanks, Rupert, for reminding me that Guinness is standing up for equality.

******************************************************************************

Timothy Egan, author of The Worst Hard Time, wrote an Op/Ed in the NYTimes this past weekend on Paul Ryan’s Irish Amnesia.  Egan says that Ryan has adopted the same attitudes towards the poor as the British politicians that let the Irish starve during the 1840′s.  It’s an attitude that a lot of older white conservative voters, who don’t have a clue about what it’s like to find a job these days, are thinking and saying about the less fortunate.  It’s an attitude of harshness, lacking in compassion and kindness.  It is absent of the values they once held dear.  It’s judgmental and narcissistic.  (more on that in another post)

But Egan is wrong when he says that Irish historian John Kelly was the first to pick up on the similarities between the Famine Years and The Great Recession.  I picked up on it back in 2010.  So, here’s my reprise of that post that I wrote back then when it dawned on me that America was getting ready to go full blight:

A bit of history: The Great Famine of Ireland

Posted on July 11, 2010 by riverdaughter | Edit
Bridget O’Donnel and her children

I can’t remember what free association web surfing lead me to the history of theIrish Potato Famine of 1845-1851.  Some have referred to it as genocide.  But it is a genocide of a peculiar sort, not necessarily motivated by racism.  Maybe the resentment of the English for the Irish had its roots in the era of Reformation when the Irish stayed with the Roman Catholic church.  Maybe it had something to do with Charles I using the Irish to quash his opponents during the English Civil War.  Maybe Oliver Cromwell’s brutal revenge on the Irish had something to do with the punitive laws that lead to widespread poverty in Ireland distinct from any other country in Europe.  Half of the country was dependent on a single crop, the potato, for sustenance, while the fruits of their labor in service to their absent landlords were shipped away to England.

When the potato blight struck, the effects were devastating and the news of the horror of the famine spread far and wide.  The Choctow native Americans contributed money for the starving in Ireland.  This was not the first failure of the potato crop.  In the late 1700′s, another failure threatened widespread starvation.  But during that crisis, the government ordered the ports closed so that crops and livestock raised in Ireland would be used to ameliorate the conditions of the starving.  No such measures were taken in the 1845 famine.  During the famine years, the Irish exported more food to England than it received.  The landlords’ agents used the famine and loss of rent revenue to throw the tenant farmers off their lands.  Their houses were torn down.  A new law was passed prohibiting a farmer in possession of more than a quarter acre of land from receiving food relief, to prevent him from getting lazy and too dependent on help.  To qualify for food, the farmer had to give up his land.  This further exacerbated the problem.  Farmers couldn’t plant crops without land and that land reverted back to the landlord to be used as pasture for more lucrative livestock.

The suffering from starvation and disease was severe but human kindness was in short supply.  The absent aristocracy, some of whom rarely set foot in Ireland, were spared the gaunt visages of peasants and their dying children making their way to the coasts to board coffin ships for America and Canada.  What counted was how much rent each peasant could bring.  When they couldn’t pay, they were better off dead.  John Mitchel, the blogger of this time wrote, “The Almighty, indeed, sent the potato blight, but the English created the Famine.”


Lest we forget…

You can make a donation to Feeding America here.

Nick Kristof is shocked, SHOCKED!

Nicholas Kristof  writes in The Compassion Gap about the nasty responses he got from a lot of his readers to the plight of a woman he profiled recently.  Says Kristoff:

SOME readers collectively hissed after I wrote a week ago about the need for early-childhood interventions to broaden opportunity in America. I focused on a 3-year-old boy in West Virginia named Johnny Weethee whose hearing impairment had gone undetected, leading him to suffer speech and development problems that may dog him for the rest of his life.

A photo of Johnny and his mom, Truffles Weethee, accompanied the column and readers honed in on Truffles’ tattoos and weight.

“You show a photograph of a fat woman with tons of tattoos all over that she paid for,” one caller said. “And then we — boohoo — have to worry about the fact that her children aren’t cared for properly?”

On Twitter, Amy was more polite: “My heart breaks for Johnny. I have to wonder if the $$ mom spent on tattoos could have been put to better use.”

“This is typical of the left,” Pancho scolded on my Facebook page. “It’s not anyone’s fault. Responsibility is somebody else’s problem.”

To me, such outrage at a doting mom based on her appearance suggests the myopic tendency in our country to blame poverty on the poor, to confuse economic difficulties with moral failures, to muddle financial lapses with ethical ones.

Apparently, Nick Kristoff doesn’t read his own paper.  A few years ago, I noticed something extremely unsettling about the way the NYTimes was portraying the unemployed.  There were a number of articles for the front page that made the unemployed look like trailer trash, slovenly and asleep at their computers.  I don’t know what message that was supposed to send but it didn’t match ANY of the unemployed I knew, who consisted of R&D professionals with multiple degrees, publications and patents to their name.  There were hundreds of thousands of those people who certainly deserved compassion who didn’t get it.  And now those same hard working professionals have a very hard time finding jobs because for some reason, employers have this image in their heads that they’re obese, lazy, slovenly and depressing to be around.

Get your head out of your ass, Nick, and you will see that you are sitting in the middle of the source of the lack of compassion. The NY Times is a world leader when it comes to inducing stereotypical and harsh Pavlovian responses to people who have fallen from middle class grace.

(Un)intended Consequences?

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The last vacation I took: Bethany Beach, Delaware, July 2011

In a day or two, I will relate my own ongoing struggle with Obamacare (it’s not positive, believe it or not).  But for now, I want to talk about something I saw yesterday on Corrente regarding the Clinton papers and what Hillary Clinton had to say about the individual mandate.

But first, let me tell you about Jobs4NJ.  When I was laid off back in 2011 from the job I loved, I signed up for the NJ job matching service.  You upload your CV to their database, spend 2 hours correcting all the formatting mistakes, and wait.  By the way, we were told at the NJDOL that we could also apply for state jobs but that each job application would require a $25 fee.  That fee was non-refundable whether you got a job or not.  Imagine asking a bunch of unemployed people to cough up $25 for each job opening they saw on the state employment site.  I’m wondering if that was a Christie innovation.  The DOL employees were extremely kind, helpful and treated us with dignity and respect and even they thought the fee was outrageous.

Anyway, getting back to Jobs4NJ.  They sent me some job listings.  The good positions were gone, gone, gone from NJ.  The postings I got had descriptions that seemed a bit vague, as if the companies themselves weren’t really sure what they wanted.  Most positions in “science” were really business positions.  Apparently, R&D has an unmet demand for marketing and finance specialists.  Labrats?  Ehhhh, not so much.

I applied to some of the few low level lab positions that were available, and, as is the custom these days with companies, never heard back from any of them that they even received my CV and cover letter or what exactly the mismatch was.  This was not the example of malignant narcissism run amok that I alluded to a couple of days ago though.  I would be grossly exaggerating if I characterized this all too typical insensitivity towards jobseekers as evil.  I’m saving the story of true senseless malice for a book.

I still get email from Jobs4NJ, though you’d have to drag me kicking and screaming to go back to that state.  But I noticed something the other day about the new positions.  Quite a few of them have the word “CONTRACT” in the post.  Hmmm, that’s a new one, thought I.  And then, the more I thought about it, the more it made sense.

Over a year ago, I predicted that the ACA would lead to a greater number of contract positions.  And why is that?  There are a couple of reasons.  One, it allows many corporations to go “weightless”.  They don’t have to offer their workers benefits if they get a third party vendor to handle their human resources needs.  That third party vendor becomes a middle man, matching up contractors with the company.  The middle man becomes the tax collector who processes the paperwork and handles the  untidy business of interacting with the people who, you know, get their hands dirty in the labs.  (Sidenote: It always amused me when I compared the executive cafeteria with the R&D cafeteria.  The business workers had bespoke prepared foods, plenty of healthy and delicious options and an on-call nutritionist who would consult with you on your dietary needs.  I witnessed this personally one day.  The R&D cafeteria served the kind of high fat, high calorie limited entrees that would be perfect for coal miners, not a bunch of bespectacled, skinny geeks.  But since the executives rarely interacted with us, we may perhaps excuse them for thinking we were grimy blue collar lumberjacks who needed 5000 calories per serving of bland, greasy food.)

The other reason why the ACA is leading to a greater number of non-full time, contract positions is that because the employer mandate keeps getting put off, indefinitely, it seems, the employee is now responsible for carrying the weight of the health care premiums, which, by the way, are still astronomical when the deductibles and OOP expenses are factored in.  An increase in precariousness shouldn’t be surprising.  Why should an employer invest money in training and retaining an employee when they don’t have to?  It’s a kind of moral hazard, is it not?

So, it came as no surprise to me that Hillary Clinton saw a flaw in the individual mandate back in the 90s.  Let’s be clear, that’s not the same as a universal mandate, which seems to be a cornerstone of successful national health care systems around the world.  It’s important that all stakeholders, employees and employers, buy in to the system or it doesn’t work.  But to put all of the burden on individuals and letting employers get away with no responsibility?  According to the papers, Hillary Clinton said that was a problem:

“That is politically and substantively a much harder sell than the one we’ve got — a much harder sell,” Clinton said. “Because not only will you be saying that the individual bears the full responsibility; you will be sending shock waves through the currently insured population that if there is no requirement that employers continue to insure, then they, too, may bear the individual responsibility.”

Yes, this is exactly what is happening.  EVERYONE is potentially affected.  Even worse, there may be a two tier system of employees.  I can just imagine the better connected, legacy ivy league graduates becoming fully vested in the employee benefit system while the state school graduates scramble from job to job trying to find a foot hold.  It’s already happening in the pharmaceutical industry where what the MBAs consider the cream of the crop get the few coveted positions in Cambridge and San Francisco and the rest of us run from contract position to contract position, or stuck in an endless series of low paying post doc positions.  (Sidenote: you politicians are crazy if you think we former scientists are going to let you get away with the “there aren’t enough STEM workers” schtick.  We are already all over the comments sections and posting loud and clear that there is no shortage.  We’re not going to let our children languish in the labs for decades while they make less money than a first grade teacher for all the education they have.)

BUT WAIT! THERE’S MORE!!

What else do contract workers not have besides health care benefits?

Well, I will tell you because I have been there.  They don’t have pensions, 401K plans, sick days, holidays or vacation days. They don’t get tuition discounts or reimbursements.  They don’t get to ride the buses for free nor can they get a spot in the employee parking lots.  And if you are a temp or contract worker, you don’t really have ANY labor protections.  You may have trouble getting paid due to the way companies pay their invoices.  In some cases, you have no protection against discrimination.  Think of how gay contractors fare with even the federal government.  YOU’RE a CONTRACTOR.  Your boss could call you in at any time of the day or night and make unreasonable demands on your time.  He may decide to arbitrarily cut your hours in half one week and let YOU worry about how you’re going to pay the rent or health insurance premium while your kid is in the hospital. As a temp worker “you do not have a salary”, as I was so brusquely  and dismissively reminded one day.

See where this is going?  Sorry, people, this is where we already are.  It’s not the future of employment.  It is the now.  Check out the Freelancer’s Union to see what employment is turning into.  A rational person would become debt free as quickly as possible and build a tiny house with solar panels and no plumbing and grow their own food.  We can let Krugman wax rhapsodic about what would happen to the economy if everyone cut back and accrued as little debt as possible.  Talk about lack of demand.  But that’s where we’re headed.  Those of us who were lucky enough to have some savings when the masters of the universe decided to pull up stakes and grab the pie for themselves have decided to stop spending money.  It’s self preservation but it’s not healthy for the country.  No more Royal Caribbean cruises, no more vacation rentals at the shore.  We question whether we really need that bentwood coffee table and agonize over hair cuts.  We save up for the days we have to call in sick.  We put off replacing our broken phones.

I think it’s time we stopped making excuses for our politicians that let this happen.  In fact, I’m not blaming Republicans for the recent, drastic, horrible negative turn of events that working people are experiencing right now.  They were like snakes and we knew what they were.  Their poison was already well understood by the educated working class.  We have no one to blame but ourselves for allowing the stealthy predators into our midst in the last 6 years.  Some of us were so bedazzled by being called “creative” that we failed to look closely at who our new friends were.

But whether the war on the working class by the financiers was intentional or not, we can no longer deny, or should I say, we deny at our peril, that our nation’s top politicians have provided a moral hazard for finance and businesses both large and small, to continue to shed benefits and worker protections via the contracting route.  In the pharmaceutical area, this was accomplished easily by laying off hundred of thousands of R&D professionals in the wake of the Great Recession and now hiring us back as contractors.  Indeed, the high unemployment rate of the last several years coupled with the delay in the employer mandate for the ACA has created a perfect storm where the stripping of compensation is going to pick up even faster and reach deeper into the American workforce just as Hillary predicted decades ago.

It’s happening so fast that many of us don’t even realize the predators are on us until we’re being forced down the gullet.  Will this become a harder sell politically in November 2014?  We will see.

{{Tap, Tap}} Is this thing on?

I’ve been away so long that the WordPress interface has changed and I have to relearn it.  Damn.

Anyhoo,  a lot has happened recently, much of it I can’t really discuss just yet.  We’ve still got a lot of ups and downs but it’s OK for now.

To get the old mind-finger thing going again, I thought I’d start off with a banana bread recipe that I made yesterday with the ingredients I had hanging around the kitchen.  This turned out pretty good, considering this was my first banana bread from scratch and I was just going by some online recipe guidelines.  Slather the thing toasted with a shmear and you’re good to go.

Banana Bread

1/2 cup butter, softened
3/4 cup dark brown sugar
2 eggs
1-2 tsp pure vanilla extract
3 mashed ripe bananas
1/4 tsp cinnamon
1/8 tsp nutmeg
2 cups self rising flour 
(or 2 cups all purpose flour + 1 tsp baking soda + 1/2 tsp salt)
1/2 cup chopped walnuts

In a standing mixing bowl, cream together the butter and brown sugar.  Add eggs  and vanilla and beat until relatively smooth.  Add bananas, cinnamon and nutmeg.  Beat together.  Slowly add self-rising or flour mixture.  Beat until all ingredients are moistened but don’t over beat.  Fold in walnuts.  Pour into a well greased loaf pan.  Bake in 350° oven for about 50 minutes or until top feels firm and butter knife inserted in top comes out clean.

Ok, that felt good.  I’ll be back tonight, after my guitar lesson.  Be good, no wild parties.

One more thing: this winter is exhausting.  We’ve had so much snow and frigid temps that it’s enough to make even Pittsburghers question the global warming thing.  It’s like a mini-ice age.  This is what I saw when I opened my door yesterday morning:

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The snow melted last weekend but it was back again in no time.  Yesterday, the temps didn’t get out of the teens.  It was single digits last night. And it has been like this for months.  When I moved here last May, we had already experienced a pretty cold spring. There was a brief heat wave in July but the rest of the summer was cool and rainy.  Sweater weather in August.  My vegetables never really took off and the tomato plants never set fruit.  The rain and cold continued into the fall and we got snow early so I wasn’t able to rake the leaves out of my back yard.  Winter came on Halloween and hasn’t let up yet.  Pittsburgh must be in the center of the polar vortex corridor.  Enough already.  Unfortunately, the forecast says that after a brief and insufficient respite this weekend, we’re going straight back to subfreezing temps next week.  It has been so bad here that the township ran out of salt and 3000 additional tons they need are on backorder.  They only salt the top of the hills so your car doesn’t go flying like it’s on the Thunderbolt at Kennywood Park.  The road crew is so behind on repairs that they were jackhammering and filling a pot hole on my street at 11 pm last Monday night.  On top of it all, the rivers are going through several freeze thaw cycles.  Last weekend, it warmed up enough that we had rain instead of snow.  The Allegheny was high and had white caps on it.  I can’t wait until spring but won’t be surprised if the Point is under water.

I’m going to deck the next person who says they prefer cold weather.

I’ve been listening to a lot of Of Monsters and Men recently.  This one’s pretty good:

There are real jotuns out there.  More on that later…

In addition (but related to Jotuns mentioned above):  I saw this post at Digby this morning about the Ohio job listserv tyrant and just want to relate that this kind of reaction to job seekers seems to be quite common.  I have a story that  will curl your hair.  Someday, I will write it all down in a book and the characters I write about will become notorious and iconic of the malicious narcissists our society has given an inordinate amount of power to lately.  Petty, selfish and vain people have got nothing on them.  We’re talking about a lack of compassion, unethical behavior and gratuitous meanness that makes the Ohio list server lady look like an amateur.  Unfortunately, the heartless, manipulative, sabotaging behavior is so harsh and nasty that it might not be as funny as the rest of the book.  I might have to lighten these people up to make them believable and not Dickensian.

2013: Rebuilding Year

I’m back. I had to step out for awhile to take care of some stuff.

So, this has been quite an eventful year with a lot of ups and downs. We are still not having a winning season but are holding our own.

First, the good things: I found a beautiful house at a rock bottom price in a very nice neighborhood. I live about a mile from where my grandparents lived. Pittsburgh is soooo much better than New Jersey in so many ways. People are just nicer here. Well, most people are. More about that later.

On the not so good front:

This year we faced a serious health crisis in the family. It’s still two steps forward and one step back. We are making progress, slowly. It has been very expensive and relapses are still possible. But the worst of it seems to be behind us.

Irrational people. This fall, I found myself dealing with four of them, only one of whom had a legitimate excuse for her behavior. The others seemed to be indulging themselves. Unfortunately, that’s when my cardiovascular system started to signal that it only had input jacks for three irrational people. The fourth was threatening to overload the system so it had to go. I’m pleased to report that as of this morning, my blood pressure has returned to it’s normal 117/76 after two alarming spiky readings. No blood pressure medication was necessary. I just had to eliminate the source of the stress.

And the power steering on my car is malfunctioning. Added to the oil pressure problem and the electrical issues, it may not make sense to continue to repair it. I’m running the numbers now but it looks like I need a new car.

Sigh.

It could be worse but there are still some significant obstacles for my family to overcome. Thanks to all of you who have stuck with this blog for the past 6 years. I couldn’t have gotten this far without all of you and especially, Katiebird.

Happy New Year!

Don’t drink and drive.

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