Author Michael Lewis — Serious Jibber-Jabber with Conan O'Brien | CONAN on TBS

hey Conan O'Brien here welcome to serious jibber-jabber I'm sitting here with the author of 11 New York Times bestsellers most notable among them are liars poker Moneyball and The Blind Side his latest flash boys uncovers some of the unsightly ways that the stock market actually works very happy to be joined by Michael Lewis Michael thanks for doing this thanks for having me read the book and I'm gonna be completely honest as you love the book sections and I mentioned this to you before there are sections that I didn't understand what I was reading I am worried I'm terribly wired I'm terribly wired for for Finance the world of financial transactions especially when we're parsing it down to milliseconds on computers sometimes escapes me but it was still a fascinating ride so parts of it where I think the most complicated things I had to ever write and the the reason I had to explain them is that Wall Street has made itself so complicated intentionally so you do not understand it because your understanding is something that can be your misunderstanding is something that can be exploited to me there was like this technical detail I had to bring across to the reader just to satisfy people who had that degree of curiosity yeah but there was really a pretty simple story and the simple story was guy who works on Wall Street it was a trainer runs the trading desk at the Royal Bank of Canada discovers around 2008 that he's a he's someone there's some predator out there who he was and who knows what he wants to do in the market before he doesn't and is exhorting exploiting him and he discovers that it isn't just him and this sort of anybody who's an investor is on the receiving end of this predatory activity he figures out what they're doing explains it goes and explains it to other people who were prey and then he goes out to try to destroy the predator so it's a it's one part like detective story figuring out what happened in one part kind of revenge story let's let's get the bad guys it's got a slight elements of like The Untouchables let's get a ragtag group of people together to fight the bad guys yeah I was thinking of the Dirty Dozen right yeah or actually what I thought what I was thinking I think everyone gets killed in the dirty desk this one isn't over yet yeah everyone may get killed in this yeah you're gonna be careful yeah you know so it was interesting so this guy name's Brad Katsuyama he's Canadian one of the things that is curious about this ragtag group people is almost none of them American they're all mostly immigrants yeah and most Ament some idea about how this society was supposed to work and it was supposed to be fair in certain ways and they they were whatever reason slower to buy into the idea that just because you work in the financial sector you have to sort of behave the way a lot of people work in the financial sector behave they they they they saw this thing that was clearly not good they and they said about trying to fix it rather than exploit it I mean and and to me what interested to me and telling the story he was almost just that it was like why do some people if you see a like like you see a big oil pipe carrying oil from one side of the country to the other and someone comes and whacks a hole in it and it makes a fortune out of the oil coming out of the hole and a whole like ecosystem grows up around this pilfered oil why does somebody walk into that situation say let's fix the hole in the pipe to get out there I'm gonna take a boil and then so that's what happened effectively a pie a pipe got busted in the financials in the stock market an echo system grew up around it to exploit the busted pipe it wasn't without anybody making the slightest effort to fix the pipe in fact they all the effort in the financial system was to preserve the size of the hole maybe increase the size of the hole and I just want to be to clarify what's fascinating in this book is wood for which I did not know is that people were exploiting the speed at which trades were made electronically right so should I say it because you might confuse people yes the nicest thing anyone's ever said to me Oh suddenly I became a grandfather who's not allowed to drive the car and you take it Michael I can't anymore I'll probably confuse cattle too because it is a little confusing the the there are 13 stock exchanges now in this country not just one not just in New York Stock Exchange so you might buy or sell like AT&T on 13 different places and these Exchange's now sell to insiders to high-frequency traders the right to put their computer right next to the exchange and get information about what's happening on this change before everybody else so they know when prices move before everybody else so so like some people have a few millisecond advantage in finding out what prices are right those same people go to the brokers that you give your stock market order to whether it's etrade or merit trade one of the online people are whether it's JP Morgan or Merrill Lynch or whoever and they buy the right to trade against your trade your slow-moving trade yep so they may know the stocks gone down or up if it's good they will know if it's moved at all and you don't and they have the right to trade against you so it's a constant opportunity to exploit the slowness with which you're you're getting information or another way of looking at it is it's a constant opportunity to exploit the informational value of what you're trying to do and this would happen this guy the main guy the hero the book he was a Wall Street guy I mean he was trading hundreds of millions of dollars of stock but he would go to the his trading screens would say they're 20,000 shares of Microsoft available at $20 a share and he'd say okay I want to buy him he hit his button and one day he hits his button and all of a sudden and then he tries to buy and they go away and the stock goes up and it's like it's because the traders could see what he wanted to do and they did in front of him so it's it's like this built in and what's up with so I don't know it's not sinister it's more it sort of like persistent about the problem is that it's this built-in skim of pennies on every transaction so you don't really feel it I mean you lost a penny who cares you lost a penny but when you add it up over the whole market its billions and billions of year of basically grift and nobody says anything I mean it's just obviously wrong it's obviously the only point of this grid this skim is to benefit well the guys who are having to be inside the exchanges and the financial sector as a whole at the expense of the broader economy and you would think that someone would say really this shouldn't be going on I mean you would think that and it took they took these guys I thought so what interested me what's interesting is they're they're not there's an Irish immigrant there's a there's a Canadian did take people from outside outside which makes you when you read the book question do we are we not teaching ethics in this country anymore are other countries or are there other systems where people might be more inclined to feel ethically than they would if he was a really great question I think you I think it's a really good question cuz you go I think what has happened is the people who are sitting in the middle of this system and making money from it they're the brightest graduates of the best schools in the country who've basically taken in the idea that it if you make a lot of money you're a success and it's tough that what they're doing is they illegal I don't think anybody actually broke any laws they took advantage of a mistake in the system a glitch in the system rather than fix the system that the the the success that the feelings of success that came with the making of the money completely overwhelmed the sense that wow this is this is actually not good what's going on and that basically a basic moral sense is numbed in a lot of people and I think that this is true when you become part of systems I mean you it's just it's the culture of the of Wall Street and this guy brad katsuyama who sort of leads this charge I mean he gets moved from Canada to the United States and as the more he's exposed to the American Way of finance the more insane he becomes I mean the more upset he becomes he just is he has almost a physiological reaction to his blood pressure starts going up he can't sleep at night and so and so forth he actually it violated his moral sense what was going right and it's odd you know if that makes it all sound very pious and humorless and all the rest it's it's not that he is a pious person not at all it's like a regular guy kind of a good guy he just he didn't care enough about the money to violate his own moral sense to get it and so I do think it's a question worth asking like why aren't more people who were big successes on Wall Street more concerned with like just making it work well for everybody as opposed to just get dollars and this goes to a bigger theme that you write about which is access to information that that in we think of ourselves in America's having this democratic system or trying to be fair as fair as possible we like to think that our markets are fair we like to think that it's the land of opportunity that if you have a talent you can rise the top and what's becoming increasingly clear and what you've written about in your books is that people with access to some information have an advantage and the technology now exists where certain people can have access to certain information and it gives them a big advantage over other people it's not a fair market that's exactly right it's a it is I think if you read the story it's hard to conclude anything but the market is rigged it's rigged in a way that you know you can investors can still make money in the market and so on and so forth but they're their players in the marketplace who have such a systemic advantage that they'll go a thousand days of trading stocks without ever losing money because it's just they have right it's it's a totally unfit the and the advantage comes from basically where you sit in the world and if you happen to sit on the inside of the financial system you have this advantage and it is that's probably always been true I'm sure it's always been true that the people who were inside the financial system have an advantage over everybody else and the the game is to get there but it is it is a little I think it is a little metaphor for the culture that is sort of like all dollars in the marketplace don't stand the same chance that some doubt some people's dollars have have advantages unfair advantages over other people's dollars well probably the biggest issue in the country right now that's a that's a pretty heavy statement but yeah I will say that one of the biggest issues is is income inequality disappearing middle class we have this layer of incredibly wealthy people a smaller middle class that shrinking and then we have a lot of people that have inadequate incomes and then the question is why is this broadening why is this getting bigger why is this income inequality seem to be growing and growing and growing it's obviously a complicated question yes yeah so let's just accept it's a complicated question yes do with globalization rights probably but given that given that these trends that and you could feel it right you can feel like the gaps between rich everybody else just feel very they feel like they're growing and you don't need you don't even need the statistics to see you see it on the leaf see iLife some people fly on jets and some people flying don't fly right and and the but given that given this is happening it seems insane to me that we allow the financial sector which is what you're supposed to be pure at least there's it's supposed to you would think in theory it's supposed to the stock market it's like it mo supposed to be a regulated you Mach retires Markham financial organ in the world supposed to be a level level playing field it seems crazy that you structure these markets to make the rich richer and everybody else's expense well that's explaining like my kids asked me what they're vaguely interested in whatever book I'm writing not terribly but sometimes I'll say like what's the book about and I said well this is that it's actually a very weird story I say these guys on Wall Street who are really rich have figured out how to take pennies away from everybody else you don't isn't very rich our rich and it adds up to billions of dollars and say rich people steal money from other people I said well it's stealing is not exactly what's going on but it's pretty closely that's awful the it is awful and some guy saw it was awful and he came and he decided to take it back it's right and they said it's Robin Hood and that is basically the story it's the story of Robin Hood but it does seem crazy that as a matter of public policy we do not try to cut off these gambits by the well-to-do insiders to to take advantage of people who are not right because there are all these other forces at work there are already widening gaps I mean why while I have a market that's in contributing to this you know it's you can't talk about this and nothing about the mortgage-backed securities fiasco we had a couple of years ago which is we're still feeling the effects of that right and how it's clear to me that many people in this country knew that this wasn't sustainable knew that this was toxic but just kept the ball rolling going back to the question of ethics that there were a lot of people working in the system who understood this is going to blow at some point we keep that's true and and then there was a national cry afterwards there's been a crime obviously committed terrible errors have been made people have to pay for it and there's a sense that nothing happened there was no you know there was no trial there was no no-one it felt like no one paid the price no one went to jail nobody I think the political I think I think what basically what happened was all right so we have this I mean basically maybe the worst the most spectacular financial crisis in in our history generated really by by machination on Wall Street to disguise the risk of lending money to people who never pay it back yeah and that happens and what naturally usually follows a financial crisis is a depression right and the Federal Reserve has been really good at numbing the pain and in numbing the economic pain they sort of reduced the political will to make changes I think that's what happened so that the anger went out of it as it became clear that this was going to be a protracted recession as opposed to depression whatever but and the strategy of the government was and it may not have been a bad strategy it was sort of like well in order to like make sure we don't have a depression we've got to prop up these existing banks that all would fail if we didn't prop them up and resuscitate them but in resuscitating them they also resuscitated their political power so they had their money had a lot of has a lot of influence on what how they're regulated and it's all outrageous and it's all unfair and you have this this giants like sector in the economy the financial sector or at least the big banks the big banks that are essentially kind of like removed from the rest of the society and most people are exposed to market forces like if you fail you fail if you are a trader on Wall Street it's not quite as simple as that that you get to keep your winnings someone else gets stuck with your losses kind of thing it's a bit of that going on and it is I mean it I think that to some extent the response to this book has been like unslaked anger about about the outcomes of the after the financial crisis it just like violated the basic rules of the system like you can't have the richest people in the society living by one set of rules where they don't have to fit they never fail no matter how badly they do their job they don't fail and then everybody else living by like red and to think law capitalism so I think that that it there is an unsettled quality to the relationship between Wall Street the financial sector and everybody else and what's interesting to me about this particular episode this story that I've written one of the things is that these guys who raise their hand and say there's a broken pipe we need to fix this system they're like trying to repair the relationship they're they trying to do is introduce trust back on Wall Street well they build they they come up with a software program they come up with a exchange - they build their own Stock Exchange right on which the predator can't function and the way they do it is they pick essentially coil like 60 kilometers or 630 miles or whatever is 38 miles of fiber between themselves and the Predators machines so the Predators they're essentially ban it effectively put far far away from the activity so they can they may know things that everybody else doesn't know in the marketplace but they can't react to it on the exchange so they level that they real 'evil the playing field the poi of reliving the play for it's not just like to make the stock market fair that's I you know that's the that's the narrow goal but the broader goal is like to create an environment where people actually deserve to be trusted like the people who were sitting in the middle of the system are actually trustworthy and when you do that it's really seditious I mean investors the way I got onto this story is big investors told me this guy from Wall Street Brad katsuyama just walked into my office and told me the truth about how the stock market work and my jaws on the floor but more the point this the my Johnson before partly because I can't believe how it works but my jaws on the floor guys I can't believe some guy from Wall Street actually told me the truth you know and there is no trust in the system it's a it's like it's bankrupt that way so someone has to come along and restore the trust because you can't just really function very well without the trust and that's his I think that's his role in the world and it's been a success that is exchanges exchange they're making their already profitable but it's hard to know how they could be there's still a bug they could be squashed they they're less than 1% of the stock market right now you can imagine lots of different outcomes it's not clear they they you know and clearly there's a lot of people that aren't rooting for Brad and his exchange all the entire existing financial system is root is not rooting for Brad in his exchange just about there are a few exceptions it's a little more complicated than that but basically all the obviously the existing exchanges and most of the brokers don't want him to succeed because he sucks money out of this yeah right so I mean that effect of him if he were if they end up over running the stock market and they become the stock market basically like people on Wall Street make 10 billion dollars less a year or something like that right so that's not that doesn't you know it's that's not that's set up for he's set up for lots of conflict with with people on Wall Street he said people tell him they're gonna come beat him up and you know kneecap him and watch out they're friends with the Mafia and he's never getting there many they've been threatened really oh yeah yeah they were still kneecapping people that actually don't meet everything let me no one's done it you know actually on Wall Street's funny there are a lot of almost fights right everybody's there's a lot of like I almost hit him if he said one more thing out of hit him right there's a lot of almost well there's a tamato it's a very macho culture but there's a very just thumping culture but then no one actually that everyone has a lawyer let's see that's exactly it was afraid of getting sued so they think yeah I'd have thrown that punch except that it would have cost me a million bucks but there's only so he's in a lot of almost fights people almost would have hit him nothing's actually happened so looking at this the broader issue here if you look at historically just at the United States you see that we've been through this many times we'd actually been through periods there's the you know is the Gilded Age where and then there's reform and then there's a depression and then there's reform you know in the 20s we've been through these periods there was economic you know turmoil in the late 80s and then there was a sense that there's reform and it seems like we never really learned because my theory is that human beings we are always we are evolved to try and game the system true we it's what we're meant to do we do it the way we breathe we will game the system and it's like rain on the roof will eventually get in right and people will game the system especially Russians yeah exactly it's amazing the role of Russians and all this like the right now why specifically Russians the Russians have some Russian immigrants explained it to me they say that we grew up in a system where you can only survive if you gain the system it was not enough bread you had to figure out how to get the bread was available but you had to gain the system to get the bread so when they get to America it seems like the land of unlimited gaming opportunities Costco this I didn't know this but Costco they apparently Russians discovered that Costco has an incredibly generous returns policy you can buy something use it for a year and 364th they bring it back and so there's this like it's just like accepted behavior in the New Jersey Russian community that you go and do this you game the Costco returns policy that's a say but they have if you talk to a Russian about what you can you can get away with in America it's breathtaking and the Russian the other side of is that Russian has generated a lot of very gifted computer programmers and that's who is gaming the stock market so the combination of the predisposition to gaming systems and the experience with it and the coding ability has led them to be very prominent in high-frequency trading business it's almost like yeah they're there again if you're looking at evolution they lived in a system where they had to evolve this way and now they've come to a fresh environment right where there's just a lot of fat veal walking over that's right yes we have bad eyesight and they have you know they're quick and they have machetes and night-vision goggles night-vision goggles yeah there's and so so at the end of the day isn't it you know it's in our DNA to try and gain the systems so what we need is feels to me like we need a strong ethical counterbalance it almost has to be I don't even know if they teach ethics in schools anymore but that's the thing I keep coming back to is there needs to be a counterbalance there needs to be something that Institute's reform more often do you know what I mean that that's what needs to be part of the system if anything is that we're always going to be gaming it there's always going to be some scam going on in Wall Street so we need to encourage people to do what Brad is doing so I think my own viewing this it without any like evidence but it's just it just like might meet when I spout on this subject I think that we're in a particularly toxic climate in the relationship between our elites and everybody else because in the past when when it appeared that so much of one's position in the society was inherited and when it was less of a meritocratic scramble when you went to Harvard because your dad went to Harvard as opposed you went to Harvard because you got an 800 on your SATs there was the idea of noblesse oblige you know there's a sense that there was a niggling sense that you you were basically handed some of this you didn't actually earn it so you owe something back right and the vice of the meritocracy is that you think I do this myself you know I don't know anybody anything I'm on top because I got I belong on top I'm the winner and so I think that to the extent there might be ethical evolution in our culture is getting back it's finding a way to reintroduce the idea of noblesse oblige to people who don't understand why they should feel it and because what we I mean the problems the problem that Brad costume is addressing is that is that promise like people on top seeing an opportunity to exploit and make lots and lots of money for themselves and it doesn't occur to them that that might be a bad thing to do it just this think oh that's how I you know that I got here by by gaming the system I got here by being smarter than everybody else I'm just this is just more just rewards for me and a kind of not a terribly organic connection to the rest of the society so how do you teach I mean you say teach ethics in school and it may be I mean business schools all pretend to teach it that nobody wants to say we're not ethical they're always embarrassed when some of their graduates go to jail for various financial manipulation right but the real problem is that when guy when people get rich doing stuff that's socially destructive like the subprime mortgage thing right a lot of people I mean a lot of people Wall Street got really rich doing really bad things with money that really stupid things that contributed the financial crisis and nobody asked them for their money back and nobody actually thinks that ill of them they think oh this is a rich successful person they never actually they did they were never on the receiving end in a serious way of any kind of disapproval that the there the mere fact they had lots of money overwhelmed whatever it was they did to get the money so I don't know exactly how you change those attitudes I think I mean you preach basically I know that once I mean I tried to sneak I did commencement speech at Princeton two years ago and I tried to sneak an idea and do and the idea is it's sort of like updating noblesse oblige the idea is all right there's a huge amount you're a smart person you understand probabilities and statistics and there's a huge amount of chance in life chances who your parents are you know luck so accept the idea that if you're lucky you owe a debt to the unlucky and that that maybe that's the way to get there but I don't I completely agree and it is journalistic heresy to say this because you're not supposed to think that they're good people and bad people you think everybody's just kind of the same and your objective about them but I completely agree that the Wall Street problem now is partly a moral problem it's partly that the people on top of the place do not feel a responsibility and they feel more of a responsibility to making the money and there's certain legitimate pressures they run a company and they're responding the shareholders and so on but they won't make the up moral argument and it I think it's a it's a big issue yeah you could argue that if you know if you get the time machine and send people back to a year before the subprime mortgage implosion and told people on Wall Street and they preached this is a problem I'm not going to sell these they would have been fired because they would have been yeah it would've been very hard to do the right thing yeah because they wouldn't be around to stop the problem they'd just be fired you know if you don't sell the heroin we'll get someone else right there oh the company and you say we're not gonna do this business because they're responsible and your company's making all this less money than everybody ever the company you've no longer the CEO so the pressures it's it isn't just it is the people are bad so the system encourages them to behave not so well yeah I think the big problem is like I mean there's an old question about whether a company should be a public company they're worse pressures on these companies these banks the betting side of the wall street used to not be public corporations it with private partnerships it was a bunch of guys who owned if they lost the money it was their money it wasn't some shareholders money if they didn't want to make that much if they won't didn't want to take risk they're willing to kind of coast for a while they did it for a while I mean they didn't they didn't they weren't forced always to grope for ever greater returns and that's a that pressure is pernicious especially in the financial sector yeah it there's almost an unwillingness to accept that their cycles there's there's certain there's growth then there's a fallow period then there's growth again that every system has a cycle and I think we talked ourselves especially late twentieth century America into this idea that no cycles can exist there must be you know the success and 15 percent growth every year or you or you're out and the problem is that when that pressure becomes so great you have to guarantee it and if you have to guarantee it it means you probably have to start fudging the numbers you have to start gaming the system you have to do whatever you can to do to show that we have the same growth this year that we had last year if not a little more because if you have a little less you might lose your job ya know this pressure this is true this is and these are this is I didn't you trace the problems in modern Wall Street back to the moment when all these investment banks became corporations and subjected themselves to that pressure but yeah anyway well what you don't think we're gonna say here to be talking about this for this long I did actually this that's the best that's the point you know one of the themes in your work too is valuing and Mis valuing if that's even a word people you know people who other people don't see the value and it's obviously a big theme in Moneyball but blind side to these exactly like this where does the this poor black kid on the streets of Memphis who's illiterate homeless eating out of garbage cans you know kind of the least valued member of our society or among them is transformed into the most highly valued seventeen-year-old and the country kind of thing what are the forces that change that what would actually change - cause - cause that change in him or my money ball is exactly about baseball players being so Miss value that you could build this juggernaut of a baseball team out of discarded parts from other people's teams and it does this subject is interested in me since I was missed hi you I mean and I felt like when I went to work on Wall Street for a couple years right after I got out of graduate school and I was being paid all this money to do stuff that I knew was there was no way it was good for the world it might have been bad it was like at best this is neutral and I just felt I just felt totally bogus it felt bizarre and I I saw how absurd the market was and just educated felt how observe the marketplace was I looked all around you people pay and I paid money not to do nothing of particular value yeah so it has interested me as a writer like how how people get valued because I think the market does a pretty poor job of it and the Wall Street doesn't even grapple with us it's like well it's just sort of assumed that the market outcomes on Wall Street makes sense that like it makes sense you have to pay a Goldman Sachs trader ten million dollars a year or else he'll leave and god forbid that happens right nobody's tested the proposition of the star systems like what if we just said we're gonna create a bank where nobody gets paid very much maybe it'd be a good bank no maybe it will actually be a really well performing bank do we actually need these highly paid people are they actually worth what they're paid I mean there are obviously absurd outcomes in our economy it is absurd that people got rich creating financial disaster in run-up to the subprime mortgage crisis and at the same time you know teachers don't get paid anything are very little I mean it's it's obviously there are obvious absurdities and yes this stories I've told often come back to that the money ball in the blindside in particular yeah any in Moneyball it was it's it really does seem to come down to it's always one person who comes along it's the same thing in flash boys one person comes along and sees things slightly differently they see something that nobody else sees or they see it in a different way right and then because they see in a different way and they and they start acting on it at first they meet incredible resistance agility hostility yeah because basically a threatening the livelihoods of everybody in the industry yeah yeah and the the curious thing is how slow seemingly really competitive environments are to react to someone who got who has a good new idea you think kind of like in theory if someone coming along and builds a better widget then the whole world goes and uses the better widget and you and everybody all the other widgets put out a business but take money ball I mean when I rolled into Billy Beane's office and it was 2002 he'd been doing this he'd been winning all sorts of baseball games with no money for five or six years and nobody in baseball cared to know what he was doing I mean nobody they just there was no curiosity about it at all like how could how can he pay no but these people nothing and have all these players that we don't think are very good how can they be winning baseball games even the players like the players were they would use them in all kinds of peculiar ways the first baseman who never played first base before you say even he didn't like want to know why he was playing at first base or is that what is that is that it just a fear are people threatened by it what is it that make someone actively not want to know what did it mean you'd think it would be the most important thing if you're a baseball player you would think you would think yeah you would think so I think with guys especially there's a there's a crazy fear of seeming ignorant of seeming not to know something that everybody knows in flash boys you see this rodent run and Ryan the Irishman who great character why he's like he spends 15 years trying to get a job on Wall Street because he thinks these guys must know something he gets a job on Wall Street after six months he says this whole world floats on nobody knows anything and he says he says when he goes around he's explaining to people you know how the stock market works and they clearly don't understand how the stock market works but they pretend he says you know that none of the he was shocked that very very important money managers wanted to seem like they knew something they didn't know because they were afraid to seem not to not know it to admit ignorance so I think this fear of admission of ignorance is it's it's widespread and I think that's part of the problem parla problem is I mean people who were successful and ensconced in careers and in industries they don't want the industry to change its pain when it changes them you've experienced this right yeah I mean your industry I mean you see this disruption after about the age of 24 is not welcome it's funny there's a time it's some of its biological I had a friend once that worked at he worked in Russia and he worked in Russia just after for the few years after the the Berlin Wall came down and I said how's it going and he said everyone cuz he and he part of his job is to work with businesses to help train them in you know capitalist techniques and business techniques and I said how's it going and he said everybody under 33 is doing great right and he said everyone from like 33 to 40 it's tough right and he said everyone over 40 we just have to wait for them to die right like they grew up in the system where the Soviet Party gave you your cardboard belt rush shoes and you you've got your check no matter what happened and they we just the system has to and of course obviously there are exceptions to that but there's something about us that really doesn't want any trouble after the age so this is 40 and this is true in the most fiercely intellectual disciplines so there's a great book called the structure of scientific revolutions that talks about how how physics of all has evolved and that a new idea will come into physics and all the old physicists will bat it down even though if some young guy has an idea and and there's a lot in that book that it's science proceeds a funeral at a time yeah yeah I mean I think and I think baseball proceeds a funeral at a time and Wall Street does too I think that's absolutely true that there's a fierce resistance to people who were established I mean they're there if someone comes along into baseball and says all these all these players are valuable and you don't know it everybody who's in baseball and may and been making baseball decisions is by implication as by implication made a lot of bad decisions that they have they're put in a position of having to defend all these things they did that made no sense and that's what they do I mean that brought it's hard to admit that you didn't know what you were doing when you put together your baseball team this way even for the New York Mets you know that it was it was so I think it's just when some disruptive entrepreneurs like inherently insulting he's inherently saying that there's something here that's that's wrong and I can fix it this way and Brad Kelsey almost done it here and Billy Beane did it Moneyball I think in my business what's happening is it's it's the internet the internet is you know this show was something I couldn't have done five ten years ago but the bigger implication is we used to think that and I benefited from the system a bunch of years ago when the idea was there a couple of people that know how to be funny on television at night right and you know for a long time there was one guy we got Johnny Carson and ever occasionally would allow another one to be around for a bit but the idea was that he's the only person well now I'm not competing against other people the other there's 15 now talk-show host right I'm not competing against them I'm competing against anyone who's got a funny idea in the world right and can get it posted right which means that's that's a revolution that's a huge revolution you feel you're doing I think it's a step it's a struggle right you know it's a daily it's a struggle I will come up with something that I'm really proud of and then the next day I'll see that a 13 year old girl you know in Groveland right made something that made me laugh harder right and if you're honest with yourself you you know I want I don't want to say you welcome it because there's always a part of you that's nostalgic for I made it in how that slows the door let's shut the door right I mean that be I think it's a very basic human idea but but but then I think you're you have to grow up you have to realize that things are changing and a lot of staying young is accepting that you got to accept that it's changing you have to accept that it's that it's changing rapidly and you have to try and figure out what's going on you know it's happening but it doesn't anyone who tells you what feels good is probably lying or insane you know there it doesn't it's an uncomfortable process you know it's funny I once talked to a sociologist who said that this is back when I was working on the new thing who was saying explaining me that she thought the pace of technical change in America had been accelerating she felt and that the internet was an example of this and that the effect on family relations of a big technology shock like the internet was similar to the effect of immigration that that a middle-aged parent dealing with a child with technology doing with his doing in America is a lot like a parent who moves with his you're their children parents move their children from Mexico to the United States and don't speak the language and the kid quickly picks up everything yeah I was running circles around the parents right within about six months all right that they so it's like the language the language changes the kid figures it out first and the parents are stuck and that's that so the what happens the parents try to shut down the technology yeah that's then they are keep it out or keep it out of the house keeping all the kids hands there it's not just the language and the technology the values are different too so you know their values from their old country and versus the new country so there's a lot of I think that is true I mean I've you know the the generation gap between me and the interns that work on the show is incredible it's been widened so much by technology but what's how they experience TV and how they experienced entertainment it has nothing to do with the way that is it's peculiar - it's funny because you had your own generation gap and it was you listened to entirely different music than your parents would have listened to right this sexual at least overt sexual mores would have been completely different but added towards did - towards different races completely I mean in some ways on the surface anyway you look a lot more similar to your children then your then your your parents did to you yes yeah but in fact it's a little it's it's it's very unsettling because it's the surface appearance that beneath it there's this shift going on I agree that is I look at my kids and I do not understand their minds that I do not understand because of technology like you know what my daughters are doing on Instagram I just I can it's don't go look but it's it's it's just weird yeah I have I have an eight-year-old who understands the whole language that I understand we don't let him he's not allowed to go on the internet but he's allowed to play the game minecraft because it's creative and it's but he wants to write code he he he helps me with the computer he's eight right and he'll be like no no no no no and he'll know and he'll just he'll take over right so there's that and we're in a society that increasingly values what he knows much more than they value what I know so you see the power shift already happening you know it's this you know one of my biggest questions and fears after reading not just flash boys but a lot of your books but let's just stick with flash boys is does anybody understand the whole system I get scared sometimes and especially after the subprime mortgage it felt like no one could explain it it took such a long time the Treasury didn't understand that the Fed didn't understand nobody understood what had happened nobody knew where the debt was nobody knew how to clean this mess up it felt very much to me I got that we all want to feel that the grown-ups are in charge and what's happening in flash boys and what's happening you know throughout the system is this scary feeling that there are these giant servers all throughout the country that are processing all this information in fractions of a millisecond and that nobody really understands how it all works it's true yeah I think it's completely true Brad Cascione understands a lot of it that's what's so one of the things is seditious about him is he's trying to piece together a picture of it he's presented a picture is comprehensible to ordinary people about how the market works and it's not a very pleasant picture but I've seen in the reaction to the book the scrambling of the head of the SEC to pretend like she knows what's going on I mean maybe she's learned what's going on but she didn't know what was going on the Justice Department and the FBI and the New York Attorney General all announcing investigations and you get the feeling that essentially there were no grownups right basically it's not it's not that the grown-ups didn't know so that no one is actually nobody's actually accepted the responsibility of understanding the system that's the most unsettling thing and that's a theme that runs through your books I found that unsettling about Moneyball the people that had devoted their lives to baseball didn't fundamentally understand some of the most basic tenants of what made of baseball team win well that they weren't and they weren't willing to obsess they weren't willing to accept new knowledge and new information after a certain point yeah that what had happened was people knew what they knew about baseball in 1975 and all of a sudden got a good-looking swing yeah awaken face he's got a billion face I like the way he carries himself there was a lot of that or his batting average is high but when that's actually a secondary kind of trait in a good baseball player right and all of a sudden people start beavering away outside of baseball and creating new baseball knowledge about what actually makes a good baseball player and they don't want to hear it all of a sudden the stock market goes from being a place where they're a bunch of guys on a trading floor shouting each other to nothing but computer servers and the code is written by people by people who understand how to write code but the people who are tasked with like being the grown-ups in the market they don't understand what that it didn't understand what's inside the black boxes or how they work her or or whether someone's being disadvantaged in relation to someone else that they are it's very complicated I mean you read it you see I read it so you can understand why people have been slow to kind of catch up the understanding has been slow of the grown ups has been slow to catch up with a reality but that's what's happened this reality has shifted very fast and the grown-ups are only kind of just starting to figure out what's going on and you do I have a fear the paranoid fear after reading this book that something could go wrong there was that glitch in the market I camera flash crash a flash crash in 2010 where I can remember how long was it a few seconds like 24 minutes there 24 minutes the the system didn't work and it scared the out of everybody but everyone just pretended everyone held their breath and then it went back to working and no one wanted to know no it's great great about that episode is that you're right no one wanted no one everyone when I wanted to just be normal go back to normal and it went back to normal to normal and the SEC like a year later produced a report explaining it it does not explain it right it's really it's not true it's not true it's really obviously not true so but nobody cares right it's so whoo so there's some right look the financial system is a particular problem but in this case I think the problem is that anybody who might get themselves in a position to be a regulator a grown-up who understands the system who can prevent it from doing bad things is paid so much more money to occupy some narrow role inside the system that there's no way they're ever going to actually execute they're not going to they're not going to police or regulate or explain or moderate the system the the the SEC for example is just a revolving door you don't want to be rude about the people go there because there are a lot of well-meaning people who go to work for the SEC who really think they're going to do God's work and but the pressures on those people are to basically turn a blind eye to anything really bad that's going on if it's going on in like big prestigious institutions because they may they will work they may go to work not just may I mean when brad katsuyama goes to explain that there's basically a predator sitting there monitoring or ready to exploit every stock market order in the United States to the SEC he gets a lot of gobbledygook in response there is no clear outrage within the SEC that this is going on he goes back to his bank on Wall Street the Royal Bank of Canada and they do a study and the study asked the question how many people from the SEC have gone to work in high-frequency trading firms or in with lobbyists who worked for high-frequency trading firms over the last couple of years and they stopped it like two I got to 250 people yeah I mean it's just and you can't you can't really blame them I mean if you work for the SEC and they pay you X and you know that if you just don't know stir up too much trouble you get paid 10 X 2 years from now by some bank I mean what are you gonna do it so the industry has captured the regulator because the industry is so well paid but you do want to accept Wixon is a bigger problem that if there's no grown-up in other sectors like on Washington in the political system is anybody actually understand how it all works and actually sitting there thinking about how we make this better I don't know are you people policies and just chasing their own narrow ambition but Wall Street does feel like it could really use like a JP Morgan like character someone who yeah he's a son of a and you know he'd probably make he makes too much money for himself but who feels a responsibility for the system as a whole from inside the system and it doesn't feel like any business and that character exists and has a sense of history have a sense of I want to stand for something yeah there's one day I'm gonna be dead and they gonna talk about me right and and that's the that's what you feel is lacking is throughout our country's history they've been and not to sound highfalutin but people that have had a sense of we've had a lot of our greatest politicians came from wealthy families Theodore Roosevelt didn't didn't need this right now Franklin Roosevelt certainly didn't need it jonatha d they get it they get involved their families have a sense that we owe something back to the system right and there's oh there's a kind of a feeling now that you'd like it if it's having a sense of history if there were people in Wall Street who thought wait a minute it would be yeah I'm gonna have a great place in Long Island their way right that's the question that you asked a lot is what is it about people that when they have two billion dollars they really are desperate to get three billion you know when it can't possibly make a difference in your life and fortunately we're starting to see some very wealthy people now say we're giving away the bulk of our fortune to these causes because this whole idea of building up billions of dollars that will in creating dynastic wealth is is absurd you know it's that's good it's interesting how much just just judge from behavior how much easier it is to give away your fortune upon your death yeah than it is to cause real turmoil and trouble in your industry for the sake of making of improving it yeah people don't want to pick fights with it people don't break with Wall Street inside wall street there's a hue it's a it's odd because it's not clubbing I mean there's no longer actually a club anymore it's not doesn't feel like that but it does it feel it does feel like people are intensely political they want to preserve they don't want to burn any of their bridges they they want to preserve their place in that system so reforming making improving shrinking the system is going to cause all kinds of conflict between you in the system yeah have you have you gotten flack for shining a spotlight on oh I mean people want on this issue understandably when you write a book that purports to show how the stock market is rigged to the people who participate in the reading are not pleased and so their people have been yeah people have been playing rude about me but it doesn't much I don't think it has much effect I mean I got shouted on I get shouted at on TV that's happened a few times right people have written nasty things about the book but I don't think I think I'm enough of a like I have a life apart from all this and I can write about other things and I don't think people feel like they can really get to me or that the focus of the hostility that seems to the most pernicious is is the anger and hatred directed towards the Brad Katsuyama and the people who created this exchange yeah and I think there was you know I didn't actually think anybody was ever gonna you know like try to off him or anything but I did worry a bit about the I knew how disruptive what they were doing was gonna be before I wrote the book I did worry a bit about them that and they are in the receiving end of lots of hostility lots of anger and people will try to put them out of business I mean that's that's be that that's so they're gonna bear the brunt of it I saw I did this with Billy Beane in Moneyball to I sort of like walk into the room picked a fight on their behalf and left the room ya know come in you look at everything you write the book and then and then and I say you know you two got a fight and then it out my role is essentially then eventually cowardly but it makes a good book a good book and it makes a great move nobody left Billy Beane and Moneyball in a fight with a ball a major league baseball for years I mean until the basically till about the movie came out right but there's a rule once you're played by Brad Pitt you're found innocent yeah then he was off the hook we have a question on the Internet you ready for this this is how it's all changing Chuck from Facebook if that's even his real name asks what do you do to get pumped up before a writing session I listen to that I listen to let it go over and over and over I tell you what I didn't left that was true yeah it was true in this case yeah what happens what I do it's funny he asked that question I I feel like I have to just shut everything out so I look at I stare at a wall all the like the screens and blinds are down on the windows turn off the phones but I found it's a habit it's probably a bad habit I've gotten into but it goes back maybe 15 years now I have to have I have a music I listen to put on it put on headphones and I listen to the same CD I my wife will burn a CD for me I'll give her a list of songs I say put these on and I'll just listen to it over and over so don't hear it anymore and I've been playing I've been writing that that that those same 20 songs for two years it's about time to stop and move on to the new 20 songs but it was let it go was actually hilarious yes so I I have actually I have put it on repeat song and listen to it 30 times in a row why right now helps you it's a real or I'm realize I would say I'm just saying this I'm totally chapter in the book that's just the lyrics to those songs to the song you realize this it's affecting your writing so so I'm aware it's weird but it totally I don't hear it it and it totally like just it I think I start to have a black of Pavlovian response yeah if I go to frozen I'm sure I'll just want to pull out my pad and start right unique qualities in the marketing efficiencies and rice betrayed right but but I do find that listening to music often stupid music that that I can just tune out just like shuts out the rest of the world it creates the impact what does is it creates conditions in which I know I won't be distracted I won't hear someone banging on the door I won't hear the mailman I won't hear a phone ring whatever it is so it just it like creates it's white noise do you believe in the there's the old saying or a belief that writers get up in the morning and they only have they've got two hours they've got two and a half hours in them and then that's it yeah I have what I respond to with deadlines so I panic I have to create the panicky environment in which I must produce yeah and then I've done it I've got I've done it so off and then I actually create some cushion so that after the panic is I have time to reflect upon what I've done and go back through it and fix it and all the rest but I find that if I have a deadline I can write any time yeah it is true that the best time is I find a write write in the morning and late at night but we have a little kids you can't write late at night so it's by then your drink read if there is the dread things done yes that's right I've said that time and time again which is always unhappiness in creating it yeah but it's a you see you once you recognize what the feeling is you you you can minimize the damage it causes but yeah totally you have to feel you have to feel like angry that you have to do do it yeah a little irritated that you I need to do good work I need I need dread and resentment and and in probably equal amounts and then something good sometimes happens comes from it and I've had people say to me can't you just let's have the fun part what about the dread and resentment part let's lose that and I'll say it just you got to wind the rubber band yes tightly to make the propeller go is just the only way it works like totally agree totally agree we could I could keep you here for 4-6 hours but I won't if there's so much fascinating stuff to talk about love the book flash boys and then I think so many people have bought it but if you haven't bought it go buy it who does the book on tape this is their book on tape yeah whose narrating it we can't say oh you can't say so it's not gonna be me no yeah parts of it you don't understand yeah yeah yeah it would be hard would be argued here me stumbling yeah you'd hear some soft weeping at no get this book Michael Lewis I think this was really cool thank you for doing this thank you that was another jibber-jabber hope you enjoyed it and we'll see you soon team koco.com slash backslash I don't know I'm the wrong age dot org we'll see you soon

Channel: Team Coco

Views: 204,833

Keywords: Conan (TV Program), Conan O'Brien (Celebrity), Interview, Long, Michael Lewis (Author), Serious Jibber-Jabber, TBS (Production Company), Team Coco, best moments of conan, celebrity interviews, coco, comedy, comedy sketches, conan best, conan best moments, conan brien, conan classic, conan funniest moments, conan funny moments, conan obrien interview, conan obrien podcast, conan on tbs, conan remotes, funny moments on conan, late night show, talk show hosts, tbs, top 10 conan

Id: tk869R-A-Bk

Length: 57min 14sec (3434 seconds)

Published: Tue Aug 05 2014

Reddit Comments

[u/getrektsnek]

It’s sad, because this isn’t what capitalism was supposed to be. Don’t get me wrong, I prefer true capitalism….but what has happened is that capitalism is now the name of a shell and the big players have control similar to bureaucratic heavy central planning of more socialist oriented systems. What should not be lost on anyone is that no matter the system put in place, YOU are the little guy and power centralizes every time. This isn’t a failing of any one system, it’s a failing of human nature and you will never rid any human economic system of humans and their nature. As a conservative, this isn’t the shit I voted for. I’m centrist, I do want fair, but even now we rail against the “rich” (a nebulous all encompassing term that won’t really mean the ultra rich) while ultimately clipping the wings of the middle and lower class, that’s who laws are made for. This happens every…single….time.

I’ll take the downvotes, but I think all of us Apes don’t need/want central Gov to run our lives, that’s how we get to where we are today….we need true free market systems hardened against fuckery. I’d wager nearly all of us could get behind that. Now profit is seen as sin…and even that will eventually lead to hurting the little guy. It always does. The ultra rich are never touched by these ideologies, they profit and manufacture them.

[u/Toomanykidstosupport]

This is why forcing purchases through iex exchange is so powerful. Katsura man for the win. Dude did a solid and actively trying to prevent predatory hft.

Once fidelity opens up iex exchange to be selectable again I will only buy on that exchange. Fuck those predators

[u/bpawsitive]

IEX