CT Blue

I just finished Michael Lewis's Flash Boys. I know I'm late to the game commenting on this book, but my take on it might be a little different. To me, it illustrates what comes of good timing, good publicity, or both.

First, the basic premise of the book: the stock market is rigged. Every time an investor buys a stock the price is just a little teeny bit inflated by high frequency traders, who essentially impose a tax on almost every stock market transaction that takes place. Were the U.S. government to impose such a tax, and put the money to good use, every Republican politician would be up in arms. But since this money, billions of dollars, goes into the pockets of the already rich, who perform no useful function (in fact, almost no function at all-the computers do all the work), we hear nary a word of protest. Flash Boys never lose money; they can't, almost by definition. If you want to buy a stock, they push in front of you, buy it for slightly less than you will eventually pay, and sell it to you in a nanosecond for slightly more. It all adds up to billions of dollars siphoned from the economy into the pockets of sociopaths.

What I thought was interesting about the book is that it was so similar to another book that came out a few years ago: Dark Pools-the Rise of the Machine Traders and the Rigging of the U.S. Stock Market, by Scott Patterson. It tells much the same story in much the same way. Honest trader can't understand why the (always a he-I don't think there was a female of note in either book) price of stocks he wants to buy shoot up the second he pushes the buy button. Eventually he finds out about the Flash Boys, etc. Both books are told through the stories of people trying to push back against the system. Both are worth reading, by the way. I'm not taking anything away from Lewis. Patterson's book was released in 2012, and while I'm sure it caused some ripples on Wall Street, I'm also sure it didn't get the attention Flash Boys got. I'm sure the 60 minutes profile of Lewis didn't hurt and, maybe, Lewis's title is a bit sexier. Also, and I think this may be key, Lewis's timing just may have been better. Personally, I think disgust with the banks and the markets has been growing as it's sinking in that we are being systemically fleeced and impoverished.

In the end, sadly, neither book has had much real world impact. Obama's SEC commissioner quickly stepped up to assure us that the rigged markets aren't rigged (pay no attention to those men behind the curtain); a few Senators blustered, but nothing concrete was proposed or done, and the Flash Boys continue to siphon money from productive uses. It affects even those of us who own no stock directly, if we have a 401k, for the funds in which we put our money are prime victims of the practice. So not only do we lose thousands over our lifetime due to excessive fees imposed by the funds in which we have no choice but to invest, those funds themselves lose thousands on our behalf by getting ripped off in turn by the bankers and brokers that execute their orders.

If things go as expected on Tuesday, the American people will vote to make double sure that nothing will be done to stop this systematic theft of their money, but we can take some comfort by considering that this problem is insignificant compared to other crises, such as global warming, that we'll also be voting to ignore.