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Michael Lewis on the Next Crisis (Businessweek article)


stahleyp
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Nothing earth shattering here, but I thought the last piece was interesting

 

"Is there a particular threat you’ve identified that’s most likely to blow up next?

The answer is yes, but I can’t talk about it yet, because I’m in the middle of a book about it. It’ll come out next March.

 

And will that be before or after it erupts?

I can’t actually tell."

 

He knows Burry...and Burry recently opened up a new hedge fund. I wonder if there's a connection here.

 

http://www.businessweek.com/articles/2013-09-12/michael-lewis-on-the-next-crisis

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student loans? actually I think he did some travelling in the last few years. Perhaps it's sovereign debt that he's sees as the big trouble area.

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one quick question, did Mr. Lewis warned the last crisis before its happening (or just reported it around/after the meltdown)

 

Nothing earth shattering here, but I thought the last piece was interesting

 

"Is there a particular threat you’ve identified that’s most likely to blow up next?

The answer is yes, but I can’t talk about it yet, because I’m in the middle of a book about it. It’ll come out next March.

 

And will that be before or after it erupts?

I can’t actually tell."

 

He knows Burry...and Burry recently opened up a new hedge fund. I wonder if there's a connection here.

 

http://www.businessweek.com/articles/2013-09-12/michael-lewis-on-the-next-crisis

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Thanks for posting that. I wonder what its going to be. Could it be a deflation crisis? I can't see him talking about debt as he already did that in Boomerang. What about farm land? Burry was invested in that after the crisis. Whatever it is, its going to be good.

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It may have to do with high frequency trading. Check out this Vanity Fair article I found on Michael Lewis. He talks about Serge Aleynikov, the ex-goldman employee who was arrested for stealing a computer code from Goldman.

 

http://www.vanityfair.com/online/daily/2013/08/michael-lewis-on-goldman-sachs-programmer?mbid=social_twitter

 

The last question lewis is asked could be what his book is on but I don't know how its a crisis:

 

 

Critics say it has become more volatile. Who exactly is hurt by the competitive advantage offered by high-frequency trading?

 

It’s essentially a tax on productive investment, and it’s a tax that’s largely unnecessary. The reason people aren’t more outraged about it is that the cost of financial intermediation in the stock market—the old-fashioned stockbroker system—has gone down because of the technology. There is this whole separate question, which I’m actually not prepared to answer right now: has it introduced new instabilities in the markets for which we all pay a price? I suspect so, but I don’t know. What I know is not true is that high-frequency trading provides liquidity.

 

There’s a line in The Big Short; one of the characters, who was cynical about the subprime-mortgage market, says, “When I hear Chinese Wall, I think you’re a fucking liar.” I feel that way about liquidity. When I hear the word liquidity, I think you’re a fucking liar. If this is liquidity, we don’t need it.

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He knows Burry...and Burry recently opened up a new hedge fund. I wonder if there's a connection here.

 

Any news on Burry? Im guessing no, but there's always prayer! Also guessing his letters to shareholders will be very hard to obtain. If anyone has seen anything since hedge fund news came out (has anyone even seen an SEC filing?) would love to read.

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HFT reminds us very much of Judo ... gaming, & the concept of letting your opponent do the work for you.

 

Link your software to trigger off the frequency of key words showing up in select locations, tie the signal to the ticker symbol & derivative markets of select deeply traded stocks, feedback words/blogs/market data to drive up the count at your source locations, & let it rip. To get ... rapid volatility perfect for option trading ... so long as everyone plays the game.

 

So .... if I put out some favourable messaging (selling calls, buying puts, synthetic shorting), & them suddenly dump a lot of negative (buying back calls, shorting), ... & keep doing it waves; I am going to make a LOT of money, & none of it illegal. I have essentially just created a new age Pump and Dump - move over Carnegie!

 

Until you meet those evil bastards who also know how to play the game  ;D

 

You just got the opportunity to buy in a big long position at an artificially low price (short sold stock)

I can dump positive messaging - at any time - to reverse the sentiment (& use their machinery)

I can average up in the physical market - at any time - to push the message (using the low cost base & their machinery)

I can sell the entire position via calls - hopefully at peak frenzy (they developed the put/call market for you)

I can suddenly withdraw - at any time ( & let time decay erase the value of the calls I just sold)

.... leaving a long position 2-3x its former size for no additional cost

.... and a welcome mat to the door of a target that I may be trying to acquire - move over Mellon!

 

Games will be played, but most would argue that they are not in the general interest of the population as a whole.

 

SD

 

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I found an interview Lewis did back in 2011 with Motley fool. He talks about the next crisis.

 

http://www.fool.com/investing/general/2011/11/01/michael-lewis-on-wall-street-europe-and-the-next-.aspx

 

 

California

The next big crisis affecting America will be the financial catastrophe facing its state and local governments, according to Lewis. California may be in the worst shape of all, so that's where Lewis went to see the problem firsthand.

 

That brought him to Vallejo, Calif., which is a city that has "hit bottom." Because of its financial problems, the city has had to ruthlessly cut all of its services. Lewis told us, "It is unbelievable just how desperate the place seems and how far it has fallen."

 

Despite its desperate circumstances, however, Lewis shared a wonderful story about how Vallejo's fire chief is moving heaven and earth to do more with less. As a result of seeing that resourceful and inspiring work, Lewis "has a hard time getting depressed about our country," though he admits that he "doesn't have a hard time getting depressed about Greece

 

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Check out this vanity fair article wrote by Lewis. It's long but good. I definitely think his next book will be about high frequency trading.

 

http://www.vanityfair.com/business/2013/09/michael-lewis-goldman-sachs-programmer

 

Thanks for sharing, long read but good.

 

I know Lewis is a great storyteller and all but I really came away disgusted with Goldman Sachs.

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He knows Burry...and Burry recently opened up a new hedge fund. I wonder if there's a connection here.

 

Any news on Burry? Im guessing no, but there's always prayer! Also guessing his letters to shareholders will be very hard to obtain. If anyone has seen anything since hedge fund news came out (has anyone even seen an SEC filing?) would love to read.

 

Burry has filed a company called Scion Value G7, L.P. I wonder if the G7 refers to a sovereign debt trade? So far he has not made any 13F filings, so it is hard to tell what he might be investing in.

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It'd be surprising if his fund doesn't cross the 100M barrier so I figure we'll know soon enough. Unless of course he gets clever and starts multiple 50M funds.....

Does that loophole work? Or will the SEC force a manager to file who controls 100+M even if not in a single fund?

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It'd be surprising if his fund doesn't cross the 100M barrier so I figure we'll know soon enough. Unless of course he gets clever and starts multiple 50M funds.....

 

I believe there are exemptions, so if he holds foreign securities or derivatives they don't count towards the $100m threshold.  There is also a time period related to reporting, so if a fund goes exempt for a year and pass the threshold the next year they might not need to report.

 

With all that said I'd be surprised if he doesn't raise more than $100m which is then placed in US common stocks.

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