FRESH AIR
“The stock market is rigged,” Michael Lewis tells Fresh Air’s Terry Gross. “It’s rigged for the benefit for really a handful of insiders. It’s rigged to … maximize the take of Wall Street, of banks, the exchanges and the high-frequency traders at the expense of ordinary investors.” Lewis is the author of several books about the world of finance, including Liar’s Poker and The Big Short. His new book Flash Boys is about the form of computerized transactions known as high-frequency trading, in which the fastest computers with the highest connection speeds get the information first, and make the trade before anyone else can. A millisecond — even a nanosecond — can make all the difference between how much money is made or lost on any transaction. You’d be surprised to hear what investment banks do to get that nanosecond edge, and how they often use it in ways Lewis describes as predatory. The victims range from some investment houses to individual investors. Lewis says high-frequency trades can end up hurting the returns on your retirement accounts. The FBI, Wall Street regulators and New York’s attorney general are investigating high-frequency trading, and whether it has created an uneven playing field. “There’s a decline of trust in the marketplace because it’s not as trustworthy,” Lewis says. “And if it’s not as trustworthy then the whole economy suffers. Trust is the grease that keeps the system working.” MORE
PREVIOUSLY: Writer Michael Lewis is the author of Moneyball, Liar’s Poker, and The Blind Side, books with vastly different subjects but a common theme: outsiders with innovative ideas who find astonishing success. Lewis’ newest book continues that narrative. The Big Short: Inside the Doomsday Machine chronicles the 2008 financial collapse through stories of the people who realized what was happening to the U.S. economy while it was happening — and then made vast fortunes by betting against the markets. MORE