Site became almost like a daily ritual. Without you, there is no us. Suki kim is the author of without you there is no us my time with the elite a memoir. It comes out in october you. Michael lewis talks about the rest of highfrequency traders in the start market and discusses how they manipulate the workings of the market with help of big banks to shortchange regular investors. This hourlong program is next on booktv. Thank you for coming. I wanted to start by explaining why it is i have the pleasure of interviewing michael this evening. [laughter] i, i have a theory, i have a grand, unified Michael Lewis theory, and i thought that we would start there. I havent heard it, id love to hear it. And im going to, this is going to be i would like to see whether you, whether you get the theory, so im going to give you an opportunity to answer. Youll see. The theory [laughter] the preamble to the theory is that you are principally a moralist. In fact, i believe you are americas leading nonfiction moralist. What do you mean by that . Well, you re someone whocc. And as proof, i would like to point out that in five of your bestsellingj a financial ark. Perfect. [laughter] okay, so, but flash boys is, its the most perfect biblicallal gory of all. Which one is it, do you know . No idea. [laughter] its jesus and the money changers this the temple. Ooh. My Fathers House is a place of prayer, but you have turned it into a den of thieves, jesus said. Flash boys [laughter] [applause] i was looking, i got the book, and i was, like, wheres the biblical epigraph from second matthew, like matthew i, whatever it is, 24. Couldnt find it. You know, what i want to know is why i dont feel better understood than i felt two minutes ago. [laughter] its okay. The you, wait, youre not disputing that there is a deeply moral center to all of yourr[ books . This certainly in this case it is more moralistic, i think, that many of the things ive written. Oh, i think theyre all, i think theyre all moral. Probably, its probably hard to write without thinking,jdtqih some sort of moral sensibility. I, its on the surface more in this book because its on the surface with the characters. A lot of my characters dont feel that way about the world around them. In this case you have, you have a canadian such as yourself who walks into the american finance, and what he finds eventually appalls him because hes canadian. [laughter] and its a, that he is so clearly not just appalled, but he has such a clear sense of right and wrong and whats going on is wrong, and hes going to fix it. Its a little different for me. Its hard to make swing on the page than some ambiguity. Many of my characters have a lot of moral ambiguity about them. He has less than anyone ive ever written. Ill grant that, but you surely arent saying i mean, i find that same, i just explained, i find that same moral centeredness in think of all of your, think of the great, the characters in those five books. Theyre all this some way in opposition to the world around them. Yes, its absolutely true. And they all have a moral position on the world around them. What is billy beans moral position . [laughter] his, well, were going to get to that in a moment. [laughter] he has a moral position, and that is that the moneyball was an argument about privilege, right . On one level. To me, it was a book about privilege. I think of it as a book about value and about, about how i think it is a book about how difficult, how much difficulty markets have placing value on human beings. But billy bean didnt think of it that way. Billy bean could have given a ratskzr ass about things like that. He thought about it as a book of war. His war and the book around him. He budget thinking right and he wasnt thinking right and wrong in a moral way. He was thinking right and wrong like my math is better than your math. I know. But you dont think theres a moral dimension to someone who says we have fundamentally misunderstood peoples true values in the world . I say that. Yeah. He doesnt. But he didnt write the book. Yeah, thats true. [laughter] so, you know, i think it is true that but i dont think this makes me unusual as a writer. No, no. It is true that, i mean, what causes you the pick up, to sit at your machine and type words out in the first place . Its some sense of, like, somethings wrong or the world misperceives something. Yeah. You have a sense of, a view of events that feels at least to you perhaps erroneously fresh, different, and often that view is driven by some moral concern. Thats fair. Im not sure i think im more this way than other people. You think i am . Oh, heavily. Really . But i want to point out, to go back to your characters again, i think theres, i think that if you list them, lee january tuohey, michael bury in big short, billy bean, brad whatever his last name, how do you pronounce his last name . Even maury taylor, they all have, theres a Common Thread that runs through them, dont you think . Um, i said before theyre all in opposition to the world around them. Every one of those people. But the ant, i mean, look, everybodys got a moral position even by default. Take a character like Michael Berry in the big short. Hes someone who goes into finance after he boons medicine abandoned med sane because he realizes i care about people but not really. [laughter] and is souon indifferent that he takes refuge in numbers. Now, i guess thats a moral position, but it isnt what most people think of as a moralistic character. Yeah. But the point is i thought when i read that i found Michael Berry to be very moving. He too. Yeah. I thought it because you did. [laughter] but this is true. Can i interrupt you for a sec . Im trying to find some truth in what you just said. [laughter] im doing my best here. My wheels are spinning. [laughter] there is some truth, its true that, um, i have no interest in writing a book unless, unless i feel something. The bottom of all of them is emotion. Its absolutely true. So i write about often very dry things; baseball statistics, subprime mortgage crisis, High Frequency trading. Who caresc really . Sub prime mortgage crisis, highfrequency trading. Who cares . If you had told me the stock market was whig and here is how it is rigged and you can explain to the world how it is red i would n interest. What i care about is this character walks into this world, discovers it is rigged and how he behaves once he has the understanding. The moral choice, no question about it. That engages my emotions. That is what causes me to care about the story. I could feel something and it is true that what i feel is quixotic sometimes. I was walking i realized this when i had my 7yearold on my lap and i was watching a 60 minute show about the story two sundays ago and as i was crying, t is coursing down embarrassed because computers and numbers of all that, i was crying because i could see the character of the guy i wrote about on the screen displayed so that character moving. It is being moved by things that causes me to put any effort into this. Were you more moved by his character than the previous your previous heroes . I find all of the moving. He was i like brave people. A lot of my characters are brave. I will say is this, what he has done is peculiarly brave. He brought on the wrath of god. He really had gone to war with his own industry. In a way not until the book came out that he was forced into that position going to war with the industry all by himself. I find him as a character because by nature he is a troublemaker, by nature someone who goes out of his way to antagonize systems. I find that moving, that he was forced by circumstances to make choices that were almost unnatural to him, to step outside a scene in which he was comfortable to in response to this moral reaction he had, he is almost forced into the role and wants forced into the role what i had in mind when i finished this book, i had a strange feeling i read this book i just wrote. What is this reminding me of. You had this character who had unleashed triggered sitting in the middle of this great war and the war was between people with money to invest and people who were mishandling the money, the middleman and the investor, and none of them want to be in some way but he was in the midland he is short, very short and in some ways a reluctant middleman. Ipod oh my god i have just lord of the rings i think of him as frodo. I find his bravery i am immediately drawn to the story, the most dramatic story in the new testament and you think of lord of the rings. You were raised with religion. I have much grander aspirations for your imagination. I think it is pretty terrific. Ashley doesnt really very well. I thought was pretty terrific. They have problems in their environment, they are all characters and situations. What is it about you that is drawn to that specific profile . A long time ago wont remember because there were six people in barnes and noble when it came out. You were perplexed that all of my books were the work of someone who has radical hostility towards the world around him. I had rich parents. I was raised look at you this hidden neurosis came from that is your question. I dont know if i answered you properly but if i had to put dont know if it is a good answer. In some way i am wired, i dont look the way i am wired but i do think that it helps me as a writer that i grew up in a world that i loved. I grew up in new orleans. It was a world that was outside in many ways american culture. American culture was clearly hostile to it. It was not going to survive as a culture and a lot of things ive valued in that world were crumbling before my eyes. I could see my fathers way of life was unsustainable. That probably helped. What do you mean by that . What was unsustainable . It wasnt the state division sustainable your status from your achievements in the world as opposed to your personal relationships from your family. It was not a success culture. People were indifferent to what people did to make a living. Much more focused on family relationships. There was an ironic twist, ironic strain in life. A gift for creating wonderful moments. There was unnaturalness about it. It was not successful. It was a failed place in many ways and you could see that. You could see that even things you love to work not sustainable. So it makes you question, makes you question success when something you feel is very successful and deep emotional level is by the standards of the worlds a failure. That has something to do with how i approach the subject but i dont know how much. The answer to the question may be i am basically lazy and it is much easier to write a story about a disruptive person in an environment that it is to talk about what you do where you have to think through the idea very clearly from beginning to end as opposed to using a character from beginning to end. We had a conversation before. What id do is harder, way harder. I think to tie these things together, i kid you not, when i was growing up my father had a coat of arms passed down from generation to generation, do as a middle as possible. And that unwillingly. [laughter and applause] better to receive this light reprimand than to perform an arduous task. Ia light reprimand than to perform an arduous task. I thought that was serious. My writing life is influenced by that. I dont look for trouble. You realize you are making no sense whatsoever. You are in sane we prolifisanel. It is not hard. Once i find a character or story that engage as me is very easy. I have to spend time with them which to other people might be totally if the situation, the character is right the rest takes care of itself. Maybe it is just for me, given my what i am doing as a writer is finding a path of least resistance. Do you do books with the heart to write . Probably the new new thing. It is a good way i think of moments like olympic dodge, you needed degree of Different Things for the execution. The degree was high because i had a character i knew the reader wasnt going to be the point of the character was incredibly uncomfortable to be with. He doesnt the minute you get settled be unsettled so he never gives you a place to rest. Is the culture of Silicon Valley embodied in a person and that is very hard to very hard he doesnt form attachments. Todd for the reader to form an attachment to him. That was probably the hardest. This one and the big short had these Technical Details that were difficult to bring across. Basically impossible to describe the obligation. Nobody no matter what you do, the best you hope for is in here, that you fool people into thinking they understand. When they put the book down, i got that and they tell people they understood it but they dont understand it. You have to give up part fullness. That was true in this. I find the hard part of these things is structure. Kind of like what is the way to tell a story . It tends to almost right itself. Which was the easiest. It was just about me. I was so vastly amused by myself. I am told this is true. My wife tells me and listen to music, i listened to the same song over and over because it shuts out everything else. I wrote an entire chapter of this book to let it go. I walk the world and i hear that song. She tells me when i am sitting there in my head phones i and tackling laughing at my own jokes. I had never written a book. Very few magazines. I knew it would be a critical reaction to this. It didnt occur to me to have that anxiety. It was just easy. Do you have any fears or anxiety . Of course. What are they . Maybe not as much as some but i fear the disapproval of others. It is not nice to get bad reviews. Beyond that, in my literary life we have a lot of time to think about things. I think did it come up with something . Probably not. Probably not. You must be this way. They are aware of insecurity and unease layers of confidence, at the bottom is confidence. At the bottom line not worried about anything in my life. I dont worry it is going to be bad really. If i work hard enough that it it is going to be flying. It comes very easily. It is problematic. Writers are supposed to be tortured and miserable and pour and i am none of those. I am very happy, more or less well adjusted, plenty rich. At peace with the world around me more or less. I cant give you what you need here. I find this deeply refreshing. Our mutual friend told me the key to understanding you is the commencement address you gave at princeton several years ago which i read this afternoon, two years ago from the pulpit in the church. First time i had ever been in the church much less the pulpit. Can you describe a little bit wet that commencement address was about . And do you agree that there is something to you agree that it encapsulates Something Real about the way you see the world . Yes. You have 12 minutes to address the undergraduate and not bore them. It was kind of funny. Princeton is such a small world. I got up, and i realized this address i gave had been given since 1798 and every class gets it so i had to have gotten it when i was graduating from princeton and i dont even remember the event much less the speaker and what hes said so i started by saying that, i must satin these pews and listened to some old guy tell you something. I dont even remember being here so you all remember this. It turns out the guy who gave the speech [laughter] i was a senior with in the audience, a grandchild graduating from princeton. I got a nice note from a lady who two years later said charlie was there. My husband charlie was there and thought was very funny that you didnt remember what you said. Would you like to come to dinner . They have actually become friends. The theme of the speech is the role of luck in life. And the people in the audience, probably more so than when i was graduating from princeton think of themselves as they passed through this filter. They are there because they deserve to be there. I have no illusion about that. And didnt even deserve to be there. A privileged to be there. But because they were programmed the way they were programmed, tells them how much luck was involved in being there and how much happens afterwards and it wasnt just enough to appreciate their luck, they owe a debt to the unlucky. When i was doing this in princeton, and most recently in those societies the people who are the elites to think a little about their responsibility for people who are not. Rather than just part of the outrage. And responsibility for the society for scanning it. It is good to get to know the artist to know which way they will drift. It was true that this scene tied in to my book, a money vault, part of that is the age, the figuring out how much luck there is in a baseball career and trying to strip out the luck to get to the true value of the player and how hard that is to do. I was trying to bring that across. I am sure i have forgotten already. Do you think that idea is surfacing to go back to my argument about moral themes in your work theres a constant engagement with this idea of privilege. Institutions are corrupted when you put it that way, money ball when you think about the privilege, the privilege of the club, the old baseball scouts. Is also about the arrogance of the rich, the way arrogance has blinded the wealthier cause, that is the puzzle, how fat the new york yankees of the world have been misled by their riches. What is more moral than that argument . You are approving the point you made at the beginning. No, no, no. This is not about me making a ridiculous argument. I do that enough. When we had that on stage, the other thing i said that i still believe, i thought the book was miss titles, that you made it sound like a book about football. Wasnt about football. It was all book about charity. About lee and chili. I think it is about all the forces that affect the value of this child and the outcomes in his life are so serendipitous. That is what it is. It all comes back, the question is how does this boy go from being the least value human being on the plan at, a homeless illiterate kids eating out of garbage cans to four years later being among those highly prized 18yearolds on the planet. What are those forces . Things that happened in football strategy to elevate the value of what so peculiarly do so well and a lot of those that all of a sudden he had. It all fit together but it wasnt just about football. I say that, that book is perfect. Theres not a single word out of place. I love your books but that to me will be red 50 years from now. It was hardly read at the time. And football, dont like to read. It shouldnt that was my frustration. I worried people would think it was a football book. A few people who do read or write football, as they really dont want a chick flick in the middle of their football. I felt i liked shoving those two things together. It did miss its market and the movie solved that problem. I liked it. I felt very good at the end. Talk about this one. I understand lets get to the book at least a little bit. Talk a little bit about the origins of this i am guessing this grew out of the peace you wrote for vanity fair. Two minutes. The russian Computer Program caught my eye, this was 2009, the program left Goldman Sachs for the trading firm and mail himself the code and a couple days later the fbi saw this in the newspaper. A year or so later sentenced seven years in jail and the first thing i wondered was y. On the back of this financial crisis goldman had so much to do with, the only person who went to jail, the person Goldman Sachs wanted to go to jail. When goldman wanted to go to jail what really caught my eye was when they arrested him the prosecutor said this code, denied bail, couldnt be left on the street. This code that he had could be used to manipulate or crash Financial Markets if it was in the wrong hands. Goldman is the right hands . I couldnt could it have been in worse hands already . I presume this stuff had to do with High Frequency trading at that time no one had ever heard of. All of a sudden it was in the newspapers without much explanation, a computerized trading. It took a couple years before i came around to doing this story and other things but when i got into a 9 needed a primary on highfrequency trading. I called friends on wall street, people who were investors, do you know anybody . Very weirdly theres this canadian guy, you wont believe what he will tell you and yes, he knows it, the only guy who is not an area 51 guy who knows what is going on with highfrequency trading. But for background, the piece i was doing about russian, a couple days in to what i realized i was pleased with doing a magazine piece with the russians. There was a book in this guys experience and there was a question of persuading him to do it and persuading him for about a year or more. Is it the small point, i am wondering i noticed when i was reading the books you return again and again to the question of baas katayama gathers his confederates around him, you return to the question which each of these people how the reporter by 9 11. That is true. Three to four times. I am curious. I am guessing that for a very good reason, would like to know what that reason is but more broadly do you think the fact that 9 11 was so much a calamity of the financial district, in some ways alter the generation . Does it have a material affect on the way people involved in the markets thought about what they did . Is that a point you were making by bringing it up . No, but i do think that 9 11 gave wall street cover to behave badly for a long stretch. We shared an entity with them and that was almost a separate point. One of the things i wanted to get at without saying it was raised the question, why do some people in this confinement decide to behave well . Why does someone who sees what is going on in the markets a lot of people knew the stock market was rigged. Why this canadian diane these people the brings together, why does it bother him more than anyone else . The answer is more complicated than a few of them had traumatic experiences but all of them did have this tendency to have a long view, a perspective on their lives, live their lives the way they wanted to look back on it rather than living their lives looking forward to the next bonus. They werent as narrowly motivated by money, 9 11 have a lot to do with that. That is why i kept coming back. The most specific, the person who is most blunt about it, there is a kid who works for katayama named josh blackburn. He was a freshman in college when 9 11 happened. He walked to the air force and ends up devoting his life to helping generals on battlefields in iraq and when he comes back after 7 or 8 years he is traumatized because he cant find anything, any job for his skill set that feels purposeful, he is that technologist, highfrequency trading firms, perfect for the man he finds it completely hollow, doesnt want to get out of bed in the morning until the bumps into katayama who has a purpose for him. They had this need for a sense of purpose that was greater than how well they were doing that day. I wanted the reader to have some clues as to why they might be that way . This is a question. Why them . It is ipod that the messenger in this case is on. This canadian guy who is not in the center of things besides the worlds needs to know some truth that is going on and ends up this is the role he is going to play in life. Essentially has walked into a place with a vacuum of trust and becomes a source of trust and everybody trusts him and the power of that is incredible but why him . So that those were ways to fried the reader into thinking along those lines. Has your own feeling about over the course of the return to you have returned to it twice unless you include boomerang. Have your feelings about wall street and the Financial Markets evolve . Are you more outrage today saying you were . Yes. What has changed . What looks like comedy has become tragedy. When i was leaving i was i had mixed feelings about the whole thing. I thought it was silly. What bothered me then was i had seen too many young people who had some other purpose in their lives be diverted into work that wasnt terribly meaningful. Because of the money. And i thought i could write a book that shows people what it was and what i do is create advertisements for wall street. I did things. It is amazing. You never know what book you have written until people read it. Six months, and i had a thousand letters from students at Ohio State University who said i read your instruction manual how to get ahead on wall street and on what to make sure there were no tips you left out because i really want to work on wall street. There was enough ambivalence. I didnt feel i wasnt writing from a moral degradation wasnt a moral high ground. Was a distance, a detachments. What changed my mind was the financial crisis. What particularly started to change my mind was when all these places, all these big banks committed suicide. They all should have failed, almost all of them should have failed to. At that point, they were exposed to Market Forces more than they actually were. I also thought that how peculiar it was these institutions that sucked in the best and brightest, these people they suck in are not and still interested people. These are very ambitious people. When brought together they were a failure. In the way they were brought together. Things that seemed absurd and comic in 196 198788 became tragic. The consequences for the larger economy fallout, and the kind of steady draining of the sole in place, much more corporate, much slicker. So i become less feeling less warm and fuzzy about it. A lot of times you just are at the mercy of the story the walking toward. This particular story is so much more black and white than most stories i had to deal with. It is and to question of who is right and who is wrong and not a lot of middle ground. It is about a young man figuring out how the stock market works. He shows you the predatory activity that is going on. The evidence is incontrovertible. It shouldnt be going on. He is attacked for delivering the truth. It just seemed the interesting thing about the story, you could read and obviously say this economic activity, i dont admire this. You are given a choice. You dont have to admire this sort of economic activity. One more time for one more . We have to go to q a but before we do, the reaction to this book has been extraordinary. Is this what you expected would happen . I did think it was an explosive store. I could never have imagined it would be as explosive as it has been. It has played out at the theater, on tv, in the most extraordinary way. I didnt know exactly as complicated, the main characters that nice canadian. No offense, but you remember this. At the new republic they have not boring headline competition and every week, readers would submit the most boring headline in the newspapers and they would be a winner every week. At an end of the year, which is the most boring . And the winner was a canadian initiative. I dont remember. Second was university of rochester decides not to change names. [laughter] i cant believe i have written a book about worthwhile canadian initiative. I had that going against me. I feel like i deserve some credit taking a worthwhile canadian initiative. In the middle of my narrative and i am not getting bad credit yet but i will eventually. What i have for me is theres a war waiting to happen, a war about the role and Financial Sector in our lives and there is one moment that crystallized the war for me . I was on tv, a was watching it. Cnbc decides to stage a debate. I am in midtown man had in and katayama is on the Stock Exchange sitting beside one of the exchanges that was rigged by highfrequency traders and owned by middlemen. The head of the bad exchange. This guy proceeded to make an ass of himself. He was screaming and yelling and very odd. The story i heard after told me why this is so explosively. Apparently a lot of trading on wall street just stopped, the Stock Exchange stopped, now the most watched show in cnbc history, the worlds tallest midget but nevertheless. I try to get the word midget in every one of my books. People were offended. I had my back against the wall. One of these trading floors was Goldman Sachs, they are all watching, the guy says we are watching and the guy next to me, and old Goldman Sachs guide, the angry guy, is it true we own a piece of his exchange . Yes. The little guy, we dont own a piece of his exchange . So wall street, wall street realized, smart people realized they are on the wrong side of the argument and it is going to change but what does that mean . Just a narrow sector of the stock market, billions of dollars a year out of wall street but this model for the computerized Financial Market was grafted on treasury market, foreignexchange market, stock market. If a fair market becomes the model wall street is screwed. It only works if it is and fair. A lot of wall street vanishes the you have got huge sums of money. Once you have that you have a different reaction from wall street than you get from my previous book and this is what it feels like in retrospect. They are blindly wacking away at a great beast with baseball bats. And nerves were not very sensitive. The second one didnt do much. When the beast woke up, i hit it where the money is made. And they know it will be taken away. And financials are part of the eruption. Anyone who has estate in the revenue is disturbing. That explains the reaction. Thank you, michael. [applause] we have time to go to a queue and a part of the evening. Questions generally start with a w or and age, they are short, we do not believe in two part questions. My first question i havent read the book. What about these high speed trading from cards . Billions of dollars, didnt see that in the peace. I am not going to name names. I will tell you what. The problem as unsatisfying as it sounds, is the entire system. With the scalp happens in the market is highfrequency traders scalping people in the market. That is the intake for the revenue from this system of a lot of unnecessary Financial Intermediaries and the revenues i changed with exchanges who rigged the exchange for highfrequency traders and the banks and brokers who fell one way or the other, the customer stock market orders for highfrequency traders, identifying symbols villains is nuts. Some reputation walrus, i kept a name out on the other side. It is not named. I know what would have happened. Someone would have got lynched, best case. If you lynch one or two highfrequency traders you are not attacking the system. If you google highfrequency trading, if you really want to you in the market. And the banks and brokers sold your information to than but if you want to know who the bad ones are, what you didnt know was where the of highfrequency trading firms that dont care about speech or carol lot about speed. The more they care about speed the more they are involved in that activity. You, google and get the answer. Next question, thank you for being here, very critical, the last of the financial experiences what would People Like Us do when the stock market to . The book is about the financial system, and exchange that built and exchange, its own by investors, the environment where investors are not exposed to the product. Who else are the davids . The first best david created a solution to a problem and if it works, what you have got is a model for how you solve other problems through disruptive on for per northship and bringing Market Forces to bear. Your own money is a different question. When i say it is rigged there is a systematic staff the goes on every time the market, the water enters the market. It is tiny from the money, spread out over the whole market, it adds up to huge sums of money so it is not that you are never going to make money in the stock market. That is not the point. The point is the market, the market is charging, found a way to tap u. S. Dollar investment dollars totally unnecessarily. It is more of a systemwide problems than it is a problem for your individual savings. As an investor you should be more concerned about the instability caused by the rigging, it is not the pennies you lose every time you trade in the stock market but the guys at Goldman Sachs say when they dont want any more to do with High Frequency trading in the current stock market, there will be calamities if we continue down this path of exchanges making the system more complicated for the benefit of the trade. What can you do . The simple answer is go on there website, i amandinvestor. Org and take control of your own stock market orders and create pressure on the banks and brokers not to sell you out. It is already happening. Theres a Political Movement going on. Charles schwab came out and said this is a cancer on the industry that needs to be stopped. An Online Brokerage Firm said they will allow customers to send their orders directly but if the waters are moved on to Fair Exchanges the competition, whatever the Fair Exchange is, you start the creditor, the beast, you try to put pressure, whatever Stock Market Investments you have you tried to direct them away from the system. My question is front running. There was a multitude of exchanges that relied upon the subsequent my question is to create an exchange which allows it to happen. And a single exchange. No question about that. And the exchanges this day, and in the name of competition, encourage this proliferation. The fragmentation doesnt hit the investor. So yes. The sensible solution is for the Stock Exchange to be a utility and we all meet in one place and it could happen. It could happen. One path this episode may take the Stock Exchange has been trying for several months to buy i e x and they already turned down, they could have been rich already. They turned it down because they cant allow themselves to be sold to the new york Stock Exchange unless the Stock Exchange gets rid of the bad stuff is going on. Other wise it is not credible. If the Stock Exchange caves and says we will not only by you but get rid of all the highfrequency traders who are in the place, no longer giving them preferential access, it is easy to imagine exchanges folding, all the business is going on in the Stock Exchange, go back to the way the market was structured ages ago, without human beings in the middle of it, without investment orders passing through hands at all, buyers and sellers just meeting. That is the natural solution. Just had to come up here but the question was up until now, how successful has it been, doing what they are doing and i dont know if there are other exchanges settled and what they did so far. If you talk to investors whose orders are directed on the exchange, all of a sudden, the problem as it manifests itself to investors, they think there is a market, that in these 13 stockmarkets there are 10,000 shares bid for microsoft at 20 a share and they go to do it and the markets anticipate what theyre doing vanishes and goes up. Doesnt happen so they have been very successful as a measure of how successful they were eliminating predatory activity, that highfrequency traders dont want to be connected to them but the size of the exchange is still small. They are incredibly successful for a new exchange, starting a new Stock Exchange always takes time. They are trading, yesterday traded 65 shares. It is a fraction of the stock market. It is enough that they are profitable or just about profitable and sustainable, but theres a break and a break right now is 70 of the stock market orders in this country are handled by eight banks. Only one of those banks is actually treating this exchange honestly. The other seven and doing what they can to avoid sending their quarters on to the exchange. So pressure has to be brought to bear for those orders to move on the exchange when customers ask them to. One is goldman. The others are not behaving uniformly bad the. There are different degrees of badness but combined with the fact that none until Interactive Brokers did this, Brokerage Firms are sending their orders, they are starved of activity but it is changing. The book has been out eight days. Enormous pressure in the system for people if the investors ask for their orders to be directed this way for them to be directed this way so it is a pretty hopeful looking situation. Thanks for being here. I would like your opinion on 50,000 when you have things like hank paulson who used to run goldman and then was running the treasury department, and it is sort of like the chicken coop. Regardless of all the things that are going on with highfrequency traders if the problems start at the top the guy who winds up in jail and the big guys like Lloyd Blankfein or other goldman executives purposely setting the against their clients, no one does anything about it because those guys wind up working for the banks, which is to be done . If you had asked me that question i thought you werent nut case. I am not a conspiracy guy. Is absolutely true what you said. You didnt just say it. Two days ago a prosecutor from the fcc who was just retiring stood up in front of the fcc and to applause said the problem with this institution is every one of you want to get higher paying job on wall street that you are free to do anything but address small street level crime. You want to be nothing but polite to the people running the institutions. We have no ability to regulate it because we accorded by the money and they all said they know it is a problem, right . How do you solve this problem . When katayama first discovered himself being a front runner very cleverly and able to demonstrate, because he is canadian instead of making mistakes he decided to tell the u. S. Government because it would be rude without telling the sec what is going on because they probably want to do something about it so describes it to them and he leaves after the conversation, he thinks nothing is going to happen. They will never do anything and he goes back to his canadian bank. They Start Talking about why would that be that way . They do will study and find out in the previous week 3 years, they go to work for highfrequency traders, lobbying firms, that is why they do that. What do you do . Do you despair . The system seems to be riddled, this problem in the market is of microcosm of a larger problem, it the industry generates so much money that it is captured, not just the regulatory process but the legislative process. It is futile to look to washington for a solution to the problem. However, we live in a country where people worship a entrepreneurship, love market based solutions. What is so clever about what this guy has done is he has created a solution that does not require much in the way of anything from washington. All they got to do is stay out of the way and let him provoke a war between investors, between capital and the people abusing the capital. I think he will win and i think he thinks he is going to win. This may lay the way forward and give you do this if he succeeds i think so much is at stake. If he succeeds and he has a huge, successful Stock Exchange and he has gotten rich and all the people who work for him all of whom are young and entrepreneur real, venturecapital pours in again and again in different sectors of wall street and all you require at that point is for the regulators or legislators not to get in the way of successful entrepreneurship and introduce more transparency to the marketplace so customers can make informed decisions about what they are doing and it is fixed. There is a path towards a marketbased solution that has opened up. That is what is at stake here because what you said is true. If the fcc, competing exchanges, competition exchanges was good, and the exchange they wanted, a really good question. The truth is there is a rule that does allow investors to insist the thin rule which is another governing body that allows investors to insist on weather orders go, it is being broken. The rules are being broken, what violation it is, you will read about this at some point in the newspaper, news stories are waiting to be written so the rules are in place, investors are not exercising their rights. They just dont know history. They never ask where the order goes. Very hard to find out how it is directed. It is more of a problem that has historically never been done. It was a radical thing to go to fidelity. They have never done it before and the banks, people were furious that he was telling them they are doing it. Now it is a matter of the rules being enforced more than anything else. The final question. What you just said about optimism, the individual does have some power. How would you rank this again . Municipalbond says breaking into scams like jpmorgan does like alabama and stuff. This is clearly the other thing about this story, the peace with the spirit of the age in the Financial Market, everywhere market the being rigged, a foreignexchanges rigging scandal, a commodity price rigging scandal. Why are markets all of a sudden so heavily manipulated by big wall street banks . Probably because they can. Partly it is because a lot of the historic sources of revenue for wall street have dried up. Style has been cramped by doddfrank so part of it is a response, survival instinct in banks and indoor traders in the banks and this is the rigging of the stock market, the same thing playing out in the stock market. That is why it is happening. Because technology has reduced the use full played by wall street to eliminate it in some markets and they found out what to do and one thing to do is rigged markets. On that note. [applause] thank you very much, thank you. Give a round of applause, thank you. So the bookstore has some free signed books for those who dont want to stick around. For those who are going to have your book signed we will bring you up by row, bring a table out here, give us a couple minutes to get organized. Thank you for coming. If you have any questions visit our web site, myfoxl a. Org. Barnes and noble is on the patio. They have some free signed Malcolm Gladwell books for sale. Only Michael Lewis will be signing books up here, though. Thank you. [inaudible conversations]. Tweet us your feed baeck, twitter. Com booktv. I think its worse now than it ever has been in terms of, not obviously in every household but in general, kids are reading enough. And also in this country now theres so much black and white thinking, as opposed to great thinking. Things are a lot more congregated if you get into them. One of the ways you getin