Book-A-Day 2014 #264a: Flash Boys by Michael Lewis

There's an old publishing rumor that Douglas Adams wrote some portion of Mostly Harmless -- in the extreme version of the rumor, all of it -- on the flight from his native UK to the big US book-industry convention, the ABA show, which was in Los Angeles that year. Some folks even claim to be able to tell, in reading the book, exactly when the pilot announced that the plane was in its final descent to LAX. It may be half a joke, but there's clearly a rushed nature to that book that can't be denied. And close readers, whether they work in publishing or not, can generally tell when a book is rushed in some way: it shows, somewhat in the prose, and even more so in the structure and fiber of the book. A quick book is a messy one, inevitably.

Michael Lewis's most recent book, Flash Boys, was published at the end of March of this year. And its epilogue is largely about a meeting that took place soon after December 19, 2013. He clearly didn't write all of the book in that interval -- most of that time had to be devoted to actually turning his words into a book and printing mass copies of the thing -- but there definitely is a feeling that this book just stops rather than ending, that Lewis got something long enough to be a book and vaguely complete enough and sent it off to his editor.

Flash Boys continues Lewis's investigation of the financial world, following his books The Big Short (about the men who knew the 2008 crash was coming, and whose response was to take market positions that would net them billions of dollars and not do anything to actually help the situation), Boomerang (about how all those nasty foreigners and tacky US public employees were really responsible for that crash, not the bankers who cheated them and walked away with all the money), and the book he edited, Panic! (about the prior four crashes). This time around, he's come back around to believing that bankers are the scum of the earth, but he still has a reporter's tropism for believing everything that his current source tells him, so that's probably because Brad Katsuyama thinks bankers are scum.

As much as Flash Boys has a through-line, it's Katsuyama: this book is Lewis's quick, kaleidoscopic attempt to understand the world of High-Frequency Trading (HFT) and how that transformed Wall Street over the past decade or so. Katsuyama went from the Royal Bank of Canada -- a bank so stodgy and Canadian that they didn't have any HFT activity -- to founding the stock market IEX last year in an attempt to save all investors from the predatory behavior of the big investment banks and the HFT houses (mostly hedge funds and similarly closed shops) across the several dozen exchanges that existed by that point.

Again, Lewis is a reporter, and likes to tell stories, so each chapter of Flash Boys is about another man in the markets: the guy who laid fiber across Pennsylvania to get signals to New York from Chicago a few miliseconds sooner, Kasuyama and his career at RBC, the guy who built a lot of the fast pipes HFT traders needed and then was poached by Katsuyama, a top Russian programmer who left Goldman Sachs and went to jail for mailing himself open-source software along the way, and a few quick takes of the quirkier second-string guys at IEX, too. It mostly adds up to the story of IEX and why it came about, but it's as much about Brad Katsuyama and his direct reports, the people Lewis presumably spent a lot of 2013 interviewing.

Those stories don't entirely cohere -- the Russian programmer, in particular, is shoehorned in clumsily, a story Lewis included because he liked it rather than because it really fit with the rest of the book. It's a marker of the book Lewis didn't write: the bigger book with deeper research into HFT, one that didn't just take Katsuyama's side but examined the changes in the market more dispassionately. But Lewis knows how to tell a story well, so it's all slick and fun and engrossing.

Lewis is a bestseller, and he's internalized the lessons of the bestselling nonfiction writer by now: ambiguity is your enemy, explaining complicated things in slick metaphors is awesome, every story needs an underdog who wins in the end, and money is how we all keep score. On all of those points, Lewis does his job here, and Flash Boys has thus been very successful, like his prior books. But it's shallow and rushed and doesn't make its own best case; even people inclined to believe that the markets really are skewed in favor of money and power could easily think Lewis doesn't close his case here.

Book-A-Day 2014 Introduction and Index