Suppose you wish to send $25,000 from Vancouver, British Columbia, to a friend in Helsinki, Finland. You would hand $25,000 cash to a Vancouver money changer (Hawaladar) in Vancouver, and receive code words (or an agreed signal such as a secret handshake) and a contact address in Helsinki. No actual cash moves out of Canada. Instead, when your friend gives the code to the correspondent hawaladar in helsinki, he will receive the equivalent in euros (less a commission) from money that is already there. To review: -There are no written documents. The exchanges are based on mutual trust (perhaps for that reason unpopular in the United States?). -Only local currencies are used. Thus, if you are sending money from the UK to Mexico, you pay in pounds and the receiver in Mexico collects in pesos. -This exchange cannot be traced because no money crosses a border.
Has this been done in a movie yet?
Once somebody pays me the first dollar, I’m on the hook to deliver. And wait a second: I don’t know if I want that yet.
I’ve found there are two types of thoughts especially worth avoiding—thoughts like the Nile Perch in the way they push out more interesting ideas. One I’ve already mentioned: thoughts about money. Getting money is almost by definition an attention sink. The other is disputes. These too are engaging in the wrong way: they have the same velcro-like shape as genuinely interesting ideas, but without the substance. So avoid disputes if you want to get real work done. Corollary: Avoid becoming an administrator, or your job will consist of dealing with money and disputes.
To make it into the richest 1 percent globally, all you need is an income of around $34,00.
Avoid mom-and-pop projects that don’t take your money! You might call this the anti-free-software movement. […]
So stop getting caught off guard when your favorite project sells out! “They were getting so popular, why did they have to shut it down?” Because it’s hard to resist a big payday when you are rapidly heading into debt. And because it’s culturally acceptable to leave your user base high and dry if you get a good offer, citing self-inflicted financial hardship.
I don’t give a fuck if you’re doin’ petty shit or big shit. […] Get your motherfuckin’ money and make other people’s lives better.
If you are dependent on borrowed money, you have to wake up every day worried about what the world thinks of you.
[$10,000] wouldn’t go so far now, and yet most of the reasonable necessaries of life cost less to-day than they did two generations ago. The difference is that we need so very many comforts that were not invented in our grandfather’s time.
It is man’s peculiarity that nature has filled him with impulses to do things, and left it to his discretion when to stop. She never tells him when he has finished. And perhaps we ought not to be surprised that in so many cases it happens that he doesn’t know, but just goes ahead as long as the materials last.
Peers have an effect on your own ambition. More money acquired → more happiness. More money desired → less happiness. I like Eric Barker’s 3-point takeaway near the end, too.
Money is like gasoline during a road trip. You don’t want to run out of gas on your trip, but you’re not doing a tour of gas stations. You have to pay attention to money, but it shouldn’t be about the money.
You can still compare a coin to the moon–poets have done so in days gone by. The coin itself remains one of the few objects of perception continually and immediately surrounding us that, through long-established habits and fantasies, connect us across the millenia to antiquity–like bread and wine, our shoes, the dog, the knife, indeed the moon.
You probably recall Jonah Lehrer’s New Yorker article about the kids who were told not to eat the marshmallow. Those who were able to hold out were better behaved, higher achievers later in life.
Low delayers, the children who rang the bell quickly, seemed more likely to have behavioral problems, both in school and at home. They got lower S.A.T. scores. They struggled in stressful situations, often had trouble paying attention, and found it difficult to maintain friendships. The child who could wait fifteen minutes had an S.A.T. score that was, on average, two hundred and ten points higher than that of the kid who could wait only thirty seconds.
When I was reading it, it reminded me of some ideas that have been around for in economics for a couple centuries or so: time preference and intertemporal choice. Someone with high time preference will tend to consume sooner rather than later. People with low time preference are the savers—the ones who can hold out. The same applies to social groups or societies. For example, married folks or people who have children (or expect them) tend to have lower time preference and set aside more for the future. And they tend to display fewer risky behaviors, so they can actually see the eventual benefits of their saving. It’s the opposite for the single, childless, young. This relates to why single males in their 20s tend to have high car insurance, lots of cool electronics stuff, and little in their IRAs. Consume more now, have less later.
Lowest quintile: 4.3 percent
Second quintile: 9.9 percent
Middle quintile: 14.2 percent
Fourth quintile: 17.4 percent
Percentiles 81-90: 20.3 percent
Percentiles 91-95: 22.4 percent
Percentiles 96-99: 25.7 percent
Percentiles 99.0-99.5: 29.7 percent
Percentiles 99.5-99.9: 31.2 percent
Percentiles 99.9-99.99: 32.1 percent
Top 0.01 Percentile: 31.5 percent
This makes the third Michael Lewis book I’ve read (see also my take on Moneyball and The Blind Side from last fall). It’s another good one. Liar’s Poker is Lewis’ first book. He writes about his years on Wall Street working with the Salomon Brothers investment firm during the heady 1980s. It’s a biography of the company’s internal breakdown and the revolutions that swept through the investment banking industry (like mortgage-backed securities and junk bonds) that made some people piles and piles of money.
Lewis’ writing is good and often funny:
The greatest of absurdity of the college investment banking interview was the people the investment banks sent to conduct them. Many of them hadn’t worked on Wall Street for more than a year, but they had acquired Wall Street personas. One of their favorites words was professional. Sitting stiffly, shaking firmly, speaking crisply, and sipping a glass of ice water are professional. Laughing and scratching your armpits are not…
I did not learn much from my stack of Wall Street rejection letters except that investment bankers were not in the market for either honesty or my services (not that the two were otherwise related). Set questions were posed to which set answers were expected. A successful undergraduate investment banking interview sounded like a monastic chant.
Lewis manages to get in to Salomon Brothers through some lucky connections, makes it through the months of lectures and hazing of the training program, and finally gets to the trading floor that’s dominated by a law-of-the-jungle ethos. Some of the best parts are these antics among the workers. People throwing phones at trainees, office pranks, verbal abuse, gluttony (“We’d order four hundred dollars of Mexican food,” says a former trader. “You can’t buy four hundred dollars of Mexican food. But we’d try—guacamole in five-gallon drums, for a start.”). It’s wonderfully disturbing.
If you are a self-possessed man with a healthy sense of detachment from your bank account and someone writes you a check for tens of millions of dollars, you probably behave as if you have won a sweepstakes, kicking your feet in the air and laughing yourself to sleep at night at the miracle of your good fortune. But if your sense of self-worth is morbidly wrapped up in your financial success, you probably believe you deserve everything you get. You take it as a reflection of something grand inside you. You acquire gravitas and project it like a cologne.
Lewis nails both the bizarre sociology inside the firm and the broader industry shifts. A lot of the stuff about mortgage bonds and junk bonds gives a good background on what’s happening on the market right now. Definitely worth reading.