How I Get My News

My freshman year at Oberlin, on my way to piano class my piano teacher asked me, “so did you hear we have a new president?” I said, “Oh shit! Did Danenberg die?” No, my teacher explained “Jimmy Carter beat Gerald Ford in the yesterday's election”.

When I started working in New York in the early 80's I didn’t really pay attention to the news, read newspapers or watch television. If I did read a paper I was more likely to read the Post or the Daily News to pass the time at work or riding the subway. When I started trading in ’84 I learned pretty quickly that I had to pay attention to the news and started reading the New York Times on my way to work. I moved to Chicago in '86 but still read the New York Times for a while. I would buy it at a news stand in the loop and read it before trading started. Then one morning a trader bumped into me on the escalator to the trading floor and mentioned, tapping the paper with his knuckle; “we don’t have a communist problem here at the CBOT”.

At the CBOT, the exchange had installed giant Trans-Lux screens that scrolled real time Reuters headlines on the trading floor and terminals where I could pull the complete story if I wanted it. I do remember how hard it was to make sense of the ’87 crash. Network news aired what amounted to headlines for 30 minutes at 5:00pm in Chicago. Newspaper writers (NYT, WSJ, Tribune) were clueless about what was actually going on between New York and Chicago. I didn’t understand it back then but the journalist knew less about the situation than I did and generally lacked any of the background in economics and finance necessary to properly explain it. Back then the news weeklies (TIME, Newsweek, US News, Economist) provided an adequate recap and semi –competent analysis but it was not news by the time I read it.

A girl I was seeing said to me; “the sexiest thing in the world is a man who reads the Economist and can talk about volatility”. I swear to god she said that…so I read the Economist fairly religiously for a long time. I would buy it at a news stand and read it over coffee on Saturday morning. I did try subscribing to the Economist only briefly. I canceled because it wouldn’t be delivered until Monday and by Monday evening it was last week’s edition as far as I was concerned. For the same reason I’ve never subscribed to the New York Times or the Wall Street Journal – they can’t seem to deliver their product to me until after I’ve read it. I refuse to subscribe to the electronic editions because they are bundled with a dead tree edition that would go directly to the recycling bin.

After finishing my undergraduate degree at Northwestern I moved over to the CME in late ’89. I ran into Leo Malamud on the floor one day and suggested that the exchange get a cable subscription; there were “complication”, he explained. Just prior to the first gulf war the CME installed CNN on cable in the break room just off the trading floor. I remember standing there in the jammed break room one afternoon listening to a State Department spokesman who said: “Unfortunately…”. The break room emptied and the currency markets exploded. That evening John Holliman - CNN’s science correspondent – was in Baghdad for “shock and awe”. Bernard Shaw – CNN’s anchor -was hiding under the bed while Holliman hung out the window of his hotel room giving play by play. I was hooked on cable news for the next fifteen years.

By the mid ‘90s back in New York City I was reading the Wall Street Journal every morning (purchasing it from the guy that watched the papers for the news stand around the corner on Madison avenue before catching a taxi down to wall street). After 9/11 I watched cable news around the clock for days.

Around that time I stopped reading the Economist, it having gone progressive. I mentioned to my sister one day how CNN had become too left wing to me. Her matter-of-fact response was: “CNN is right wing”. Long about “W”s second term I stopped watching cable news completely. It had by then become all bloviating pundits. At a risk management conference I attended in 2007 I was pointed to the video of Jim Cramer (who I could not stand) ranting about how clueless the fed was about the state of the economy. I went home and watched it and It did scare me, but everywhere I looked the opposite seemed true. I did not work in securitization or credit derivatives, and found the people associated with them the most craven sort and avoided the subject. So the 2008 crash caught me completely unaware.

I continued reading the Wall Street Journal which I bought at a news stand every morning for a very long time. When Amazon offered its “Kindle” edition back in 2010 or so I subscribed to it for about a year and a half. I could download the WSJ to my Kindle every morning and read it on the train. Then Amazon or the WSJ broke the Kindle edition – requiring a network connection for anything more than headlines – and I canceled my subscription. Back then mobile data was useless on my commute. I haven’t read the Journal since.

I have Reuters (globalist) and Bloomberg (progressive) terminals on my desktop at work. I have no need for news after that. I read articles pointed to by bloggers and aggregation sites. My favorite aggregator is Hacker News (tech progressive / libertarian) and RealClear Politics and Markets (seem to try to show a broad range of opinion) . I look at Marginal Revolution most days (progressive academic) and Instapundit (libertarian law professor) every day. My wife Patricia subscribes to the Sunday New York Times. I have found that, for the most part, all the articles in the Sunday times have been tested on the internet before making the Sunday edition.

Disruptive Technology / Disruptive Innovation

Disruptive innovation grew out of the management consulting world of the second half of the nineteen nineties; McKinsey, BCG, and Anderson. Corporations were told they needed to innovate or be swept away by global competition. Technology promised, and global markets threatened. The banking 2008 crisis destroyed Wall Street's control of the economy. The iPhone 4 release in 2010 provided the initial platform. To that point, a mobile phone was a corporate perk, but the iPhone got millions of hipsters to shell out for one of their own.

So the west coast boys tried on their libertarian suits and went to work thinking up ways to disrupt stodgy, old-fashioned industries. They delivered stripped-down apps to hipster early adopters on their phones. The product was mostly information, a repackaging of the TV model for the twenty-first century or an app that brought together buyers and sellers.

Network effects allocated huge rewards to first movers. And that money was deemed to be the reward for bringing change to the old way of doing things; money is taken from the fat lazy old boomers and their golf-playing pensioner grandparents.

What the sellers were selling mostly was the leftovers from their now ruined physical lives; stuff, parking spaces, rides, rooms, rentals, gigs, personal services, and of course, sex; and buyers could get cheap stuff they wanted. The app builders took a piece from both sides, plus information about the market that they could resell.

The TV model stole the intellectual property of writers, musicians, artists, photographers, and filmmakers; then offered it out at a price of zero - conditional on the consumer giving up private information that could be sold to old-fashioned businesses. Not that the writers, musicians, etc., didn't set themselves up for confiscation. You can't offer a product to a global audience that has a zero marginal cost and expect to get $20 a copy; not for very long anyway - that's another story: twentieth-century property rights.

What the disruptors were disrupting was mostly state and local regulation and government. They were disrupting the institutions that granted certifications and operating licenses, set zoning regulations, controlled rents, and regulated wages and quality. Not that a lot of that stuff made a lot of economic sense; rent controls, minimum wages, beautician licenses, etc. However, they were the institutions of long-established civil agreements.

I don't have a lot of empathy for the owners of Google, Amazon, and Facebook or Uber, Lyft, and Airbnb.

I'm not entirely convinced they are entitled to their wealth or use it for anything but evil.

The second and third drafts will not be kind to the winners in the first two decades of the twenty-first century.