Every weekend, Longform.org shares a collection of great stories from its archive with Slate. For a daily selection of new and classic nonfiction, check out Longform.org or follow @longformorg on Twitter.
It's apparently Moneyball week here on the Internet, so we've put together a collection of classic journalism by Moneyball author/ erstwhile Slate columnist Michael Lewis. In keeping with the week's theme, we've picked four stories about economics and four on sports, plus one piece that bridges the two: "The Trading Desk," Lewis' original article on Billy Beane and the Oakland A's..
Stock Manipulator, S.E.C. Nemesis—and 15 Michael Lewis • New York Times Magazine • February 2001
Using different email addresses and a lot of exclamation points, teenager Jonathan Lebed worked finance message boards in the morning before school and made nearly a million bucks. Then he made the head of the S.E.C. look like a fool:
"I finally came clean with a thought: the S.E.C. let Jonathan Lebed walk away with 500 grand in his pocket because it feared that if it didn't, it would wind up in court and it would lose. And if the law ever declared formally that Jonathan Lebed didn't break it, the S.E.C. would be faced with an impossible situation: millions of small investors plugging their portfolios with abandon, becoming in essence professional financial analysts, generating embarrassing little explosions of unreality in every corner of the capital markets. No central authority could sustain the illusion that stock prices were somehow 'real' or that the market wasn't, for most people, a site of not terribly productive leisure activity. The red dog would be off his leash.
"I might as well have strolled into the office of the drug czar and lit up a joint.
" 'The kid himself said he set out to manipulate the market,' Walker virtually shrieked.
"But, of course, that is not all the kid said. The kid said everybody in the market was out to manipulate the market."
Betting on the Blind Side Michael Lewis • Vanity Fair • April 2010
Sitting alone in his San Jose office, Michael Burry saw the subprime bubble before anyone else. So he convinced Wall Street to let him bet on it, even though few were betting on him (a story excerpted from The Big Short):
"The market made no sense, but that didn't stop other Wall Street firms from jumping into it, in part because Mike Burry was pestering them. For weeks he hounded Bank of America until they agreed to sell him $5 million in credit-default swaps. Twenty minutes after they sent their e-mail confirming the trade, they received another back from Burry: 'So can we do another?' In a few weeks Mike Burry bought several hundred million dollars in credit-default swaps from half a dozen banks, in chunks of $5 million. None of the sellers appeared to care very much which bonds they were insuring. He found one mortgage pool that was 100 percent floating-rate negative-amortizing mortgages—where the borrowers could choose the option of not paying any interest at all and simply accumulate a bigger and bigger debt until, presumably, they defaulted on it. Goldman Sachs not only sold him insurance on the pool but sent him a little note congratulating him on being the first person, on Wall Street or off, ever to buy insurance on that particular item. 'I'm educating the experts here,' Burry crowed in an e-mail."
"The United States obviously occupies a strange place in the world. It is the capital of innovation, of material prosperity, of a certain kind of energy, of certain kinds of freedom and of transience. Silicon Valley is to the United States what the United States is to the rest of the world. It is one of those places, unlike the Metropolitan Museum of Art, but like Las Vegas, that is unimaginable anyplace but in the United States. It is distinctively us. Within this unusual place some people have clearly been more unusual than others. Many of those who sought and found fortune in Silicon Valley in the 1990's could just as easily have found it on Wall Street in the 1980's or in London in the 1860's. But a certain type of person who has made it big in Silicon Valley could have made it big at no other time in history. He was built to work on the frontier of economic life when the frontier was once again up for grabs. He was designed for rapid social and technological change. He was the starter of new things."
Beware of Greeks Bearing Bonds Michael Lewis • Vanity Fair • October 2010
Riots in Athens, the shadowy Vatopaidi monastery, and a quarter million dollars in debt for every citizen. Welcome to Greece:
"As it turned out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it. In just the past decade the wage bill of the Greek public sector has doubled, in real terms—and that number doesn't take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece's rail passengers into taxicabs: it's still true. … The retirement age for Greek jobs classified as 'arduous' is as early as 55 for men and 50 for women. As this is also the moment when the state begins to shovel out generous pensions, more than 600 Greek professions somehow managed to get themselves classified as arduous: hairdressers, radio announcers, waiters, musicians, and on and on and on. The Greek public health-care system spends far more on supplies than the European average—and it is not uncommon, several Greeks tell me, to see nurses and doctors leaving the job with their arms filled with paper towels and diapers and whatever else they can plunder from the supply closets."
The Trading Desk Michael Lewis • New York Times Magazine • March 2003
The original article on Billy Beane and the Oakland A's, published a month before the release of Moneyball:
"A leading independent authority on baseball finance, a Manhattan lawyer named Doug Pappas, pointed out a quantifiable distinction between Oakland and the rest of baseball. The least you could spend on a 25-man team, if everyone was paid the minimum salary, was $5 million, plus $2 million more for players on the disabled list and the remainder of the 40-man roster. The huge role of luck in any baseball game, and the relatively small difference in ability between most major leaguers and the rookies who might work for the minimum wage, meant that the fewest games a minimum-wage baseball team would win during a 162-game season was something like 49. The Pappas measure of financial efficiency was this: How many dollars over the minimum $7 million does each team pay for each win over its 49th? How many marginal dollars does a team spend for each marginal win? Over the past three years Oakland has paid about half a million dollars per win. The only other team in six figures has been the Minnesota Twins, at $675,000 per win. The most profligate rich franchises -- the Baltimore Orioles, for instance, or the Texas Rangers -- have paid nearly $3 million for each win, or more than six times what Oakland paid. Oakland seemed to be playing a different game from everyone else."