Week of September 17, 2018

A few things of note from around the Internet this week…

Criminal

White collar crime really does pay. Ben Hunt explains what makes the world go ‘round.

Dick Fuld claims that he knew nothing about the Repo 105 program. The only possible answer to this, and here I’ll apologize in advance for my language, but it’s really the best possible word – bullshit. Did I mention that Repo 105 was a really expensive program to run? Did I mention that Dick Fuld’s nickname was The Gorilla, that he was infamous for controlling everyone and everything at Lehman? Did I mention that Repo 105 was concealing existential risk for Lehman?

If you or I did what Lehman did with Repo 105, we would be charged and convicted of bank fraud. Happens all the time. It’s pretty much what Paul Manafort just got convicted on. This is a crime. It is not a minor crime. It’s an absolute slam-dunk case for any prosecutor in any jurisdiction in the country. And yet, with the exception of the civil fraud charges brought against Ernst & Young, no other charges – civil or criminal – were ever filed by the SEC or the Justice Department in connection with Repo 105.

When was I radicalized? When Dick Fuld walked away scot-free from the wreckage of Lehman after getting half a billion dollars in cash comp and stock sales during his tenure.

Enron

This whole retrospective is quote worthy.

That’s the world Jeff Skilling will be returning to: the one in which most of the wealth in this country has been transferred to the kind of person he used to be, one in which the President of the United States continues to oversee the transfer of even more riches to his pals, while ordinary folks try to figure out why they can’t afford to retire and their kids are saddled with massive debt for college educations.

iOS

The definitive review of iOS, year after year.

After years of unabated visual and functional changes, iOS 12 is Apple's opportunity to regroup and reassess the foundation before the next big step – with one notable exception.

Water

The water crises are closer than we think. Donate to Living Water.

When a region runs out of water, the people left there don’t really die of thirst. They die mainly from the diseases that come from drinking bad water. In these places, the equation is succinct: Demand, simple human need, the assertion, even, of a right, overwhelms supply.

Local Maxima

Chris Dixon on professional development.

There is a natural human tendency to make the next step an upward one. He ends up falling for a common trap highlighted by behavioral economists: people tend to systematically overvalue near term over long term rewards. This effect seems to be even stronger in more ambitious people. Their ambition seems to make it hard for them to forgo the nearby upward step.

People early in their career should learn from computer science: meander some in your walk (especially early on), randomly drop yourself into new parts of the terrain, and when you find the highest hill, don’t waste any more time on the current hill no matter how much better the next step up might appear.

History

Jamie Catherwood has been providing historical context to a lot of what's going on in the financial world for the past several months.

The field of active management has faced many challenges over its 2,300 year existence. The rise of passive investing is merely another headwind that such managers must face. The investing landscape as we know it today may not survive the onslaught of passive investing, but active investing itself is sure to weather this storm, just as it has done for millenniums.

Trust

Nathaniel Popper observes that the technology industry is following in the footsteps of the financial industry. There's a good case to be made that the financial crisis in 2008 led to the current state of our politics and division. What potential effects will this technology crisis have in 10 years?

Whatever steps the government takes, they are unlikely to help recover the trust that has already been lost. As I know from those years of covering the banks, confidence, once gone, is not easily regained.