Guy Lawson

Israel was a child of privilege who loved trading, watched traders up close during the 80s as they bribed and traded inside information, and decided he was successful enough to start his own hedge fund. When he immediately started losing, he immediately started cooking the books, and as things got bad, he looked desperately for rescue. He thought he found it in the bigger fraudsters who promised him access to secret bond auctions only available to the richest of the rich; though they kept failing to deliver, and though antifraud controls prevented them from stealing most of the money he had already stolen from clients, he believed them for a long time—after all, they were only revealing further depths to an economy he already knew was crooked. Born on third base and convinced he hit a triple, unable to build a real hedge fund, Israel believed that “shortcuts” were available; only fools played by the rules. And why would he believe otherwise?… (más)

There were a few different reactions I had to this airport thriller-style account of the life and career of Steve Israel, a hedge fund con artist. One is that it's just another rise-and-fall tale of a Wall Street jerk who got shown that he wasn't as smart as he thought he was, and whose life story would be ignored if he had been, say, a blue-collar worker from the South Side with a gambling problem rather than a rich-kid trader who turned his hedge fund into a Ponzi scheme. The book is full of lurid psychodrama and the standard "this is larger-than-life" kind of writing where the smallest bits of detail, like what kind of tattoo the main character gets, have Immense Significance. It's a bit mysterious to me exactly why and how someone else's mundane personal problems with drugs/alcohol/money/family/their marriage seem more interesting when that person has more money, and even though I'm obviously not immune to this effect (after all, I read the whole book), I found myself getting impatient with all the chin-stroking about the psychological roots of Israel's behavior, like his relationship with his father and so on.

Another way to look at the book is that an example like Israel helps give more weight to its detailed look at how silly the self-image of the finance industry is. If people like him are really smarter than the rest of us, then society is fucked, because as the lengthy quotes from interviews show, he and the rest of the Masters of the Universe crowd he hung out with were basically idiots. Cut to its core, all he and his compatriots did was steal from people, using flimsy cover stories of a magical automated trading program, regulatory loopholes, and his clients' ignorance and willingness to be deceived. That's it. Some people might find the book's depictions of cocaine parties and trips to whorehouses and jamming with the Allman Brothers thrilling or shocking or whatever, but while I'd also have had a great time with all that decadence if it were my story, anyone who has watched a few Behind the Music specials of hair metal bands will be more than familiar with how lifestyles of wild partying usually end. Furthermore, I just can't be impressed with what guys like him do: the way he eventually gets stuck doing business with a cartoonish CIA agent and his pack of shady friends with ludicrous stories of secret financial cabals and hidden conspiracies (the Octopus of the book's title is your garden-variety banking/political/power Illuminati) is more funny than anything else. How smart can you really be if you actually believe someone who says they're pals with the people who shot JFK and can get you access to a magical bond market with free money, especially when you went to a psychic beforehand and seem to base your sense of reality on cheap spy novels? Sure, you were on a lot of drugs, but come on.

Another reaction was simple disgust. The way he and his other partners in the fund talk about their exploits as acts of cleverness is sickening. There's plenty of anecdotes about the sense of power they got from being surrounded by rich and powerful people, about how great it is to be incredibly rich, and about the huge rush that they got from spinning straw into gold. But when I read these stories about fooling their clients with fake audits, or tricking regulators, or other financial crimes, I just got depressed. Maybe these people's lives of making and losing hundreds of millions of dollars are "great stories" in the kind of Greek tragedy sense that seems to infect writers like Lawson and Michael Lewis (the inevitable Icarus analogy is trotted out a few times) because they show what happens when familiar human flaws are magnified by lots of money. Or maybe these people are just small men made big by the collapse of the rotting institutions of society, nothing more admirable or impressive than your everyday loan shark, and one of the best ways to handle them is to see them for the demented idiots they actually are. Lawson is a good writer so it's likely that you'll make it to the end of the book, but knowing the damage that asshole finance types can inflict on the world, it's as hard to actually cheer for Israel and his increasingly deranged schemes to make his company solvent again as it is to cheer for a termite that's burrowing into your house, especially when his attempt to fake his own death after the jig was up didn't even last a month. "I cheated my partners, wrecked my company, and destroyed zillions of dollars in wealth based on my own inflated sense of self-worth and inability to tell the truth, and all I got was a ruined marriage and 22 years in prison." Couldn't happen to a nicer guy.… (más)

The surprisingly engrossing story of Efraim Diveroli a greedy and ethically challenged Miami Beach stoner who got into the business of winning US government arms contracts for the wars in Iraq and Afghanistan. Diveroli brought in another stoner, David Packouz, as his VP to run their biggest deal, eventually many others were drawn into his schemes from a Mormon moneyman, to a shady Swiss arms broker, Albanian gangsters, and unwitting friends. In over their heads and not understanding the reality of the world they had gotten involved in they eventually became scapegoats for the problems the US military had supplying the war on terror. Fascinating not only for what the Dudes did but for the outstanding lack of oversight and accountability in the department of defense's procurement processes and the glimpse into the world of global arms dealing. So strange at times that it didn't seem like it could be true, and with dire consequences for many of those involved, this was a great read. I received a free copy of this book through Goodreads First reads giveaways.
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