- American Cultural Revolution

My daily email communication includes a bunch of correspondence with friends of mine who are more or less my peers at other firms. Often that means other hedge funds, but it also means guys who are running trading books (or departments) at investment banks.

We talk about the state of the market a little, but nothing too specific. We all know the rules and have no interest in telling anyone outside our own firms what we’re doing anyway. Most of the conversations are nothing more than ‘big picture’ political commentary. It's probably the same kind of snide remarks and exasperated chatter that you have with your friends. In fact, one way to think about it is as a shorter version of what I write in this blog. It’s really just a circle of friends chit chatting, the only difference is that we all trade the markets for a living, and follow the news on a minute by minute basis instead of once at the end of the day.

Persuant to all this, I got a note from a friend of mine today. He’s Chinese (here on a green card), works at a major investment bank, and is an expert in High Frequency Trading. He was telling me that he has to be a little more careful about the email that he sends back and forth going forward.

“What’s the problem” I said, “did some of our correspondence get you in trouble?”

“Not with you” he replied, “but I sent a note to another friend about the North Korea situation where I lightheartedly said that the Dear Leader must be long vol, and I got a note from legal demanding to know who the ‘dear leader’ was.”

I sent him an LOL and told him I’ll be careful in the future, but he wasn’t laughing with me.

“I’m not kidding, he said, “this reminds me of the cultural revolution. The US has degraded into a kind of corporate fascism.”

I find that a little overstated, but maybe if I was at an investment bank I’d feel that way too.

There is no doubt about it, the regulatory pendulum has swung MUCH too far in the direction of more power for the lawyers. what's worse, the idea that new government regs will somehow prevent a future crash is simply idiotic. What will happen is, they will spell out how the new rules work, someone will figure out a way around them, and the whole drama will continue again. The same as it always does.

But in the meantime we’ll be calling people before the governmental inquisition to find out what precisely they meant in their emails about world leaders. And calling people on the carpet for figuring things out before anyone else does, even if they did it on their own.