Thoughts with Whiskey: 2025-07-11

Tonight's beverage:  Weller Special Reserve.  For the price and availability, probably the best value in my opinion.

Currently reading:  The Innovators.  Walter Isaacson is a great writer, and the history that led to the computer- from the theories of Charles Babbage and Ada Lovelace through the invention of the transistor, microchip, and computer- is a powerful story.  I'm learning a lot.

Currently playing:  Nothing.  I have an issue where computer games with first person perspective usually gives me vertigo.  Could use a good new PC game (preferences are for mystery/puzzle/RPG games).  Recommendations are welcomed.

Current recommendation:  Game Changer, from Dropout.  It's a simple formula- take a bunch of comedians, put them in a game where they don't know the rules, and run with it (Taskmaster operates on the same principle, and the episodes are free on youtube).  This year's games have been utterly chaotic and brilliant, and Game Changer alone is worth getting Dropout.

The Pink Floyd retrospective continues next week.  I've known the band's most famous albums, but almost nothing of their earlier stuff.  It's a fascinating group- musically talented, with a lot of ideas- but with their early albums they are still trying to put it all together.  It's not until their eighth album that it finally comes together.  The journey is long but it's worth it.

Going Infinite: Thoughts about SBF, Crypto, and the Cult of Personality

 I have finished Going Infinite, Michael Lewis' book about Sam Bankman-Fried and the Rise and Fall of FTX.  A few thoughts:

Would you give this man 15 billion dollars?

1)  Bankman-Fried has been found guilty of seven counts of fraud, and I firmly believe the evidence is correct and that he is guilty.  What I don't know is if his intention was to actually steal the money or he was just so criminally reckless with the money that it's missing or taken by other people.  The book is full of stories about how little he paid attention to any sort of guardrails to protect the financial interests of either himself or the people around him.

2)  Lewis is a great writer. (he did a better job explaining the 2008 financial crisis to me than anyone else in his book The Big Short).  He also finds Bankman-Fried a fascinating character, and paints him in a better light than most people expect.  Lewis doesn't hide the facts, but when his opinion comes out, it is more favorable on Bankman-Fried than you would expect.

3)  Bankman-Fried comes across (in my own opinion) as an idiot savant.  He's brilliant, especially at lateral thinking.  But he's also incapable of empathy, and not only believes he is smart, but that there is no point listening to other people.  At one point in the book, when he talks about how outsiders want him to bring in a CFO (Chief Financial Officer), his quote from the book:

"There's a functional religion around the CFO," said Sam.  "I'll ask them, 'Why do I need one?'  Some people cannot articulate a single thing the CFO is supposed to do.  They'll say 'keep track of the money' or 'make projections.'  I'm like, What the fuck do you think I do all day?  You think I don't know how much money we have?"

I think we see how that turned out.

4)  Here's my big question:  Why the hell did so many people give this guy so much money?  He had investors giving him 15 billion dollars.  That's $15,000,000,000.00  

I get that he's smart.  Big deal- I know lots of smart people.  I wouldn't give them my life savings.  

This isn't a Theranos situation, where the company outright lied about what they were capable of doing.  I can understand investors falling for that.  But even after reading the book, I don't understand either what his business model was supposed to be, nor why would people trust that this reckless sociopath would be the place to invest.

I admit that I'm biased- I've gone from being a skeptic of Cryptocurrency to now believing it is a complete scam.  So when a company based around Cryptocurrency is found out to be guilty of fraud, it just reinforces my beliefs.  But obviously a lot of people trusted his company- and specifically, trusted him.  Investors have decided to investor in the founder, even though they've been burned so many times before.  You'd think that people who were responsible for other people's money would expect more safeguards than invest because they think the founder is the next Steve Jobs.

Sam Bankman-Fried is an odd character; I enjoyed the book Michael Lewis wrote about him.  But I'm glad I never invested a dime in him- and I don't understand why others did.

 

The Big Short

One of the books I received this Christmas was Michael Lewis' book The Big Short.  I actually think this is one of the most important books of the last decade, and it was made into a movie.  Which, for a book about esoteric financial transactions, is pretty amazing.

The book does a great job describing what the hell happened in the 2008 financial crisis, better than anything else I have read or seen.  I'd really recommend seeing the movie or reading the book, but if you want my interpretation (which is like asking a child to describe the Mona Lisa), it's this:

We encouraged a bunch of people to buy houses they couldn't afford with financial gimmicks (subprime mortgages).  Then the banks repackages these as bonds, used tricks to make the bonds seem a lot more secure on paper than they actually were, and ended up being so leveraged that when the housing market collapsed, it took down a large number of banks.  

I'm still not sure what amount of this was criminal and what percentage was just blind stupidity.  I think it's mainly stupidity; the banks told themselves that the housing market never fell that badly, so they basically bet everything that it never would.  

I'm a capitalist by nature, and still reading about this both shocks and angers me.  Shocks me in that these banks could be so blind that they didn't realize what they were doing;  angers me in that I'm still not sure they learned their lesson.