Spread Networks laid a new fibre optics cable between New York and Chicago

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pages: 250 words: 87,722

Flash Boys: A Wall Street Revolt by Michael Lewis

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automated trading system, bash_history, Berlin Wall, Bernie Madoff, collateralized debt obligation, Fall of the Berlin Wall, financial intermediation, Flash crash, High speed trading, latency arbitrage, pattern recognition, risk tolerance, Sergey Aleynikov, Small Order Execution System, Spread Networks laid a new fibre optics cable between New York and Chicago, too big to fail, trade route, transaction costs, Vanguard fund

In mid-2010, Forbes magazine called him out of the blue to ask him what he thought about a fiber-optic cable that Spread Networks had strung from Chicago to New Jersey. Van Vliet had never heard of Spread Networks, and knew nothing about the cable, but wound up with his name in print—which, of course, led to more calls from journalists, who needed a high-frequency trading expert. Then came the flash crash, and Van Vliet’s phone rang off the hook. Eventually, federal prosecutors found him and asked him to serve as their expert witness in the trial of a former Goldman Sachs high-frequency programmer. Van Vliet still had never actually done any high-frequency trading himself, and had little to add on the value or the gist of what Serge Aleynikov had taken from Goldman Sachs. About the market itself he was badly misinformed. (He described Goldman Sachs as “the New York Yankees” of high-frequency trading.)

An ambitious hiker or cyclist could follow them all the way to a building beside the Nasdaq stock exchange, in New Jersey; or, if he turned and headed west, to the Chicago Mercantile Exchange. Across the road was a local landmark: the Red Round Barn. One of the women repeated a rural legend, saying that the red barn had been built in the round so that mice had no corners in which to hide. “People don’t know how to live in a world that is transparent,” Brad Katsuyama had said, and mice were probably no better at it. Beyond the barn was a mountain. On top of the mountain was a microwave tower—a string of them, in fact, perched on the mountains above the valley in which the line was buried. It takes roughly 8 milliseconds to send a signal from Chicago to New York and back by microwave signal, or about 4.5 milliseconds less than to send it inside an optical fiber. When Spread Networks was laying its line, the conventional wisdom was that microwave could never replace fiber.

The speed with which trades occurred on them was no longer constrained by people. The only constraint was how fast an electronic signal could travel between Chicago and New York—or, more precisely, between the data center in Chicago that housed the Chicago Mercantile Exchange and a data center beside the Nasdaq’s stock exchange in Carteret, New Jersey. What Spivey had realized, by 2008, was that there was a big difference between the trading speed that was available between these exchanges and the trading speed that was theoretically possible. Given the speed of light in fiber, it should have been possible for a trader who needed to trade in both places at once to send his order from Chicago to New York and back in roughly 12 milliseconds, or roughly a tenth of the time it takes you to blink your eyes, if you blink as fast as you can.


pages: 317 words: 84,400

Automate This: How Algorithms Came to Rule Our World by Christopher Steiner

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23andMe, Ada Lovelace, airport security, Al Roth, algorithmic trading, backtesting, big-box store, Black-Scholes formula, call centre, cloud computing, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, delta neutral, Donald Trump, Douglas Hofstadter, dumpster diving, Flash crash, Gödel, Escher, Bach, High speed trading, Howard Rheingold, index fund, Isaac Newton, John Maynard Keynes: technological unemployment, knowledge economy, late fees, Mark Zuckerberg, market bubble, medical residency, Narrative Science, PageRank, pattern recognition, Paul Graham, prediction markets, quantitative hedge fund, Renaissance Technologies, ride hailing / ride sharing, risk tolerance, Sergey Aleynikov, side project, Silicon Valley, Skype, speech recognition, Spread Networks laid a new fibre optics cable between New York and Chicago, transaction costs, upwardly mobile, Watson beat the top human players on Jeopardy!, Y Combinator

In fact, as the new machines were installed in phases, Western Union had to devise a way to slow them down to run at the same speed as the older machines so they wouldn’t offer unfair advantages to traders looking to front-run the rest of the market.6 Not long after the new tickers were installed, Western Union announced that they would be raising the rates from $25 per month for the first time in a decade.7 From there, the price of getting information as quickly as technology allowed escalated inexorably, culminating in our single strands of dark fiber that fetch $3 million per year. Just weeks after Spread Networks completed its route, rumors popped up of a yet shorter pipe from New York to Chicago. The gossip, circulated on popular finance blogs and hacker chat rooms such as NuclearPhynance, posited that a company was drilling a hole in an absolute straight line through the earth from Chicago to New York. This hole would dispense with the earth’s curvature, ensuring the shortest route possible. As fun as it sounded, the project was a complete hoax. “Yeah, I heard about that one,” says Spivey, the Spread Networks president, with a laugh. “Let’s hope it doesn’t get done anytime soon.” But with quants and hackers chasing them, Spread’s castle will never be totally secure.

Even the best algorithms can be thwarted by speed. This is why, in 2010, two men built a secret gopher hole that stretched halfway across the country. TO TRADE IS TO DIG The unlikely tale begins in 2008, when a New York hedge fund asked Daniel Spivey to develop an algorithmic trading strategy that searched out tiny price discrepancies between index futures in Chicago and their underlying stocks and securities in New York. If the future cost more in Chicago than did all of its stocks in New York, the strategy would sell futures in Chicago and buy stocks in New York. When prices in Chicago and New York realigned—and they always realigned—Spivey’s program would dump its positions and book its profit. Spivey’s strategy was no different than the arbitrage Thomas Peterffy did with similar stock indexes in disparate markets—except Spivey had to do it a lot faster.

., 119 Naples, 121 Napoleon I, emperor of France, 121 Napster, 81 Narrative Science, 218 NASA: Houston mission control of, 166, 175 predictive science at, 61, 164, 165–72, 174–77, 180, 194 Nasdaq, 177 algorithm dominance of, 49 Peterffy and, 11–17, 32, 42, 47–48, 185 terminals of, 14–17, 42 trading method at, 14 National Heart, Lung, and Blood Institute, 159 Nationsbank, Chicago Research and Trading Group bought by, 46 NBA, 142–43 Neanderthals, human crossbreeding with, 161 Nebraska, 79–80, 85 Netflix, 112, 207 Netherlands, 121 Netscape, 116, 188 Nevermind, 102 New England Patriots, 134 New Jersey, 115, 116 Newsweek, 126 Newton, Isaac, 57, 58, 59, 64, 65 New York, N.Y., 122, 130, 192, 201–2, 206 communication between markets in Chicago and, 42, 113–18, 123–24 financial markets in, 20, 198 high school matching algorithm in, 147–48 McCready’s move to, 85 Mocatta’s headquarters in, 26 Peterffy’s arrival in, 19 tech startups in, 210 New York Commodities Exchange (NYCE), 26 New Yorker, 156 New York Giants, 134 New York Knicks, 143 New York magazine, 34 New York State, health department of, 160 New York Stock Exchange (NYSE), 3, 38–40, 44–45, 49, 83, 123, 184–85 New York Times, 123, 158 New York University, 37, 132, 136, 201, 202 New Zealand, 77, 100, 191 Nietzsche, Friedrich, 69 Nirvana, 102 Nixon, Richard M., 140, 165 Nobel Prize, 23, 106 North Carolina, 48, 204 Northwestern University, 145, 186 Kellogg School of Management at, 10 Novak, Ben, 77–79, 83, 85, 86 NSA, 137 NuclearPhynance, 124 nuclear power, 139 nuclear weapons, in Iran, 137, 138–39 number theory, 65 numerals: Arabic-Indian, 56 Roman, 56 NYSE composite index, 40, 41 Oakland Athletics, 141 Obama, Barack, 46, 218–19 Occupy Wall Street, 210 O’Connor & Associates, 40, 46 OEX, see S&P 100 index Ohio, 91 oil prices, 54 OkCupid, 144–45 Olivetti home computers, 27 opera, 92, 93, 95 Operation Match, 144 opinions-driven people, 173, 174, 175 OptionMonster, 119 option prices, probability and statistics in, 27 options: Black-Scholes formula and, 23 call, 21–22 commodities, 22 definition of, 21 pricing of, 22 put, 22 options contracts, 30 options trading, 36 algorithms in, 22–23, 24, 114–15 Oregon, University of, 96–97 organ donor networks: algorithms in, 149–51, 152, 214 game theory in, 147–49 oscilloscopes, 32 Outkast, 102 outliers, 63 musical, 102 outputs, algorithmic, 54 Pacific Exchange, 40 Page, Larry, 213 PageRank, 213–14 pairs matching, 148–51 pairs trading, 31 Pakistan, 191 Pandora, 6–7, 83 Papanikolaou, Georgios, 153 Pap tests, 152, 153–54 Parham, Peter, 161 Paris, 56, 59, 121 Paris Stock Exchange, 122 Parse.ly, 201 partial differential equations, 23 Pascal, Blaise, 59, 66–67 pathologists, 153 patient data, real-time, 158–59 patterns, in music, 89, 93, 96 Patterson, Nick, 160–61 PayPal, 188 PCs, Quotron data for, 33, 37, 39 pecking orders, social, 212–14 Pennsylvania, 115, 116 Pennsylvania, University of, 49 pension funds, 202 Pentagon, 168 Perfectmatch.com, 144 Perry, Katy, 89 Persia, 54 Peru, 91 Peterffy, Thomas: ambitions of, 27 on AMEX, 28–38 automated trading by, 41–42, 47–48, 113, 116 background and early career of, 18–20 Correlator algorithm of, 42–45 early handheld computers developed by, 36–39, 41, 44–45 earnings of, 17, 37, 46, 48, 51 fear that algorithms have gone too far by, 51 hackers hired by, 24–27 independence retained by, 46–47 on index funds, 41–46 at Interactive Brokers, 47–48 as market maker, 31, 35–36, 38, 51 at Mocatta, 20–28, 31 Nasdaq and, 11–18, 32, 42, 47–48, 185 new technology innovated by, 15–16 options trading algorithm of, 22–23, 24 as outsider, 31–32 profit guidelines of, 29 as programmer, 12, 15–16, 17, 20–21, 26–27, 38, 48, 62 Quotron hack of, 32–35 stock options algorithm as goal of, 27 Timber Hill trading operation of, see Timber Hill traders eliminated by, 12–18 trading floor methods of, 28–34 trading instincts of, 18, 26 World Trade Center offices of, 11, 39, 42, 43, 44 Petty, Tom, 84 pharmaceutical companies, 146, 155, 186 pharmacists, automation and, 154–56 Philips, 159 philosophy, Leibniz on, 57 phone lines: cross-country, 41 dedicated, 39, 42 phones, cell, 124–25 phosphate levels, 162 Physicians’ Desk Reference (PDR), 146 physicists, 62, 157 algorithms and, 6 on Wall Street, 14, 37, 119, 185, 190, 207 pianos, 108–9 Pincus, Mark, 206 Pisa, 56 pitch, 82, 93, 106 Pittsburgh International Airport, security algorithm at, 136 Pittsburgh Pirates, 141 Pius II, Pope, 69 Plimpton, George, 141–42 pneumonia, 158 poetry, composed by algorithm, 100–101 poker, 127–28 algorithms for, 129–35, 147, 150 Poland, 69, 91 Polyphonic HMI, 77–79, 82–83, 85 predictive algorithms, 54, 61, 62–65 prescriptions, mistakes with, 151, 155–56 present value, of future money streams, 57 pressure, thriving under, 169–70 prime numbers, general distribution pattern of, 65 probability theory, 66–68 in option prices, 27 problem solving, cooperative, 145 Procter & Gamble, 3 programmers: Cope as, 92–93 at eLoyalty, 182–83 Peterffy as, 12, 15–16, 17, 20–21, 26–27, 38, 48, 62 on Wall Street, 13, 14, 24, 46, 47, 53, 188, 191, 203, 207 programming, 188 education for, 218–20 learning, 9–10 simple algorithms in, 54 Progress Energy, 48 Project TACT (Technical Automated Compatibility Testing), 144 proprietary code, 190 proprietary trading, algorithmic, 184 Prussia, 69, 121 PSE, 40 pseudocholinesterase deficiency, 160 psychiatry, 163, 171 psychology, 178 Pu, Yihao, 190 Pulitzer Prize, 97 Purdue University, 170, 172 put options, 22, 43–45 Pythagorean algorithm, 64 quadratic equations, 63, 65 quants (quantitative analysts), 6, 46, 124, 133, 198, 200, 202–3, 204, 205 Leibniz as, 60 Wall Street’s monopoly on, 183, 190, 191, 192 Queen’s College, 72 quizzes, and OkCupid’s algorithms, 145 Quotron machine, 32–35, 37 Rachmaninoff, Sergei, 91, 96 Radiohead, 86 radiologists, 154 radio transmitters, in trading, 39, 41 railroad rights-of-way, 115–17 reactions-based people, 173–74, 195 ReadyForZero, 207 real estate, 192 on Redfin, 207 recruitment, of math and engineering students, 24 Redfin, 192, 206–7, 210 reflections-driven people, 173, 174, 182 refraction, indexes of, 15 regression analysis, 62 Relativity Technologies, 189 Renaissance Technologies, 160, 179–80, 207–8 Medallion Fund of, 207–8 retirement, 50, 214 Reuter, Paul Julius, 122 Rhode Island hold ‘em poker, 131 rhythms, 82, 86, 87, 89 Richmond, Va., 95 Richmond Times-Dispatch, 95 rickets, 162 ride sharing, algorithm for, 130 riffs, 86 Riker, William H., 136 Ritchie, Joe, 40, 46 Rochester, N.Y., 154 Rolling Stones, 86 Rondo, Rajon, 143 Ross, Robert, 143–44 Roth, Al, 147–49 Rothschild, Nathan, 121–22 Royal Society, London, 59 RSB40, 143 runners, 39, 122 Russia, 69, 193 intelligence of, 136 Russian debt default of 1998, 64 Rutgers University, 144 Ryan, Lee, 79 Saint Petersburg Academy of Sciences, 69 Sam Goody, 83 Sandberg, Martin (Max Martin), 88–89 Sandholm, Tuomas: organ donor matching algorithm of, 147–51 poker algorithm of, 128–33, 147, 150 S&P 100 index, 40–41 S&P 500 index, 40–41, 51, 114–15, 218 Santa Cruz, Calif., 90, 95, 99 satellites, 60 Savage Beast, 83 Saverin, Eduardo, 199 Scholes, Myron, 23, 62, 105–6 schools, matching algorithm for, 147–48 Schubert, Franz, 98 Schwartz, Pepper, 144 science, education in, 139–40, 218–20 scientists, on Wall Street, 46, 186 Scott, Riley, 9 scripts, algorithms for writing, 76 Seattle, Wash., 192, 207 securities, 113, 114–15 mortgage-backed, 203 options on, 21 Securities and Exchange Commission (SEC), 185 semiconductors, 60, 186 sentence structure, 62 Sequoia Capital, 158 Seven Bridges of Königsberg, 69, 111 Shannon, Claude, 73–74 Shuruppak, 55 Silicon Valley, 53, 81, 90, 116, 188, 189, 215 hackers in, 8 resurgence of, 198–211, 216 Y Combinator program in, 9, 207 silver, 27 Simons, James, 179–80, 208, 219 Simpson, O.


pages: 356 words: 105,533

Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market by Scott Patterson

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algorithmic trading, automated trading system, banking crisis, bash_history, Bernie Madoff, butterfly effect, buttonwood tree, cloud computing, collapse of Lehman Brothers, Donald Trump, Flash crash, Francisco Pizarro, Gordon Gekko, Hibernia Atlantic: Project Express, High speed trading, Joseph Schumpeter, latency arbitrage, Long Term Capital Management, Mark Zuckerberg, market design, market microstructure, pattern recognition, pets.com, Ponzi scheme, popular electronics, prediction markets, quantitative hedge fund, Ray Kurzweil, Renaissance Technologies, Sergey Aleynikov, Small Order Execution System, South China Sea, Spread Networks laid a new fibre optics cable between New York and Chicago, stealth mode startup, stochastic process, transaction costs, Watson beat the top human players on Jeopardy!

And there were signs in early 2012 that even fiber-optic networks would soon be obsolete. A small group of elite high-speed traders in Chicago had started using microwaves to transmit trading signals at rates that dwarfed those boasted by fiber. First used to beam trades into the Chicago Mercantile Exchange, microwaves were now relaying trades between Chicago and New York through a series of microwave-station relays. The only problem: The signals could be disrupted by rainstorms or even geese. But the advantage was huge. According to industry estimates, microwaves could transmit a round-trip trade between Chicago and New York in ten milliseconds—a “whopping” three milliseconds faster than Spread Networks. The biggest firms were already using microwaves, insiders said, and more were coming onboard. Regulators, of course, had little if any clue about what was happening, and the high-frequency crowd was in no hurry to tell them.

Welcome to the new level playing field of high-frequency trading. The phenomenon wasn’t confined to the United States—it was going global. In October 2010, just months after Spread Networks plugged into Nasdaq, fiber-optic companies Hibernia Atlantic, based in Summit, New Jersey, and Huawai Marine Networks, of Tianjin, China, announced a plan to lay the first transatlantic fiber-optic cable built in a decade, a half-billion-dollar project that was projected to cut five milliseconds off trades between New York and London. Once complete, the three-thousand-mile cable would stretch from Halifax, Nova Scotia, across the North Atlantic to Somerset, England. As with the Spread Networks cable, the route would be shorter than other cable providers had used because it would cross shallow waters, where cable can be damaged by everything from fishing trawlers to sharks, which are attracted by the line’s electricity.

That could create havoc with his fine-tuned models. It was too much. “There’s something going on,” he shouted to the trading room. “Get out!” THE Chicago Mercantile Exchange was straining under the pressure. Then, just before 2:43 Eastern time, a massive sell order for several thousand E-mini contracts hit the tape, eating right through the order book. At the exact same moment in New York, a massive wave of ETFs mirroring the S&P 500, the Nasdaq index, and the Dow industrials were sold. Research group Nanex would later theorize that the sell order came from the same firm capitalizing on a fourteen-millisecond delay in the time it took prices to move between Chicago and New York. It labeled the trade the Disruptor. BACK in Chicago, the giant hedge fund Citadel was seeing system errors in its programs. As volumes surged, Citadel operators began noticing a slowdown in the data coming from NYSE Arca.


pages: 200 words: 54,897

Flash Boys: Not So Fast: An Insider's Perspective on High-Frequency Trading by Peter Kovac

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bank run, barriers to entry, bash_history, Bernie Madoff, Flash crash, housing crisis, index fund, locking in a profit, London Whale, market microstructure, merger arbitrage, prediction markets, price discovery process, Sergey Aleynikov, Spread Networks laid a new fibre optics cable between New York and Chicago, transaction costs, zero day

Fortunately, in the surveillance state that is today’s stock market, such a violation would have to be pretty rare and pretty insignificant to avoid detection. Finding Proof (of something): CBSX Volume and Spread Networks The story Lewis tells about CBSX is a relatively small anecdote, but it neatly demonstrates both a conspiracy paranoia and a lack of real trading knowledge. As Lewis correctly notes, the Chicago-based CBOE Stock Exchange (CBSX) suddenly exploded with activity in late 2010 – specifically, trading in the stock of Sirius. Why? Katsuyama and Ryan put their heads together and figured out that it must be because Spread Networks’ new fiber-optic cable between Chicago and New York just became operational, yet again somehow proving in their minds that high-frequency traders were front-running the market through speed. What this really proves is that they still didn’t understand a thing about electronic trading in 2010.

And if he is right, we have even more serious problems in our country. Let’s take a look at what Michael Lewis has dug up this time. Chapter 1: Spread Networks and The Value of Speed The first chapter is Michael Lewis at his best: how many other authors can make a story about laying fiber-optic cable through rural Pennsylvania a page-turner? Why Does Speed Matter (and When Does It Not)? It’s a classic story of somebody who saw an opportunity, and made a huge bet that paid off. From everyone I’ve talked to in the industry, and from my own experience, the story Lewis tells of Spread Networks is quite accurate, down to the pricing of $176k per month. Lots of people paid lots of money so that their stock market data and orders would travel between Chicago and New York in 13 milliseconds instead of 16 milliseconds. Why? Does speed really matter?

Simplified trade-through protection discussion. * * * [1] The only quotation I could find from anyone involved in high-frequency trading was about the fiber-optic network between New York and Chicago. Curiously, we never hear a word from this electronic trading firm (or any other) about actual trading. [2] Ronan Ryan, Chief Strategy Officer of IEX, as quoted in the article “IEX not anti-HFT, says founder,” John Bakie, The TRADE, April 9, 2014. [3] See “Exploratory Trading,” Adam Clark-Joseph, Job Market Paper, January 13, 2013 (emphasis added). [4] On an annualized basis, the five-year Spread Networks contract plus equipment would total approximately $2.8 million per year. It’s not clear why, but before the chapter ends this has become “tens of millions of dollars in entry fees.” Chapter 3 runs with the new inflated figure, citing “the tens of millions being spent by high-frequency traders for tiny increments of speed


pages: 478 words: 126,416

Other People's Money: Masters of the Universe or Servants of the People? by John Kay

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Affordable Care Act / Obamacare, asset-backed security, bank run, banking crisis, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, Bonfire of the Vanities, bonus culture, Bretton Woods, call centre, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, cognitive dissonance, corporate governance, Credit Default Swap, cross-subsidies, dematerialisation, diversification, diversified portfolio, Edward Lloyd's coffeehouse, Elon Musk, Eugene Fama: efficient market hypothesis, eurozone crisis, financial innovation, financial intermediation, fixed income, Flash crash, forward guidance, Fractional reserve banking, full employment, George Akerlof, German hyperinflation, Goldman Sachs: Vampire Squid, Growth in a Time of Debt, income inequality, index fund, inflation targeting, interest rate derivative, interest rate swap, invention of the wheel, Irish property bubble, Isaac Newton, London Whale, Long Term Capital Management, loose coupling, low cost carrier, M-Pesa, market design, millennium bug, mittelstand, moral hazard, mortgage debt, new economy, Nick Leeson, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shock, passive investing, peer-to-peer lending, performance metric, Peter Thiel, Piper Alpha, Ponzi scheme, price mechanism, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, railway mania, Ralph Waldo Emerson, random walk, regulatory arbitrage, Renaissance Technologies, rent control, Richard Feynman, risk tolerance, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, Schrödinger's Cat, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, sovereign wealth fund, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, Steve Wozniak, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tobin tax, too big to fail, transaction costs, tulip mania, Upton Sinclair, Vanguard fund, Washington Consensus, We are the 99%, Yom Kippur War

The finance sector establishes claims against assets – the operating assets and future profits of a company, or the physical property and prospective earnings of an individual – and almost any such claim can be turned into a tradable security. ‘High-frequency trading’ is undertaken by computers which are constantly offering to buy and sell securities. The interval for which these securities are held by their owner may – literally – be shorter than the blink of an eye. Spread Networks, a telecoms provider, has recently built a link through the Appalachian Mountains to reduce the time taken to transmit data between New York and Chicago by a little less than one millisecond. World trade has grown rapidly, but trading in foreign exchange has grown much faster. The value of daily foreign exchange transactions is almost a hundred times the value of daily international trade in goods and services. The annual volume of payments processed in Britain is £75 trillion: about forty times Britain’s national income.

., 2009, Hidden Champions of the 21st Century, London and New York, Springer Verlag. Sinclair, U., 1906, The Jungle, London, Werner Laurie. Sinclair, U., 1994, I, Candidate for Governor: And How I Got Licked, orig. pub. 1935, London, University of California Press. Smith, A., 1776, An Inquiry into the Nature and Causes of the Wealth of Nations, 5th edn, 1904, ed. Edwin Cannan, London, Methuen. Smith, G., 2012, ‘Why I Am Leaving Goldman Sachs’, The New York Times, 14 March. Soble, R.L., and Dallos, R.E., 1975, The Impossible Dream: The Equity Funding Story, the Fraud of the Century, New York, G.P. Putnam’s Sons. Sorkin, A.R., 2009, Too Big to Fail: Inside the Battle to Save Wall Street, London, Allen Lane. Stafford, P., 2010, ‘Spread Networks Unveils Managed Services’, Financial Times, 22 November.

., 2009, ‘Why Goldman Always Wins’, The Atlantic, 1 October. McCardie, J., 1917, Armstrong v. Jackson, 2KB 822. McCullough, D., 1992, Truman, New York, Simon & Schuster. McLean, B., and Elkind, P., 2003, The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, New York, Penguin. Meeker, M., 1995, The Internet Report, New York, Morgan Stanley. Megginson, W.L., and Netter, J.M., 2001, ‘From State to Market: A Survey of Empirical Studies on Privatization’, Journal of Economic Literature, 39 (2), June, pp. 321–89. Mian, A., and Sufi, A., 2014, House of Debt: How They (and You) Caused the Great Recession, and How We Can Prevent It from Happening Again, Chicago and London, The University of Chicago Press. Miles, D.K., Yang, J., and Marcheggiano, G., 2013, ‘Optimal Bank Capital’, The Economic Journal, 123 (567), pp. 1–37.


pages: 282 words: 80,907

Who Gets What — and Why: The New Economics of Matchmaking and Market Design by Alvin E. Roth

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Affordable Care Act / Obamacare, Airbnb, algorithmic trading, barriers to entry, Berlin Wall, bitcoin, Build a better mousetrap, centralized clearinghouse, computer age, crowdsourcing, deferred acceptance, desegregation, experimental economics, first-price auction, Flash crash, High speed trading, income inequality, Internet of things, invention of agriculture, invisible hand, Jean Tirole, law of one price, Lyft, market clearing, market design, medical residency, obamacare, proxy bid, road to serfdom, school choice, sealed-bid auction, second-price auction, second-price sealed-bid, Silicon Valley, spectrum auction, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, The Wealth of Nations by Adam Smith, two-sided market

Millisecond after millisecond ticks past, with no transactions and no change in the highest bid or lowest ask. Just as important, it takes a few milliseconds for news of a price change in Chicago to reach traders in New York, and vice versa. Put another way, when the price of SPY or ES changes in one city, there can be a few milliseconds of lag time in which someone who has heard the news can buy cheap on one market and sell at a higher price on the other. How fast do you have to be to make money this way? Before 2010, market news between Chicago and New York was transmitted fastest on cables that ran along the rights-of-way of roads and railways. But that year, a company called Spread Networks spent hundreds of millions of dollars to build a high-speed fiber-optic cable that went in a much straighter line and cut round-trip transmission of information and orders from 16 milliseconds to just 13.

Let’s take a look at each in turn, starting with the fastest market of all: finance. A Game of (Milli)Seconds Not far from where wheat futures are traded at the Chicago Board of Trade, there’s another marketplace, the Chicago Mercantile Exchange. And near them both, at the University of Chicago, an innovative market designer named Eric Budish (a former student of mine) has been thinking about high-speed trading at both exchanges. Budish is looking at the growing use of computerized algorithms and how they influence financial markets. He’s also looking at how changes in the design of financial marketplaces might help solve some of their long-standing structural problems. The Chicago Mercantile Exchange is a lot like the New York Stock Exchange. For one thing, they both have similar market designs: trades are made via a continuous electronic limit order book, which records the offers to buy (bids) and the offers to sell (asks) starting with the highest bid first and the lowest ask first.

See also algorithms Bowl Championship Series, 63–64 boxing, 7 Brigham and Women’s Hospital (Boston), 42 British National Health Service, 140–41 Brown, Janice Rogers, 97 Budish, Eric, 82, 86, 88, 239, 246 Burns, Adele, 42 Burns, Jack, 42 busing, 166–67 California Penal Code, 195–97 Carnegie Mellon University, 180 Catholic Church, 207 cell phones, 186. See also smartphones central planning, 7, 149–50, 166–67 Chain, Ernst, 134 chains. See kidney transplants cheap talk, 176–77 checks (bank), 23 Chen, Yan, 127–28, 241, 243 Cherokee Strip Land Run, 57–58 Chicago Board of Trade, 16–17, 82 Chicago Mercantile Exchange, 82 China, school matching in, 165–66 Civil War, 203 clearinghouses. See also National Resident Matching Program (NRMP) for British medical interns, 140–41 for medical residencies, 136–50 New York City school system, 112 in New York school choice program, 155–61 preferences information for, 34 stable outcomes with, 139–43 trading cycles and, 32–41 Coca-Cola, 25 coercion, 203, 208 coffee, 17–19 Coles, Peter, 244 college admissions, 5–6 acceptance rates in, 172 campus visits in, 178 deferred acceptance algorithm in, 141–43 early, 171–72 signaling in, 169, 170–73 strategic decision making in, 10 “College Admissions and the Stability of Marriage” (Gale & Shapley), 141–43, 158, 241, 242 college bowl games, 59–65 College Football Playoff, 64 Commodity Futures Trading Commission, 85 commodity markets, 228 coffee, 17–19 congestion in, 111–12 differentiation and, 18–20 financial, 82–89 grading systems for, 16–18 markets for, 5 price-based markets for, 9–10 standardization of, 17–18, 19–20 wheat, 15–17 Common Application, 170–73 communication, 169–92.


pages: 342 words: 94,762

Wait: The Art and Science of Delay by Frank Partnoy

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algorithmic trading, Atul Gawande, Bernie Madoff, Black Swan, blood diamonds, Cass Sunstein, Checklist Manifesto, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, Daniel Kahneman / Amos Tversky, delayed gratification, Flash crash, Frederick Winslow Taylor, George Akerlof, Google Earth, Hernando de Soto, High speed trading, impulse control, income inequality, Isaac Newton, Long Term Capital Management, Menlo Park, mental accounting, meta analysis, meta-analysis, Nick Leeson, paper trading, Paul Graham, payday loans, Ralph Nader, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, Saturday Night Live, six sigma, Spread Networks laid a new fibre optics cable between New York and Chicago, statistical model, Steve Jobs, The Market for Lemons, the scientific method, The Wealth of Nations by Adam Smith, upwardly mobile, Walter Mischel

Consider this extreme example: one of the most popular fiber-optic cable routes for carrying securities trades runs between Chicago, where most options and futures are traded, to New York, where most stocks are traded. Many firms are perfectly content to send their ChicagoNew York trades along the cables that zig and zag along old railroad tracks running through Indiana, Ohio, and Pennsylvania. They don’t care much if their trades arrive a few milliseconds faster, any more than we would care if a package sent by overnight mail arrived at 8:59 AM instead of 9:00 AM. But other firms demand a faster route, and this demand led a company, Spread Networks, to spend two years and several hundred million dollars digging a new straight-shot trench from Chicago to New York. It costs a fortune to send trades through the cables along this more direct new route, like a superfast version of Federal Express, but many firms are willing to pay to minimize latency.

Adam Smith, The Wealth of Nations (1776; University of Chicago Press, 1976), p. 112. 13. An excellent summary of the categories of methods is Ike Brannon, “What Is a Life Worth?” Regulation (Winter 2004–2005): 60–63. 14. Orley Ashenfelter and Michael Greenstone, “Using Mandated Speed Limits to Measure the Value of a Statistical Life,” Journal of Political Economy 112(S1, February 2004): S226–S267. 15. For example, medical professionals now use both the quality-adjusted-life-year, or QALY, which values a future year of perfect health more highly than a future year with some affliction, and the micromort, a unit measuring a one-in-one-million risk of death. 16. Binyamin Appelbaum, “As US Agencies Put More Value on a Life, Businesses Fret,” New York Times, February 16, 2011. 17. The definitive account of the recent financial crisis will require several more years, or perhaps decades, as was the case following the stock market crash of 1929.

Although UNX’s new trading platform was a huge success, he thought they could do even better by moving their computers three thousand miles from Burbank to New York, closer to the trading facilities of the New York Stock Exchange and NASDAQ, where most trades were completed. At the time, few people had focused on the travel time of trades. But Harrison understood that geography was causing delay: even at the speed of light, it was taking UNX’s orders a relatively long time to move across the country. He studied UNX’s transaction speeds and noticed that it took about sixty-five milliseconds from when trades entered UNX’s computers until they were completed in New York. About half of that time was coast-to-coast travel. Closer meant faster. And faster meant better. So Harrison packed up UNX’s computers, shipped them to New York, and then turned them back on. This is where the story gets, as Harrison put it, weird.


pages: 484 words: 104,873

Rise of the Robots: Technology and the Threat of a Jobless Future by Martin Ford

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3D printing, additive manufacturing, Affordable Care Act / Obamacare, AI winter, algorithmic trading, Amazon Mechanical Turk, artificial general intelligence, autonomous vehicles, banking crisis, Baxter: Rethink Robotics, Bernie Madoff, Bill Joy: nanobots, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chris Urmson, Clayton Christensen, clean water, cloud computing, collateralized debt obligation, computer age, debt deflation, deskilling, diversified portfolio, Erik Brynjolfsson, factory automation, financial innovation, Flash crash, Fractional reserve banking, Freestyle chess, full employment, Goldman Sachs: Vampire Squid, High speed trading, income inequality, indoor plumbing, industrial robot, informal economy, iterative process, Jaron Lanier, job automation, John Maynard Keynes: technological unemployment, John von Neumann, Khan Academy, knowledge worker, labor-force participation, labour mobility, liquidity trap, low skilled workers, low-wage service sector, Lyft, manufacturing employment, McJob, moral hazard, Narrative Science, Network effects, new economy, Nicholas Carr, Norbert Wiener, obamacare, optical character recognition, passive income, performance metric, Peter Thiel, Plutocrats, plutocrats, post scarcity, precision agriculture, price mechanism, Ray Kurzweil, rent control, rent-seeking, reshoring, RFID, Richard Feynman, Richard Feynman, Rodney Brooks, secular stagnation, self-driving car, Silicon Valley, Silicon Valley startup, single-payer health, software is eating the world, sovereign wealth fund, speech recognition, Spread Networks laid a new fibre optics cable between New York and Chicago, stealth mode startup, stem cell, Stephen Hawking, Steve Jobs, Steven Levy, Steven Pinker, strong AI, Stuxnet, technological singularity, telepresence, telepresence robot, The Bell Curve by Richard Herrnstein and Charles Murray, The Coming Technological Singularity, Thomas L Friedman, too big to fail, Tyler Cowen: Great Stagnation, union organizing, Vernor Vinge, very high income, Watson beat the top human players on Jeopardy!, women in the workforce

Indeed, speed—in some cases measured in millionths or even billionths of a second—is so critical to algorithmic trading success that Wall Street firms have collectively invested billions of dollars to build computing facilities and communications paths designed to produce tiny speed advantages. In 2009, for example, a company called Spread Networks spent as much as $200 million to lay down a new fiber-optic cable link stretching 825 miles in a straight line from Chicago to New York. The company operated in stealth mode so as not to alert the competition even as it blasted its way through the Allegheny Mountains. When the new fiber-optic path came online, it offered a speed advantage of perhaps three or four thousandths of a second compared with existing communications routes. That was enough to allow any algorithmic trading systems employing the new route to effectively dominate their competition.

John Markoff, “Google’s Next Phase in Driverless Cars: No Steering Wheel or Brake Pedals,” New York Times, May 27, 2014, http://www.nytimes.com/2014/05/28/technology/googles-next-phase-in-driverless-cars-no-brakes-or-steering-wheel.html. 17. Kevin Drum, “Driverless Cars Will Change Our Lives. Soon.,” Mother Jones (blog), January 24, 2013, http://www.motherjones.com/kevin-drum/2013/01/driverless-cars-will-change-our-lives-soon. 18. Lila Shapiro, “Car Wash Workers Unionize in Los Angeles,” Huffington Post, February 23, 2012, http://www.huffingtonpost.com/2012/02/23/car-wash-workers-unionize_n_1296060.html. 19. David Von Drehle, “The Robot Economy,” Time, September 9, 2013, pp. 44–45. 20. Andrew Harris, “Chicago Cabbies Sue Over Unregulated Uber, Lyft Services,” Bloomberg News, February 6, 2014, http://www.bloomberg.com/news/2014–02–06/chicago-cabbies-sue-over-unregulated-uber-lyft-services.html.

Erik Brynjolfsson, “Race Against the Machine,” presentation to the President’s Council of Advisors on Science and Technology (PCAST), May 3, 2013, http://www.whitehouse.gov/sites/default/files/microsites/ostp/PCAST/PCAST_May3_Erik%20Brynjolfsson.pdf, p. 28. 9. Claire Cain Miller and Chi Birmingham, “A Vision of the Future from Those Likely to Invent It,” New York Times (The Upshot), May 2, 2014, http://www.nytimes.com/interactive/2014/05/02/upshot/FUTURE.html. 10. F. A. Hayek, Law, Legislation and Liberty, Volume 3: The Political Order of a Free People (Chicago: University of Chicago Press, 1979), pp. 54–55. 11. Ibid., p. 55. 12. John Schmitt, Kris Warner, and Sarika Gupta, “The High Budgetary Cost of Incarceration,” Center for Economic and Policy Research, June 2010, http://www.cepr.net/documents/publications/incarceration-2010–06.pdf. 13. John G. Fernald and Charles I.


pages: 320 words: 87,853

The Black Box Society: The Secret Algorithms That Control Money and Information by Frank Pasquale

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Affordable Care Act / Obamacare, algorithmic trading, Amazon Mechanical Turk, asset-backed security, Atul Gawande, bank run, barriers to entry, Berlin Wall, Bernie Madoff, Black Swan, bonus culture, Brian Krebs, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chelsea Manning, cloud computing, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, cryptocurrency, Debian, don't be evil, Edward Snowden, en.wikipedia.org, Fall of the Berlin Wall, Filter Bubble, financial innovation, Flash crash, full employment, Goldman Sachs: Vampire Squid, Google Earth, Hernando de Soto, High speed trading, hiring and firing, housing crisis, informal economy, information retrieval, interest rate swap, Internet of things, invisible hand, Jaron Lanier, Jeff Bezos, job automation, Julian Assange, Kevin Kelly, knowledge worker, Kodak vs Instagram, kremlinology, late fees, London Interbank Offered Rate, London Whale, Mark Zuckerberg, mobile money, moral hazard, new economy, Nicholas Carr, offshore financial centre, PageRank, pattern recognition, precariat, profit maximization, profit motive, quantitative easing, race to the bottom, recommendation engine, regulatory arbitrage, risk-adjusted returns, search engine result page, shareholder value, Silicon Valley, Snapchat, Spread Networks laid a new fibre optics cable between New York and Chicago, statistical arbitrage, statistical model, Steven Levy, the scientific method, too big to fail, transaction costs, two-sided market, universal basic income, Upton Sinclair, value at risk, WikiLeaks

Stephanie Ruhle, Christine Harper, and Nina Mehta, “Knight Trading Loss Said to Be Linked to Dormant Software,” Bloomberg Technology, August 14, 2012, http://www.bloomberg.com /news /2012-08-14 /knight-software.html. Korean exchanges faced a smaller crash in late 2013. 129. For example, McCabe observes, a “Chicago-New York cable will shave about 3 milliseconds off . . . communication time.” Thomas McCabe, “When the Speed of Light Is Too Slow: Trading at the Edge,” Kurzweil Accelerating Intelligence (blog), November 11, 2010, http://www.kurzweilai.net /when-the -speed-of-light-is-too-slow. 130. This story opens Michael Lewis, Flash Boys (New York: W.W. Norton, 2014), 15. Economic sociologists have also studied Spread Networks. Donald Mackenzie et al., “Drilling Through the Allegheny Mountains: Liquidity, Materiality and High-Frequency Trading” ( Jan., 2012), at http://www.sps.ed .ac.uk /__data /assets/pdf_file/0003/78186/LiquidityResub8.pdf. 131.

Here, buy and sell signals can take on a life of their own, leading to momentum trading and herding.124 Algorithmic trading can create extraordinary instability and frozen markets when split-second trading strategies interact in unexpected ways.125 Consider, for instance, the flash crash of May 6, 2010, when the stock market lost hundreds of points in a matter of minutes.126 In a report on the crash, the CFTC and SEC observed that “as liquidity completely evaporated,” trades were “executed at irrational prices as low as one penny or as high as $100,000.”127 Traders had programmed split-second algorithmic strategies to gain a competitive edge, but soon found themselves in the position of a sorcerer’s apprentice, unable to control the technology they had developed.128 Though prices returned to normal the same day, there is no guarantee future markets will be so lucky. The Computerized Market HFT is the ultimate in fi nancial self-reference, where perceptions of value come entirely from signals encoded on trading terminals. Lately, the limiting factor in fast trading the speed of light in fiber optic cables. Thus fi rms are paying to construct ultrafast cables between fi nancial centers.129 Spread Networks spent over $200 million to lay a cable between Chicago and New York-area exchanges, estimating that fi rms could make $20 billion in a year exploiting price discrepancies (lasting less than a second) between the two cities.130 Modelers have devised more extreme solutions to the time delay problem. An “optimal scheme” would “push trading fi rms to build new computers [at] the exact, optimal points in between markets”— even if that happened to be in the middle of an ocean.131 How does this minuscule speed advantage help?

See Scott Patterson, The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It (New York: Crown Publishing, 2010). 24. Jeff Connaughton, The Payoff: Why Wall Street Always Wins (Westport, CT: Prospecta Press, 2013). Chapter 10 of Connaughton’s book is titled “The Blob,” referring to the shadowy exchange of favors among government, lobbyists, businesses, and media interests. For a theoretical and critical take on the intermixture of political and economic elites, see Hanna Fenichel Pitkin, Attack of the Blob: Hannah Arendt’s Concept of the Social (Chicago: University of Chicago Press, 2000), 5; Janine R. Wedel, Shadow Elite: How the World’s New Power Brokers Undermine Democracy, Government, and the Free Market (New York: Basic Books, 2009). 25. Jon Elster, Local Justice: How Institutions Allocate Scarce Goods and Necessary Burdens (New York: Russell Sage Foundation, 1993). 26.


pages: 369 words: 121,161

Alistair Cooke's America by Alistair Cooke

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Albert Einstein, Alistair Cooke, British Empire, double entry bookkeeping, full employment, Hernando de Soto, imperial preference, interchangeable parts, joint-stock company, Maui Hawaii, Ralph Nader, Ralph Waldo Emerson, Spread Networks laid a new fibre optics cable between New York and Chicago, strikebreaker, The Wealth of Nations by Adam Smith, transcontinental railway, Triangle Shirtwaist Factory, urban sprawl, wage slave, Works Progress Administration

Ogden gambled on the furious growth of the city and in 1841, six years after he’d arrived, the first bumper crop on the prairie paid him off. Wagons brought the crops and the livestock into Chicago; and steamboats, brigs, and schooners carried them to New York and then to Europe. In only nine years Chicago had gone from a marshy village of two hundred squatters to the largest grain market in the world. It became the reception center for all the harvests and the livestock of the prairie. It is still the stock exchange of the American farmer. Every Wednesday, on the floor of the Chicago Commodity Exchange, there is a deafening frenzy of bidding that will be filtered, at twilight, over thousands of radio stations, into a few laconic phrases: ‘Wheat up one point, corn down three eighths, soybeans steady.’ After the Civil War, more ships cruised into Chicago than into the six busiest ports of America combined. But the lake and the river traffic alone would not have made Chicago the mammoth among inland cities.

This was the first of four lakes – Michigan, Huron, Erie, and Ontario – that were linked with canals to the north and east, giving clear access all the way from the Atlantic, fifteen hundred miles away, to the western shore of Lake Michigan. At that point, at Chicago, there was a snag – literally, an obstacle that impeded navigation. Between a bend in the Chicago River and the lake there was a sand bar. Once they cut through it, Chicago had a harbor. This was done in 1833, when the place was a squatter settlement of two hundred souls. When the canal opened, the usual horde swept in: disappointed factory workers from the East, refugee farmers from the rocky soil of New England, immigrants from Europe. Two years later, when the traffic of the Lakes was beginning to hum, a thirty-year-old hustler from New York State arrived. William Ogden was an orphan, but of comfortable means, who had got out of school as soon as he could and at fifteen was already dabbling in real estate.

William Ogden was an orphan, but of comfortable means, who had got out of school as soon as he could and at fifteen was already dabbling in real estate. He fancied, he once said, ‘I could do anything I turned my hand to, and that nothing was impossible.’ He entered the New York State Legislature on an election promise to build the New York and Eric railroad. But a land company excited him with tales of the boom-to-be along the shore of Lake Michigan, and in 1835 he went to look over a patch of Chicago land his brother-in-law had bought. He was as exhilarated, at a distance, as the Northerners who were sold a slice of paradise in the Florida land boom of the 1920s. They found their plots were underwater and sometimes under the sea. He found a piece of unbroken marsh, and he was disgusted. But he roamed around the rude village and imagined a metropolis. It would have been absurd, had he not made it come true.


pages: 443 words: 112,800

The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World by Jeremy Rifkin

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3D printing, additive manufacturing, Albert Einstein, barriers to entry, borderless world, carbon footprint, centre right, collaborative consumption, collaborative economy, Community Supported Agriculture, corporate governance, decarbonisation, distributed generation, en.wikipedia.org, energy security, energy transition, global supply chain, hydrogen economy, income inequality, informal economy, invisible hand, Isaac Newton, job automation, knowledge economy, manufacturing employment, marginal employment, Martin Wolf, Masdar, megacity, Mikhail Gorbachev, new economy, oil shale / tar sands, oil shock, open borders, peak oil, Ponzi scheme, post-oil, purchasing power parity, Ray Kurzweil, Ronald Reagan, Silicon Valley, Simon Kuznets, Skype, smart grid, smart meter, Spread Networks laid a new fibre optics cable between New York and Chicago, supply-chain management, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, transaction costs, trickle-down economics, urban planning, urban renewal, Yom Kippur War, Zipcar

Bureau of the Census Library, pp. 718, 721. 4.Stover, J. F. (1961). American Railroads. Chicago: University of Chicago Press, p. 135; Ripley, W. Z. (1912). Chapters 14–15. In Railroads: Rates and Regulations. New York: Longmans, Green, and Co. 5.Chandler, A. D., Jr. (1977). Revolution in Transportation and Communication. In The Visible Hand: The Managerial Revolution in American Business. Cambridge, MA: Belknap Press, p. 120. 6.Malone, D. (1946). Dictionary of American Biography (Vol. VII). New York: Ch. Scribner’s Sons, p. 461; Burgess, G. H., Kennedy M. C., “Centennial History of the Pennsylvania Railroad 1846–1946” (1949), The Pennsylvania Railroad Company, Philadelphia, pp. 514–515. 7.Taylor, F. (1947). The Principles of Scientific Management. New York: W. W. Norton, pp. 235–236. 8.Ibid. 9.Anderson, R. O. (1984).

Thrift (Eds.), Making Sense of Time. New York: J. Wiley, p. 67. 31.Hammer, K. (1966). Experimental Evidence for the Biological Clock. In J. T. Fraser (Ed.), The Voices of Time: A Cooperative Survey of Man’s Views of Time as Expressed by the Sciences and by the Humanities. New York: G. Braziller; Meerloo, J. A. (1970). Along the Fourth Dimension: Man’s Sense of Time and History. New York: John Day Company, p. 67; Sharp, S. (1981–1982). Biological Rhythms and the Timing of Death. Omega Journal of Death and Dying, 12, pp. 15–23. CHAPTER 8 1.Barringer, F. (2010, November 26). In California, Carports that Can Generate Electricity. New York Times, p. A23. 2.Ibid. 3.Zeller, T., Jr. (2010, December 29). Utilities Seek Fresh Talent for Smart Grids. New York Times. Retrieved from http://www.nytimes.com/2010/12/30/business/energy-environment/30utility.html?

Unfortunately, the current trend is toward depopulation of the city center and flight to suburban enclaves because of a lack of modern housing, severe traffic congestion, and air pollution. Although central Rome has a shortage of social housing, it has a surplus of office space. Therefore, our urban design group proposed that Rome convert now-defunct commercial buildings into new residential blocks—as both New York City and Chicago have done before—using innovative architectural techniques that echo some of the best elements of ancient Roman building design. The plan calls for leaving the historical facades intact to preserve the architectural heritage of central Rome, while excavating the central core of buildings to make room for communal gardens, like those of ancient Roman villas. The greening of Rome will also include thousands of small public gardens scattered in neighborhoods across the historic/residential core.


pages: 859 words: 204,092

When China Rules the World: The End of the Western World and the Rise of the Middle Kingdom by Martin Jacques

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Admiral Zheng, Asian financial crisis, Berlin Wall, Bretton Woods, BRICs, British Empire, credit crunch, Dava Sobel, deindustrialization, Deng Xiaoping, deskilling, discovery of the americas, Doha Development Round, energy security, European colonialism, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global reserve currency, global supply chain, illegal immigration, income per capita, invention of gunpowder, James Watt: steam engine, joint-stock company, Kenneth Rogoff, land reform, land tenure, Malacca Straits, Martin Wolf, Naomi Klein, new economy, New Urbanism, open economy, pension reform, price stability, purchasing power parity, reserve currency, rising living standards, Ronald Reagan, Scramble for Africa, Silicon Valley, South China Sea, sovereign wealth fund, special drawing rights, special economic zone, spinning jenny, Spread Networks laid a new fibre optics cable between New York and Chicago, the scientific method, Thomas L Friedman, trade liberalization, urban planning, Washington Consensus, Xiaogang Anhui farmers

., China: Fragile Superpower (Oxford: Oxford University Press, 2007) So, Hirano, ‘Study of Contemporary Political History of East Asian Region - from the Chain Effect of Chinese and Japanese Nationalism Perspective’, workshop on Sino-Japanese relations, Renmin-Aichi University conference, Beijing, 2005 Song, Weiquiang, seminar paper, Aichi University, 21 May, 2005 ——‘Study on Massive Group Incidents of Chinese Peasants’, PhD dissertation, Nankai University, 20 April 2006 Soros, George, The Crisis of Global Capitalism (New York: Public Affairs, 1998) Spence, Jonathan D., The Chan’s Great Continent: China in Western Minds (New York: W. W. Norton, 1998) ——The Search for Modern China, 2nd edn (New York: W. W. Norton, 1999) Stanlaw, James, ‘English in Japanese Communicative Strategies’, in Braj B. Kachru, ed., The Other Tongue: English Across Cultures (Urbana and Chicago: University of Illinois Press, 1992) Steele, Valerie, and John S. Major, China Chic: East Meets West (New Haven: Yale University Press, 1999) Stephens, Philip, ‘A Futile European Contest for Obama’s Ear’, Financial Times, 10 November 2008 Stiglitz, Joseph E., ‘Development in Defiance of the Washington Consensus’, Guardian , 13 April 2006 ——Globalization and Its Discontents (London: Allen Lane, 2002) ——Making Globalization Work (London: Allen Lane, 2006) ——‘Thanks for Nothing’, Atlantic Monthly, October 2001 ——and Linda J.

., The Rise of the West: A History of the Human Community (Chicago and London: University of Chicago Press, 1991) McRae, Hamish, The World in 2020: Power, Culture and Prosperity: A Vision of the Future (London: HarperCollins, 1994) Maddison, Angus, Chinese Economic Performance in the Long Run, Second Edition, Revised and Updated: 960- 2030AD (Paris: OECD, 2007) ——The World Economy: A Millennial Perspective (Paris: OECD, 2006) ——The World Economy: Historical Statistics (Paris: OECD, 2003) Mahbubani, Kishore, The New Asian Hemisphere: The Irresistible Shift of Global Power to the East (New York: Public Affairs, 2008) Manji, Firoze, and Stephen Marks, eds, African Perspectives on China in Africa (Oxford: Fahamu, 2007) Mann, James, The China Fantasy: How Our Leaders Explain Away Chinese Repression (New York: Viking, 2007) Martinez, D.

., ‘Not “When to Marry” but “Whether to Marry”: The Changing Context of Marriage Decisions in East and Southeast Asia’, in Gavin Jones and Kamalini Ramdas, eds, Untying the Knot: Ideal and Reality in Asian Marriage (Singapore: NUS Press, 2004) Kachru, Braj B., ed., Asian Englishes: Beyond the Canon (Hong Kong: Hong Kong University Press, 2005) ——The Other Tongue: English Across Cultures (Urbana and Chicago: University of Illinois Press, 1992) Kagan, Robert, ‘The Case for a League of Democracies’, Financial Times, 13 May 2008 ——Dangerous Nation: America and the World 1600-1898 (London: Atlantic Books, 2006) ——Paradise and Power: America and Europe in the New World Order (London: Atlantic Books, 2003) Kahn, Joseph, and Jim Yardley, ‘As China Roars, Pollution Reaches Deadly Extremes’, New York Times, 26 August 2007 Kang, David C., China Rising: Peace, Power, and Order in East Asia (New York: Columbia University Press, 2007) ——‘Getting Asia Wrong: The Need for New Analytical Frameworks’, International Security, 27:4 (Spring 2003) Kaplinsky, Raphael, Globalization, Poverty and Inequality (Cambridge: Polity, 2005) ——‘Winners and Losers: China’s Trade Threats and Opportunities for Africa’, in Leni Wild and David Mepham, eds, The New Sinosphere (London: Institute for Public Policy Research, 2006) Karumbidza, John Blessing, ‘Win-Win Economic Co-operation: Can China Save Zimbabwe’s Economy?’


pages: 734 words: 244,010

The Ancestor's Tale: A Pilgrimage to the Dawn of Evolution by Richard Dawkins

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agricultural Revolution, Alfred Russel Wallace, complexity theory, delayed gratification, double helix, Drosophila, Haight Ashbury, invention of writing, Louis Pasteur, nuclear winter, out of africa, Peter Singer: altruism, phenotype, Richard Feynman, Richard Feynman, Ronald Reagan, Spread Networks laid a new fibre optics cable between New York and Chicago, Steven Pinker, the High Line, urban sprawl

[36] BRUNET, M., GUY, F., PILBEAM, D., etal. (2002) A new hominid from the Upper Miocene of Chad, central Africa. Nature 418: 145-151. [37] BUCHSBAUM. R.(1987) Animals Without Backbones, University of Chicago Press, Chicago, 3rd edn. [38] BUTTERFIELD. N.J. (2001) Paleobiology of the late Mesoproterozoic (ca. 1200 Ma) Hunting Formation, Somerset Island, arctic Canada. Precambrian Research 111: 235-256. [39] CAIRNS-SMITH, A. G. (1985) Seven Clues to the Origin of Life. Cambridge University Press, Cambridge. [40] CARROLL, R. L. (1988) Vertebrate Paleontology and Evolution. W.H. Freeman, New York. [41] CATANIA, K. C., KAAS.J. H. (1997) Somatosensory fovea in the star-nosed mole: Behavioral use of the star in relation to innervation patterns and cortical representation.Journal of Comparative Neurology 387: 215-233

Tatiana's Sex Advice to ail Creation. Metropolitan Books, New York,. [148] KAUFFMAN, S.A. (1985) Self-organization, selective adaptation, and its limits. In Evolution at a Crossroads (Depew, D.J. & Weber. B. H., eds.). pp. 169-207. MIT Press, Cambridge. Mass. [149] KEELING, P.J., & FAST, N.M. (2002) Microsporidia: Biology and evolution of highly reduced intracellular parasites. Annual Review of Miaobiology 56: 93-116. [150] KEMP, T. S. (1982) Mammal lilce reptiles and the origin of mammals. Academic Press, London. [151] KEMP.T. S. (1982) The reptiles that became mammals. New Scientist 93: 581-584, [152] KIMURA, M. (1994) Population Genetics. Molecular Evolution and the Neutral Theory (Takahata. N. ed.). University of Chicago Press, Chicago. [153] KINGDON, J. (1990) Island Africa, Collins, London

[58] CRONIN, H. (1991) The Ant and the Peacock: Altruism andSexuai Selection from Darwin to Today. Cambridge University Press, Cambridge. [59] DARWIN, C. (1860/1859) On The Origin of Species by Means of Natural Selection. John Murray, London. [60] DARWIN. C. (1987/1842) The Geology of the Voyage of HMS Beagle: The Structure and Distribution of Coral Reefs. New York University Press, New York. [61] DARWIN, C. (2002/1839) The Voyage of the Beagle. Dover Publications, New York. [62] DARWIN, C. (2003/1871) The Descent of Man. Gibson Square Books, London. [63] DARWIN, F. (ed.) (1888) The Life And Letters of Charles Darwin. John Murray. London. [64] DAUBIN, V., GOUY, M., Si PERRIERE, G. (2002) A phylogenomic approach to bacterial phylogeny: evidence for a core of genes snaring common history. Genome Research 12: 1080-1090


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Platform Scale: How an Emerging Business Model Helps Startups Build Large Empires With Minimum Investment by Sangeet Paul Choudary

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3D printing, Airbnb, Amazon Web Services, barriers to entry, bitcoin, blockchain, business process, Clayton Christensen, collaborative economy, crowdsourcing, cryptocurrency, data acquisition, frictionless, game design, hive mind, Internet of things, invisible hand, Kickstarter, Lean Startup, Lyft, M-Pesa, Mark Zuckerberg, means of production, multi-sided market, Network effects, new economy, Paul Graham, recommendation engine, ride hailing / ride sharing, shareholder value, sharing economy, Silicon Valley, Skype, Snapchat, social graph, social software, software as a service, software is eating the world, Spread Networks laid a new fibre optics cable between New York and Chicago, TaskRabbit, the payments system, too big to fail, transport as a service, two-sided market, Uber and Lyft, Uber for X, Wave and Pay

Had Facebook launched throughout the world as a general purpose network, it would possibly have suffered a similar fate. Quora and LinkedIn targeted entrepreneurs and investors in the valley where their respective founding teams had significant influence. Both platforms are, respectively, global brands today. Local platforms always start by targeting a micro-market, by design. Yelp started by focusing on restaurants in San Francisco, Foursquare focused on New York City, and Groupon on Chicago. Pinterest offers an object lesson in succeeding as a follower by targeting a micro-market. Pinterest started at a time when Facebook was already huge, users were developing ‘social’ fatigue, and all the pundits of user experience were advocating real-time text feeds. An image-based social network was not exactly a venture capitalist’s dream. Pinterest grew slowly initially, but started gaining traction among designers, especially designer-bloggers, who started using Pinterest to promote themselves.

A Kickstarter project is a bid to potential funders to come over to Kickstarter and fund the project. While not necessarily a requirement for all spreadable units, the incompleteness of the interaction creates an active call to action for the recipient, prompting them to act. Spreadable units remain the most important, yet least understood, element of designing for viral adoption. EXTERNAL NETWORK What is the external network on which the unit spreads? Networks grow on top of other networks. Instagram leveraged Facebook, as did Zynga. There are countless examples of viral growth, leveraging Facebook as an underlying network. For quite some time, startups building new platforms saw Facebook as their savior for solving launch and adoption problems. For many marketers, implementing viral growth translates to little more than a simple introduction via a share button and an integration with Facebook.

Yet, most new platform ideas fail because the business design and growth strategies involved in building platforms are not well understood. Platform Scale is a builder’s manual for anyone building a platform business today. It lays out a structured approach to designing and growing a platform business model and addresses the key factors that lead to the success and failure of these businesses. “The leading resource for understanding business models for the networked age.” — PATRICK VLASKOVITS, New York Times Bestselling Author of The Lean Entrepreneur “Many understand the power of platforms. Few understand how they work. Only Sangeet tells you how to build them.” — NIR EYAL, Wall Street Journal Bestselling author of Hooked “Sangeet’s work brings science and structure to a host of emerging digital business models.” — MICHAEL KARNJANAPRAKORN, Founder and CEO, SkillShare “The go-to person when it comes to understanding digital economics


pages: 457 words: 128,838

The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna, Michael J. Casey

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3D printing, Airbnb, altcoin, bank run, banking crisis, bitcoin, blockchain, Bretton Woods, California gold rush, capital controls, carbon footprint, clean water, collaborative economy, collapse of Lehman Brothers, Columbine, Credit Default Swap, cryptocurrency, David Graeber, disintermediation, Edward Snowden, Elon Musk, ethereum blockchain, fiat currency, financial innovation, Firefox, Flash crash, Fractional reserve banking, hacker house, Hernando de Soto, high net worth, informal economy, Internet of things, inventory management, Julian Assange, Kickstarter, Kuwabatake Sanjuro: assassination market, litecoin, Long Term Capital Management, Lyft, M-Pesa, Mark Zuckerberg, McMansion, means of production, Menlo Park, mobile money, money: store of value / unit of account / medium of exchange, Network effects, new economy, new new economy, Nixon shock, offshore financial centre, payday loans, peer-to-peer lending, pets.com, Ponzi scheme, prediction markets, price stability, profit motive, RAND corporation, regulatory arbitrage, rent-seeking, reserve currency, Robert Shiller, Robert Shiller, Satoshi Nakamoto, seigniorage, shareholder value, sharing economy, short selling, Silicon Valley, Silicon Valley startup, Skype, smart contracts, special drawing rights, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, supply-chain management, Ted Nelson, The Great Moderation, the market place, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, Turing complete, Tyler Cowen: Great Stagnation, Uber and Lyft, underbanked, WikiLeaks, Y Combinator, Y2K, Zimmermann PGP

Meanwhile, San Francisco–based hedge fund Pantera Capital has gone from investing in global bonds and currencies to converting itself into a fully dedicated bitcoin vehicle, managing money on behalf of New York–based mega-hedge-fund Fortress Capital. Also in New York, Union Square Partners has taken up a key East Coast bitcoin-booster role, most commonly via the person of cofounder Fred Wilson. Big-name individuals in business and entertainment are also popping up in bitcoin and other cryptocurrency investment pools: Virgin Group chairman Sir Richard Branson, actor Ashton Kutcher via his A-Grade Investments fund, and Hong Kong billionaire Li Ka-shing, who plowed money into BitPay via his Horizons Ventures firm. Then there are those investors who’ve become so involved that they’re now part of the bitcoin community as mainstays on the bitcoin conference circuit: Matthew Roszak at Tally Capital in Chicago, Rik Willard of MintCombine in New York, and William Quigley of Santa Monica–based Clearstone Venture Partners, to name a few.

It called for an extension of the forty-five-day comment period that Lawsky had set, arguing that this was an inordinately short period for poorly funded tech firms with limited experience on Wall Street. Some suggested more drastic action and started lobbying New York State lawmakers in Albany to rein in Lawsky, framing him as a killer of innovation and new job creation in New York. Most dramatically, Circle CEO Jeremy Allaire, perhaps the bitcoiner with the best connections to the political establishment,* wrote a powerful blog post arguing that his high-profile and well-funded retail bitcoin service might have to shut out people with New York ISP addresses. Allaire posited that it would be “devastating” for bitcoin if the New York BitLicense became a template for other states. The pressure clearly had some effect. Lawsky agreed to another forty-five-day extension and said the proposal was not intended to trap little tech outfits.

-wide gasoline prices from the Energy Information Administration, http://www.eia.gov/dnav/pet/pet_pri_gnd_dcus_nus_w.htm; and bitcoin prices from the CoinDesk Bitcoin Price Index, http://www.coindesk.com/price. New York University professor David Yermack concluded that bitcoin: David Yermack, “Is Bitcoin a Real Currency?,” NBER Working Paper No. 19747, December 2013. You need look no further: CoinDesk Bitcoin Price Index. This included a harrowing “flash crash”: Paul Vigna, “BitBeat: A Bitcoin ‘Flash Crash’ as Volume Spike Briefly Takes Price to $309,” Wall Street Journal, MoneyBeat blog, August 18, 2014, http://blogs.wsj.com/moneybeat/2014/08/18/bitbeat-a-bitcoin-flash-crash-as-volume-spike-briefly-takes-price-to-309/. In a scathing presentation to the New York: Mark T. Williams, “Testimony of Mark T. Williams,” New York State Department of Financial Services, January 28–29, 2014, http://www.dfs.ny.gov/about/hearings/vc_01282014/williams.pdf.