"The orders resting on BATS were typically just the 100-share minimum required for an order to be at the front of any price queue, as their only purpose was to tease information out of investors. The HFT firms posted these tiny orders on BATS—orders to buy or sell 100 shares of basically every stock traded in the U.S. market—not because they actually wanted to buy and sell the stocks but because they wanted to find out what investors wanted to buy and sell before they did it. BATS, unsurprisingly, had been created by high-frequency traders."

"You see, I’m the event. I am the news"

"The big Wall Street firms, seemingly so shrewd and self-interested, had somehow become the dumb money. The people who ran them did not understand their own businesses, and their regulators obviously knew even less."

"All that was clear that the profits to be had from smart people making complicated bets overwhelmed anything that could be had from servicing customers, or allocating capital to productive enterprise."

"The fuses had been lit and could not be extinguished. All that remained was to observe the speed of the spark, and the size of the explosions."

"Spain and France had accumulated debts of more than ten times their annual revenues. Historically, such levels of government indebtedness had led to government default. “Here’s the only way I think things can work out for these countries,” Bass said. “If they start running real budget surpluses. Yeah, and that will happen right after monkeys fly out of your ass.”"

"He walked around the Las Vegas casino incredulous at the spectacle before him: seven thousand people, all of whom seem delighted with the world as they found it. A society with deep, troubling economic problems had rigged itself to disguise those problems, and the chief beneficiaries of the deceit were its financial middlemen. How could this be?"

"Yet another hedge fund manager explained Icelandic banking to me this way: you have a dog, and I have a cat. We agree that each is worth a billion dollars. You sell me the dog for a billion, and I sell you the cat for a billion. Now we are no longer pet owners but Icelandic banks, with a billion dollars in new assets."

"The deep problem with the system was a kind of moral inertia. So long as it served the narrow self-interests of everyone inside it, no one on the inside would ever seek to change it, no matter how corrupt or sinister it became"

"Each firm held its rope; one by one, they realized that no matter how strongly they pulled, the balloon would eventually lift them off their feet."

"Even as late as the summer of 2006, as home prices began to fall, it took a certain kind of person to see the ugly facts and react to them-to discern, in the profile of the beautiful young lady, the face of an old witch."

"Why isn't someone smarter than us doing this?"

"Here was a strange but true fact: The closer you were to the market, the harder it was to perceive its folly."

"Looking into it a bit, Jamie found that the model used by Wall Street to price LEAPs, the Black-Scholes option pricing model, made some strange assumptions."

"the more he studied Buffet, the less he thought he could be copied; indeed, the lesson of Buffet was: To succeed in a spectacular fashion you had to be spectacularly unusual."

"The CDO was, in effect, a credit laundering service for the residents of Lower Middle Class America. For Wall Street it was a machine that turned lead into gold."

"The model used by Wall Street to price trillions of dollar's worth of derivatives thought of the financial world as an orderly, continuous process. But the world was not continuous; it changed discontinuously, and often by accident."

"Incredibly, at this critical juncture in financial history, after which so much changed so quickly, the only constraint in the subprime mortgage market was a shortage of people willing to bet against it."

"A thought crossed his mind: How do you make poor people feel wealthy when wages are stagnant? You give them cheap loans."

"These guys lied to infinity. What I learned from that experience was that Wall Street didn't give a shit what it sold."

"I confess some part of me thought, If only I'd stuck around, this is the sort of catastrophe I might have created."

"A credit default swap was confusing mainly because it wasn't really a swap at all. It was an insurance policy, typically on a corporate bond, with semiannual premium payments and a fixed term."

"Ever since grade school, when his father had shown him the stock tables at the back of the newspaper and told him that the stock market was a crooked place and never to be trusted, let alone invested in, the subject had fascinated him."

"The longer-term the option, the sillier the results generated by the Black-Scholes option pricing model, and the greater the opportunity for people who didn't use it."

"The role had been spawned by the widespread belief that traders didn’t know how to talk to computer geeks and that computer geeks did not respond rationally to big, hairy traders hollering at them."

"I'd stumbled into a job at Salomon Brothers in 1985, and stumbled out, richer, in 1988, and even though I wrote a book about the experience, the whole thing still strikes me me as totally preposterous-which is one reason the money was so easy to walk away from."

"Reg NMS was intended to create equality of opportunity in the U.S. stock market. Instead it institutionalized a more pernicious inequality. A small class of insiders with the resources to create speed were now allowed to preview the market and trade on what they had seen."

"The entire history of Wall Street was the story of scandals, it now seemed to him, linked together tail to trunk like circus elephants. Every systemic market injustice arose from some loophole in a regulation created to correct some prior injustice."

"The SEC staffer argued that it was unfair that high-frequency traders couldn’t post phony bids and offers on the exchanges to extract information from actual investors without running the risk of having to stand by them."

"Political conservatives have focused on tax reduction as an economic growth strategy for three reasons. First it is self-serving; it saves rich people lots of money. Second, it comports with their ideological allegiance to laissez-faire economics. And third, tax incentives are less intrusive to business-as-usual than any other form of government planning."

"By default, we have created a "system" of nursing-home care for the aged in which middle-class people pay exorbitant rates to for-profit nursing-home entrepreneurs - and then when private resources are consumed and the patient qualifies as a pauper, the nursing home begins billing Medicaid. This is precisely the antithesis of social citizenship; instead of the poor being accorded the dignity associated with the middle class, equality of treatment is achieved by making the middle class undergo pauperization."

"The total impact of the Reagan tax cuts on capital lowered the effective cost of capital to American industry by an estimated 1.2 percent. Unfortunately, the Laffer curve did not work as advertised. Lower tax rates did not produce more tax revenues. They produced deficits."

"Britain, with the most completely socialized health system in the West, now spends the lowest fraction of GNP on health care of any major nation. There are frequent complaints of excessive waits for elective surgery and other inconveniences, but British citizens live slightly longer than Americans, on average, and our overall health conditions are comparable."

"We are already well down the road toward a managed-trade regime. It would be far better to acknowledge that reality, and seek a set of reasonable rules, than to pretend that Ricardian trade is the norm and allow mercantilist states to overwhelm U.S. industry and ratchet down wages, in the name of free trade."

"Henry Ford, in a sense, was the first Keynesian. He paid his assembly workers high wages so they could afford to buy his cars."

"Why, then, should we have to lower our living standards? What is the mysterious source of the economic loss? If productivity is increasing, why should we sacrifice services and wages?"

"Not surprisingly, extensive effort in Britain and America goes into finding tax shelter. the system is "efficient" for the shelter industry, not for the economy."

"When laissez-faire creates instability, the move to a freer market can be something less than pure gain."

"If got a big head start on the 707 from multibillion-dollar military contracts to develop an air force transport, is that a sin against free trade?"

"If social security depresses savings rates, it is only because it is unfunded."

"Technological advance often thrives in sheltered and subsidized markets, which defy free trade."

"In America, we build public housing by creating lucrative inducements to private developers, and then wax indignant at the public waste."

"In a world where technology and capital are highly transferable, there is a real risk that comparative advantage comes to be defined as whose labor force will work for the lowest wage."

"I have tried to suggest that injustice is not necessary economics;that the economics can work, and has often worked, when the constituency for it is animated. The politics of equality - that is a little harder."

"It is more than a little ironic that "capital accumulation" once a rather tendentious Marxian view of a supposed capitalist obsession, should have become - of all things - Wall Street's own slogan."

"The economic illusion is the belief that social justice is bad for economic growth."

"But of course you can have your cake and eat it, too - if you decide to bake a second cake. And you may well find that baking two cakes does not take twice the work of baking one."

"Can we reverse these deeply rooted sources of inequality? Or are they just endemic to a capitalist economy?"

"In practice, a good deal of the outcomes produced by the market reflect nothing more than luck - good or bad."

"American critics of welfare statism are often surprised to learn that countries like West Germany, with a much more comprehensive welfare state and a statistically "larger" public sector, have fewer government employees per capita than the United States does."