"If FIFTY BANKERS ever arrive at your office all at once, (1) you have done something terrible but (2) it is absolutely their problem, not yours."

I might get into trouble for such a long quote, but I wanted to give you a sense of how sharp and funny Matt Levine's writing is (all the more remarkable given his output). Most of his work appear behind the Bloomberg paywall but for cheapskates like me, there's a free but highly influential newsletter (link at the bottom of the page).

 Highly recommended. Essential if you follow business and finance.

If you sell nickel futures at a price of $25,000 per ton, and then the price of nickel futures goes up to $100,000 per ton, then in some simple arithmetic sense you have lost $75,000 per ton. If you sold 100 tons of nickel futures, then you have lost more than $7 million. But if you sold 150,000 tons of futures, the math changes a bit; it becomes non-linear and relativistic. If you sold 150,000 tons of nickel futures at $25,000 per ton, and then the price goes up to $100,000, your banks will call you up and say “uh you have lost $11 billion, can you pay that please,” and you will say “I would prefer not to,” and an insane series of events will happen:

  1. The nickel exchange will cancel a bunch of trades and declare that actually the market price of nickel is $48,000 per ton, magically reversing most of your losses.
  2. Then the exchange will call you and say “okay let’s close you out of that trade at $48,000 per ton.”
  3. Then you will say “no, (Read more...)