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Matt Levine Live at Bloomberg HQ (Ep. 34)

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Mercatus Center
Feb 14, 2018 · 44 min read

On derivatives markets and CryptoKitties

Think about derivatives markets — you’ve worked in that sector. By some measures derivatives are over a quadrillion in value outstanding, but there’s another way you can measure the net positions and turn it into zero.

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On Bitcoin and cryptoassets

COWEN: We have a good idea of how to price most futures and options. But when it comes to pricing, say, Bitcoin or other cryptoassets, what do you think is the best model we have — however bad they may all be — for thinking about what that value should be?

On the future of Uber

COWEN: We’re in New York. We have Uber. We have taxis. They compete against each other. There at least appears to be a long history of the taxi sector being somewhat of a natural monopoly.

Uber’s bet is that the long-term outcome of that is self-driving cars, and that they have some sort of advantage in being the provider of the self-driving car app, which I’m not sure if that is super compelling because it seems to me it’s hard to build a self-driving car. It’s relatively easy to build a routing app to send the self-driving car to you.

COWEN: The so-called moat for the company — it starts with the app, but over time it shifts to owning a fleet of self-driving cars?

On not being worried enough

COWEN: Let me ask you a very Matt Levine question. Are you worried that people aren’t worried enough?

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On what makes an activity “nerdy”

COWEN: Some activities are what we might call nerdy and others are not. Country and western music is not very nerdy. There are plenty of bars, say, in Lower Manhattan that are not very nerdy.

On the next financial crisis

COWEN: Here’s a question from a reader. I quote, “Are there huge bets being made on Wall Street now that could end in something like the CDO-MBS financial crisis debacle?”

On price discovery and IPOs

COWEN: Like you, I’m mostly an efficient markets guy, but when I look at initial public offerings I’m very baffled because investment banks take such a huge cut.

On the classics

COWEN: Now, Matt speaks Latin, and he was a classics major as an undergraduate at Harvard.

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On things under- and overrated

COWEN: Now, as you, Matt, know, in every conversation with Tyler, there’s a middle segment called “underrated versus overrated.” I toss something out. You tell me if it’s underrated or overrated. You’re always free to pass, of course.

Buffy the Vampire Slayer is a perfect example of dealing very intelligently with serious themes in a way that, on its surface, and particularly in its title, is silly and is not presented as serious, which I think is, obviously, something that I often aspire to do.

COWEN: Hearkening back to the Romans, Virgil’s magnum opus, the Aeneid. Overrated?

On the weird world of banks

COWEN: What financial stories or issues do you think are not getting enough coverage and why?

On Iliad and Nabokov’s Pnin

COWEN: Ovid once wrote, “In our leisure, we reveal what kind of people we are.” Do you agree?

Nabokov’s Pnin has this random interlude of gorgeous writing and bizarre scenery and just random pileup of weird delightfulness with no point that I find very appealing.

COWEN: If we think about mergers and acquisitions, one of the standard results in the empirical finance literature is that acquiring firms do fairly poorly. That is, acquisitions don’t seem to pay off. Yet, of course, acquisitions persist.

On the Matt Levine production function

COWEN: I sometimes like to say, “Matt Levine, only you can do what you do.” So my final question is about what I call the Matt Levine production function. So many days in the week, early in the morning typically, you have produced something that is perfectly clear and lucid and witty and informative and original.

What I think is, people have their proper metabolism for producing stuff. For me…it is reliable that I can produce something in a panic every day. Whereas, I think if I had to produce something every week, I do it about every three weeks.

The other thing is, I try to be pretty ruthlessly focused on places where I have an advantage or where I can add value. One nice thing about working at Bloomberg is that if I don’t write about something, someone else will write about it.

Q&A

AUDIENCE MEMBER: Hey, thanks a lot. On the topic of efficient markets and cryptoassets, I wonder if you think it’s possible that the prices of many of these assets are far too high now and if that might be because the risks of buying and the risks of selling are very different.

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Conversations with Tyler

A podcast in which esteemed economist Tyler Cowen engages…

Mercatus Center

Written by

The Mercatus Center at George Mason University is the world’s premier university source for market-oriented ideas.

Conversations with Tyler

A podcast in which esteemed economist Tyler Cowen engages with today's most underrated thinkers in wide-ranging explorations of their work, the world, and everything in between.

Mercatus Center

Written by

The Mercatus Center at George Mason University is the world’s premier university source for market-oriented ideas.

Conversations with Tyler

A podcast in which esteemed economist Tyler Cowen engages with today's most underrated thinkers in wide-ranging explorations of their work, the world, and everything in between.

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