8 ms·

You Can Pay Credit Suisse Not to Work There

145 points by dsalzman 6y ago

bryanmgreen 6y ago
This is a particularly entertaining article. On one hand, capitalistic systems are clearly optimizing for peak efficiency during global instability which is reassuring in some minor or maybe not so minor way. On the other, just be nice and give your employees some extra official time off because they're obviously not working as much. Life is slowly returning to normal, but it's still wacked out and stressful - just be nice. Giving kindness when it's needed most pays long-term dividends.
- JadeNB 6y ago
  > Life is slowly returning to normal, but it's still wacked out and stressful - just be nice. I think that the most privileged (of whom I, and I expect many of us on here, am one) are experiencing less of the hardships associated to coronavirus than they did in the first flush of the reaction, and that, in the US at least, there is a rush to try to act as if things are returning to normal, but I don't think that there's much realistic sense in which things are actually returning to normal, slowly or otherwise.
empira 6y ago
My previously employer offers just that : you could spend money to 'buy' up to 10 (more) days of holidays per year (for context, you start with 20 mandatory days, plus 10 to 15 depending on your seniority and your age). It would cost you exactly what it would costs the company to pay you, and seems redondant with simply taking un-paid holiday. They were several benefits to this though : those extra days would become part of your offical compensation, so you are entitled to take them in the year, and you do not need his approbation. It is also slightly better for your pension and your taxes to buy those days rather than take un-paid holidays.
- ihaveajob 6y ago
  Interesting idea. I assume you're buying that time with post-tax money? As opposed to an unpaid holiday which would lower your taxable income.
  - StillBored 6y ago
    I'm in a similar situation, and its all setup pre-tax. You elect it at the beginning of the year, and it effectively lowers your salary by the fraction you choose not to work. Pretty neat, but its capped, otherwise I suspect there would be people who elect to work for 4 months a year (or something similar) for 1/3 of their salary.
    - WJW 6y ago
      Isn't that just regular part time work? People do that all the time. In the Netherlands there's even a law that states that you can request working part time in basically any fraction of a full work week and the company _must_ grant it unless they can show grave impact to their business that couldn't be resolved by hiring and/or training more people. Your pay is altered in the same proportion, ie you can work 50% of the time for 50% of the pay. This would probably be more difficult in the states, since health insurance is not as strongly linked to having a job over here.
- dathinab 6y ago
  But doesn't this cost the company more due to taxes and salary side costs. At least in Germany this would either not be a good deal for the employee or employer. Also I'm not sure how legal it would be in Germany and other EU countries.
  - close04 6y ago
    This would conceivably work by adjusting the work schedule. So if you want 2 extra vacation days this month you simply get assigned to a 90% working time (and salary). Your standard holiday days stay untouched but your salary goes down proportionally, and so do the employer's taxes.
wging 6y ago
It's always tough to figure out which part of a Matt Levine article the OP wanted to talk about, since the title just covers the first one. They're all interesting. If I had to guess I'd say the Luckin Coffee one, since it also mocks certain startup business models.
- kgwgk 6y ago
  And shows another reason why companies prefer not to go public and are happy to take money from private investors instead. You don't need to publish your accounts and you don't have to worry about someone looking into them to make money showing you're a fraud.
  - skrtskrt 6y ago
    That's definitely a theme that Matt Levine touches on a lot, especially when he talks about the WeWork and Uber IPOs: basically in the private VC market, your investors either pass on the investment, or they invest. They cannot short. So the investors participating in your market (not the ones who chose to sit on the sidelines) are already selected for being the people that are overly positive or at least believe in the vision. Even if they have suspicions, their incentive is to pump pump pump the valuation and the narrative so they can ultimately dump the company onto the public markets. This largely worked for Uber, but not for WeWork. Once you're public, you're exposed to short sellers and 10000x the scrutiny. To expand more, if you're in the private market and don't believe in X company, you could invest in a competitor Y instead of shorting company X, but only if you think the market opportunity is legit and company X is going about it wrong and that company Y is any good. Pretty narrow case. Matt Levine has a half-funny half-serious suggestion for essentially shorting in the private VC markets if you think the whole market is crap: found a company and have VCs pay you a shit ton of money to run it, and take a golden parachute before the house cards falls.
- deleted 6y ago
  [deleted]
kylec 6y ago
No thanks, I’m already not working there for free
whyhow 6y ago
In response to the article about USO: If you wanted to build a financial entity to track oil prices, couldn't you just form a company that just buys a warehouse and stores a large amount of oil? Then its value would be roughly equivalent to the amount of oil it has stored? Then I guess at the end of the month, the company would buy or sell more oil to align its value. Maybe operate like an etf that tracks an index?
- warbaker 6y ago
  Storing oil safely is hard: https://www.bloomberg.com/news/articles/2015-11-03/that-time-i-tried-to-buy-some-crude-oil https://www.bloomberg.com/news/articles/2015-11-03/that-time...
- zacherates 6y ago
  That strategy is discussed in footnote #2. Though one of the interesting things about such a physical oil fund is it makes it clear that you're just frittering away investor money on storage costs (discussed in footnote #4), which are more abstract/less obvious when you're spending the money trading futures rather than on a big bin to hold the oil.
  - mrfredward 6y ago
    And so the difference between May and June futures should be constrained by the cost of storing oil for a month (the price of oil for June should be <= may + 1 month storage). Of course, storage facilities take time and money to build and shutdown, so there ends up being supply and demand based fluctuations for the cost of storing oil, and so if we run out of storage space (as happened at the end of April), you can get a huge difference in prices for futures that are a short time apart (which also happened at the end of April).
- dls2016 6y ago
  Goldman Sachs did that with aluminum. https://www.nytimes.com/2013/07/21/business/a-shuffle-of-aluminum-but-to-banks-pure-gold.html https://www.nytimes.com/2013/07/21/business/a-shuffle-of-alu...
- 6y ago
fossuser 6y ago
I loved this indictment of Movie Pass (or WeWork) style companies: > "There are other business models. For instance you could make a product that people kind of want, or that they would want if it were affordable. Then you convince people to buy it by selling it for much less than it costs you to make it, or by paying them to buy it. If you do this well, you will have high revenue and rapid revenue growth, because lots of people are buying your product. You will not, however, get rich, because you’ll be spending more money making the product than you get from your customers. Your revenue will be high but your net income will be negative; it will cost you money to run this business. > But then you will go to investors, and you will say “look, I have a company with rapidly growing revenue, that’s worth something, you should pay me for a share of my company.” And they will agree—“we love rapid revenue growth,” they will say—and you will sell stock in the company for hundreds of millions of dollars. And then it will cost them money to run the business, and you will be rich. There are various possible endgames; in some of them you go to prison but in quite a lot of them you just stay rich and become an elder statesman admired for your business acumen." The later part about the Chinese coffee company fraud also getting caught by motivated short sellers was also great: > "The thing about inflating your revenue by pretending that you sold more coffee than you did is that people can go to your stores and watch you sell coffee. It is a reasonable bet that they won’t do that, because it’s incredibly boring. “Who is going to send 1,500 people to our stores to watch us sell coffee all day, count how much we sell and compare it to our financial statements,” Luckin could reasonably have thought. 1 But the answer was “short sellers”! They actually hired people to sit around watching the coffee get made, so they caught the fraud." Matt Levine is a good writer (often funny too) - I'm impressed he can continually write up these high quality newsletters almost every day. Between this, Stratechery, and Preet's podcast I find it really hard to actually read all of this. How do other people do this? It's hard to really have the time for even just one newsletter or podcast (at least with the podcasts you used to be able to listen in the car, back when we still drove places).
- echelon 6y ago
  > But the answer was “short sellers”! They actually hired people to sit around watching the coffee get made, so they caught the fraud." Is it legal to report negatively on a company you're short selling? Wouldn't that count as market manipulation, even if your reports are true? Or will simply disclosing that you have a position while simultaneously disclosing the information make it safe and legal?
dsalzman 6y ago
A podcast version of today's newsletter. https://anchor.fm/talking-money-stuff https://anchor.fm/talking-money-stuff
- 1stcity3rdcoast 6y ago
  This is great, thanks. I'm always behind on Matt's daily email and this will help me catch up. I do wish he would guest on more podcasts!
xenocyon 6y ago
This is also true of academia: you can buy your way out of the stipulated teaching load. Some faculty members with large research grants or side businesses (and little interest in teaching) find this well worth it. Meanwhile adjunct faculty - who used to only account for a small fraction of higher ed - today do the majority of college-level teaching (generally with low pay and benefits and nonexistent job security).
naringas 6y ago
> They have a fixed life, some number of months, and then they end and, if you still own them, you have to take delivery of oil. so far so good, this creates stability for companies depending on oil. > You can build a perpetual strategy around them—buy next month’s futures, wait, and as they get closer to expiry sell them and buy the following month’s futures, etc.—but then the thing you are betting on is not quite the thing you want. You are betting on the relative value of different futures, the shape of the curve, the cost of rolling futures, all this technical stuff. this looks more like gambling than real economic activity, how does this create new value? in any case in the end, this is not what the market actually has because "that product is actually impossible to manufacture"
- xyzzyz 6y ago
  this looks more like gambling than real economic activity, how does this create new value? It creates liquidity, which is very useful to oil producing companies, which can sell their product months in advance of it being actually produced.
hwestiii 6y ago
We lose a dollar on every unit, and make it up in volume!
gowld 6y ago
Levine can spin the most mundane things, like unpaid time off, into salacious stories.
basseq 6y ago
This is an interesting way to spin an unpaid furlough... which many people are being forced to take right now. It's basically equivalent. "You are going to be furloughed for 2 weeks without pay" means, "You have an additional 2 weeks of vacation, but we're going to cut your annual salary by 1/26th." Which is the same thing as, "Give us back 1/26th of your annual salary, and we'll give you 2 additional weeks of PTO."
wizzwizz4 6y ago
I don't like the straw-man near the end: > I feel like “quickly doing math on lots of different potential combinations” is actually a specialty of computers? Usually when I read defenses of floor traders they are focused on the humans’ calm common sense, not their superior ability to rapidly do complex computations. in response to: > Because of the sheer number of possible combinations when every underlying futures contract, expiration month and strike price is taken into account, human market-makers shouting and flashing hand signals can work faster and at lower cost than robots, according to the humans. I mean, sure, we've got algorithms that can short-circuit combinatorics problems for certain specific categories of problem, but the human brain is still the most powerful general-purpose parallel processor known to humanity.

145 points by dsalzman 6y ago

This is a particularly entertaining article. On one hand, capitalistic systems are clearly optimizing for peak efficiency during global instability which is reassuring in some minor or maybe not so minor way. On the other, just be nice and give your employees some extra official time off because they're obviously not working as much. Life is slowly returning to normal, but it's still wacked out and stressful - just be nice. Giving kindness when it's needed most pays long-term dividends.

JadeNB 6y ago
> Life is slowly returning to normal, but it's still wacked out and stressful - just be nice. I think that the most privileged (of whom I, and I expect many of us on here, am one) are experiencing less of the hardships associated to coronavirus than they did in the first flush of the reaction, and that, in the US at least, there is a rush to try to act as if things are returning to normal, but I don't think that there's much realistic sense in which things are actually returning to normal, slowly or otherwise.

empira 6y ago

My previously employer offers just that : you could spend money to 'buy' up to 10 (more) days of holidays per year (for context, you start with 20 mandatory days, plus 10 to 15 depending on your seniority and your age). It would cost you exactly what it would costs the company to pay you, and seems redondant with simply taking un-paid holiday. They were several benefits to this though : those extra days would become part of your offical compensation, so you are entitled to take them in the year, and you do not need his approbation. It is also slightly better for your pension and your taxes to buy those days rather than take un-paid holidays.

ihaveajob 6y ago
Interesting idea. I assume you're buying that time with post-tax money? As opposed to an unpaid holiday which would lower your taxable income.
- StillBored 6y ago
  I'm in a similar situation, and its all setup pre-tax. You elect it at the beginning of the year, and it effectively lowers your salary by the fraction you choose not to work. Pretty neat, but its capped, otherwise I suspect there would be people who elect to work for 4 months a year (or something similar) for 1/3 of their salary.
  - WJW 6y ago
    Isn't that just regular part time work? People do that all the time. In the Netherlands there's even a law that states that you can request working part time in basically any fraction of a full work week and the company _must_ grant it unless they can show grave impact to their business that couldn't be resolved by hiring and/or training more people. Your pay is altered in the same proportion, ie you can work 50% of the time for 50% of the pay. This would probably be more difficult in the states, since health insurance is not as strongly linked to having a job over here.
dathinab 6y ago
But doesn't this cost the company more due to taxes and salary side costs. At least in Germany this would either not be a good deal for the employee or employer. Also I'm not sure how legal it would be in Germany and other EU countries.
- close04 6y ago
  This would conceivably work by adjusting the work schedule. So if you want 2 extra vacation days this month you simply get assigned to a 90% working time (and salary). Your standard holiday days stay untouched but your salary goes down proportionally, and so do the employer's taxes.

wging 6y ago

It's always tough to figure out which part of a Matt Levine article the OP wanted to talk about, since the title just covers the first one. They're all interesting. If I had to guess I'd say the Luckin Coffee one, since it also mocks certain startup business models.

kgwgk 6y ago
And shows another reason why companies prefer not to go public and are happy to take money from private investors instead. You don't need to publish your accounts and you don't have to worry about someone looking into them to make money showing you're a fraud.
- skrtskrt 6y ago
  That's definitely a theme that Matt Levine touches on a lot, especially when he talks about the WeWork and Uber IPOs: basically in the private VC market, your investors either pass on the investment, or they invest. They cannot short. So the investors participating in your market (not the ones who chose to sit on the sidelines) are already selected for being the people that are overly positive or at least believe in the vision. Even if they have suspicions, their incentive is to pump pump pump the valuation and the narrative so they can ultimately dump the company onto the public markets. This largely worked for Uber, but not for WeWork. Once you're public, you're exposed to short sellers and 10000x the scrutiny. To expand more, if you're in the private market and don't believe in X company, you could invest in a competitor Y instead of shorting company X, but only if you think the market opportunity is legit and company X is going about it wrong and that company Y is any good. Pretty narrow case. Matt Levine has a half-funny half-serious suggestion for essentially shorting in the private VC markets if you think the whole market is crap: found a company and have VCs pay you a shit ton of money to run it, and take a golden parachute before the house cards falls.
deleted 6y ago
[deleted]

kylec 6y ago

No thanks, I’m already not working there for free

whyhow 6y ago

In response to the article about USO: If you wanted to build a financial entity to track oil prices, couldn't you just form a company that just buys a warehouse and stores a large amount of oil? Then its value would be roughly equivalent to the amount of oil it has stored? Then I guess at the end of the month, the company would buy or sell more oil to align its value. Maybe operate like an etf that tracks an index?

warbaker 6y ago
Storing oil safely is hard: https://www.bloomberg.com/news/articles/2015-11-03/that-time-i-tried-to-buy-some-crude-oil https://www.bloomberg.com/news/articles/2015-11-03/that-time...
zacherates 6y ago
That strategy is discussed in footnote #2. Though one of the interesting things about such a physical oil fund is it makes it clear that you're just frittering away investor money on storage costs (discussed in footnote #4), which are more abstract/less obvious when you're spending the money trading futures rather than on a big bin to hold the oil.
- mrfredward 6y ago
  And so the difference between May and June futures should be constrained by the cost of storing oil for a month (the price of oil for June should be <= may + 1 month storage). Of course, storage facilities take time and money to build and shutdown, so there ends up being supply and demand based fluctuations for the cost of storing oil, and so if we run out of storage space (as happened at the end of April), you can get a huge difference in prices for futures that are a short time apart (which also happened at the end of April).
dls2016 6y ago
Goldman Sachs did that with aluminum. https://www.nytimes.com/2013/07/21/business/a-shuffle-of-aluminum-but-to-banks-pure-gold.html https://www.nytimes.com/2013/07/21/business/a-shuffle-of-alu...
6y ago

fossuser 6y ago

I loved this indictment of Movie Pass (or WeWork) style companies: > "There are other business models. For instance you could make a product that people kind of want, or that they would want if it were affordable. Then you convince people to buy it by selling it for much less than it costs you to make it, or by paying them to buy it. If you do this well, you will have high revenue and rapid revenue growth, because lots of people are buying your product. You will not, however, get rich, because you’ll be spending more money making the product than you get from your customers. Your revenue will be high but your net income will be negative; it will cost you money to run this business. > But then you will go to investors, and you will say “look, I have a company with rapidly growing revenue, that’s worth something, you should pay me for a share of my company.” And they will agree—“we love rapid revenue growth,” they will say—and you will sell stock in the company for hundreds of millions of dollars. And then it will cost them money to run the business, and you will be rich. There are various possible endgames; in some of them you go to prison but in quite a lot of them you just stay rich and become an elder statesman admired for your business acumen." The later part about the Chinese coffee company fraud also getting caught by motivated short sellers was also great: > "The thing about inflating your revenue by pretending that you sold more coffee than you did is that people can go to your stores and watch you sell coffee. It is a reasonable bet that they won’t do that, because it’s incredibly boring. “Who is going to send 1,500 people to our stores to watch us sell coffee all day, count how much we sell and compare it to our financial statements,” Luckin could reasonably have thought. 1 But the answer was “short sellers”! They actually hired people to sit around watching the coffee get made, so they caught the fraud." Matt Levine is a good writer (often funny too) - I'm impressed he can continually write up these high quality newsletters almost every day. Between this, Stratechery, and Preet's podcast I find it really hard to actually read all of this. How do other people do this? It's hard to really have the time for even just one newsletter or podcast (at least with the podcasts you used to be able to listen in the car, back when we still drove places).

echelon 6y ago
> But the answer was “short sellers”! They actually hired people to sit around watching the coffee get made, so they caught the fraud." Is it legal to report negatively on a company you're short selling? Wouldn't that count as market manipulation, even if your reports are true? Or will simply disclosing that you have a position while simultaneously disclosing the information make it safe and legal?

dsalzman 6y ago

A podcast version of today's newsletter. https://anchor.fm/talking-money-stuff https://anchor.fm/talking-money-stuff

1stcity3rdcoast 6y ago
This is great, thanks. I'm always behind on Matt's daily email and this will help me catch up. I do wish he would guest on more podcasts!

xenocyon 6y ago

This is also true of academia: you can buy your way out of the stipulated teaching load. Some faculty members with large research grants or side businesses (and little interest in teaching) find this well worth it. Meanwhile adjunct faculty - who used to only account for a small fraction of higher ed - today do the majority of college-level teaching (generally with low pay and benefits and nonexistent job security).

naringas 6y ago

> They have a fixed life, some number of months, and then they end and, if you still own them, you have to take delivery of oil. so far so good, this creates stability for companies depending on oil. > You can build a perpetual strategy around them—buy next month’s futures, wait, and as they get closer to expiry sell them and buy the following month’s futures, etc.—but then the thing you are betting on is not quite the thing you want. You are betting on the relative value of different futures, the shape of the curve, the cost of rolling futures, all this technical stuff. this looks more like gambling than real economic activity, how does this create new value? in any case in the end, this is not what the market actually has because "that product is actually impossible to manufacture"

xyzzyz 6y ago
this looks more like gambling than real economic activity, how does this create new value? It creates liquidity, which is very useful to oil producing companies, which can sell their product months in advance of it being actually produced.

hwestiii 6y ago

We lose a dollar on every unit, and make it up in volume!

gowld 6y ago

Levine can spin the most mundane things, like unpaid time off, into salacious stories.

basseq 6y ago

This is an interesting way to spin an unpaid furlough... which many people are being forced to take right now. It's basically equivalent. "You are going to be furloughed for 2 weeks without pay" means, "You have an additional 2 weeks of vacation, but we're going to cut your annual salary by 1/26th." Which is the same thing as, "Give us back 1/26th of your annual salary, and we'll give you 2 additional weeks of PTO."

wizzwizz4 6y ago

I don't like the straw-man near the end: > I feel like “quickly doing math on lots of different potential combinations” is actually a specialty of computers? Usually when I read defenses of floor traders they are focused on the humans’ calm common sense, not their superior ability to rapidly do complex computations. in response to: > Because of the sheer number of possible combinations when every underlying futures contract, expiration month and strike price is taken into account, human market-makers shouting and flashing hand signals can work faster and at lower cost than robots, according to the humans. I mean, sure, we've got algorithms that can short-circuit combinatorics problems for certain specific categories of problem, but the human brain is still the most powerful general-purpose parallel processor known to humanity.