Author Archives: Michael Froomkin

Where Are the Customers’ Yachts?

One of my all-time favorite books about Wall Street is Fred Schwed, Where Are the Customers' Yachts? or A Good Hard Look at Wall Street (1940).

It begins with the wonderful old tale of the visitor to New York who admired the yachts that the bankers and brokers had in the harbor. Naively, he then asked where the customers' yachts were. Naturally, there were no customers' yachts.

I'm reminded of this story by today's bit of front-page boosterism in the New York Times. Goldman Sachs Rakes in Profit in Credit Crisis is all about how the boffins at Goldman were smart about the mortgate crisis, and got out of the dangerous securities a year ago, or if they didn't then insured them like crazy. So they're coining it this year, while competitors are hemorrhaging.

But in a classic case of totally missing the real story, we find the following down in paragraph nine:

Even Goldman, which saw the problems coming, continued to package risky mortgages to sell to investors. Some of those investors took losses on those securities, while Goldman’s hedges were profitable.

Goldman hedged, but its customers didn't. Were the investors so sophisticated that they have only themselves to blame? Were they properly advised, and ignored the advice? Or has nothing changed since the Roaring 20s?

Well, one thing has changed: We re-wrote the securities laws. And if I were a Goldman customer who had been sold radioactive sludge as a security in the past few months without a very stern warning about the unusual risk, risk so great the G-S itself wouldn't hold the securities without insurance, I'd be calling my lawyer about now to find out what my options were.

Posted in Econ & Money | 5 Comments

Router Mapping Tables Near Breaking Point (Maybe)

Every few months, the people who know the most about the Internet's architecture warn us that the Internet is doomed — address space is running out and we need to change to IPv6 as fast as we can. And other people call them Chicken Littles.

The best case for the version that says the sky is in fact going to fall isn't simply IPv4 number address space even though there's problems there — we keep inventing fixes of various degrees of ugliness that stave off the day of reckoning for that one, and there are huge allocated but unused blocks that could in theory be repurposed. No, The Internet's real Achilles Heel may be routers.

Router mapping tables keep growing, and there are signs that (despite clever enhancements) the BGP tables are getting up to capacity. And, we now hear the cost of routing all the traffic may be growing too quickly. Which means we may soon all be singing The Day The Routers Died:

Posted in Internet | 4 Comments

Cosmic Humor

A UserFriendly comic joke you will get if you've been reading this blog.

(If puzzled, see Can the Underlying Structure of the Universe Be Represented as an E8?.)

Update: Bonus Lisi joke: UnNews:Surfer dude stuns physicists with theory of everything.

Posted in Completely Different | Comments Off on Cosmic Humor

I Am Now a Locavore

I am now a locavore.

This morning we picked up our first box of local produce from Redland Organics & Bee Heaven Farm, Miami's Community-Supported Agriculture, which proudly calls itself “the southernmost CSA in the USA.” They deliver to a member's house, not all that far from where I live.

There was a healthy mix of things in the box — not too much of anything. Mostly leafy things, but also radishes, herbs, and (if the packing list is to be believed) avocados. I didn't have time to look carefully because I have an all-day committee meeting…

Posted in Miami | 1 Comment

How to Use Google to Crack Passwords

Google as a password cracker. Amazing.

Posted in Cryptography | 3 Comments

Reasons to Avoid Law School

Paul Gowder has written an essay on Why you shouldn't go to law school.. There's a lot of truth there, but it also leaves out a few crucial things.

The truest parts are surely these: a lot of legal jobs are no fun. Some of the most no-fun jobs pay very well, but many of the no-fun jobs don't pay that well if you consider the need to repay law school (and perhaps also undergraduate) debt.

A law degree is absolutely not a guaranteed meal ticket. Nor is it a guarantee that you'll be doing something interesting. For one thing, before you even get to the negatives that Gowder lists, there's an even more basic issue that makes some people unhappy: you are a lawyer. Some people — notably a significant fraction of the people who drifted into law school straight from college because they couldn't think of anything else to do — find that they don't like being a lawyer. Gowder captures that problem. And it is a very real problem.

One thing he doesn't capture is that there are also people who actually discover they love the law. It's about important things. You get to solve people's problems. Perhaps you get to solve puzzles, or you get to deal with people.

Gowder's essay is aimed at all the people who are not landing at the elite of the profession. People who do really well get to choose some of the firms that are still run by nice people with decent values.

Gowder is writing to the rest of the world, and he paints a grim picture. What he says has a lot of truth (although I think he's overly grim about what the experience of public interest law is like), but also dramatically incomplete.

The biggest thing Gowder's essay leaves out is the attractions of government work. There are a lot of good government jobs at the local, state and national levels. The federal jobs even offer decent wages. The local jobs don't always. But government jobs do offer some other important things: because the offices are chronically understaffed and under-resourced, young lawyers get responsibility early in their careers. These jobs often offer the satisfaction of using one's talents for the public good.

Government work has many faces: prosecutors, public defenders [link added 1/17], agency lawyers, state AG's offices, advisers to legislatures and to the executive. Lots of these are frustrating yet fulfilling places to work.

The prospects for lawyers are not as bright as they were in the Good Old Days (whenever those were). The profession is stratified, pay and job quality varies enormously, satisfaction levels are shrinking while (not coincidentally) hours (especially in the highly paid sectors of the private sector) are at unreasonably high levels. And the billing rates are climbing to levels that are sure to incite client revolts.

So there are indeed many reasons not to go to law school. You should only go if you know why you are doing it (although you should also expect that you are likely to change your mind about what kind of law you like best once you are exposed to new things), not because you can't think of anything better to do. And I also suggest a couple of years working full time before law school — there's nothing like seeing the working world from the inside to both make you a more disciplined student, and also to give you insight into many of the situations that give rise to the legal issues you will spend three years analyzing. (Second-best: graduate school in an affiliated discipline, as it gives a different and also valuable perspective.)

That said, I have to admit I enjoyed many aspects of the practice of law. At the end of the day I didn't care deeply enough about which oil company got the money, but I cared about my clients (and they cared a lot which oil company got the money!), and I had pride in the quality of our work. Unlike Gowder's dismal prediciton, I was never in a position where either I or anyone around me even contemplated anything unethical. I did have the advantage of parlaying elite credentials into working for a very good and very decent firm, but not all firm jobs (at least 15 years ago) amounted to complete corporate serfdom.

I enjoyed law school more, which is a large part of why I came back to it. There really is a distinct kind of rigor and reasoning style which characterizes the law. Law is how we decide (or, sometimes, should decide) important social issues. It is the means by which we implement the large majority of public policies. It matters. Unless you are caught up in the sort of associate treadmill that eats all your waking life, a law license is also a license to take part in a meaningful way in politics, law reform, legal aid, and many other things that can be very satifying even if your day job isn't as exciting as it might be.

Posted in Law School | 14 Comments