The Fear Index

By Felix Salmon
January 15, 2012

I tend to find fictionalizations of high finance disappointing. I wasn’t a huge fan of Margin Call: it seemed to me oversimplistic and often quite silly in its portrayal of a how a bank like Lehman Brothers operates. And Adam Haslett’s hugely ambitious novel Union Atlantic was worse. In both cases, a series of senior bankers behaved in ways that senior bankers simply wouldn’t ever behave in reality.

Robert Harris’s The Fear Index, however, is very different. For one thing, it’s not boring: it doesn’t allow financial exegesis to slow it down, and it’s as addictive as any thriller written. PIck this up on an airplane, and you won’t want to land. On top of that, it’s well written, to boot. I wouldn’t go so far as to call it literary, necessarily, but when our antihero, Alex Hoffmann, reaches up to touch “the hard puckered smile of his wound”, or when a key subplot is artfully introduced, early in the book, with the single word “again”, and then left to simmer for 150 pages before being properly picked up, you know you’re dealing with an author who relishes the craft of writing. Oh, and did I mention there’s even an autistic fund-of-funds manager named Ezra Klein?

For me, however, the greatest pleasure of this book is that it gets finance right. It’s set in the world of algorithmic hedge funds, and the whole thing takes place on May 6, 2010 — the day of the flash crash (and the UK general election). The details are specific, and correct — everything from the way that hedge fund managers sell their funds to investors, to the PhD snobbism at algo shops, to the income-tax rates on Switzerland-based hedgies, to the mechanics of the NBBO system and algorithmic e-mini orders during the flash crash. The thing that freaks out the managers at Hoffmann’s hedge fund is not that they’re losing money, but rather that they seem to be losing their delta hedge.

This is a thriller, of course, so there’s a quantum of what Harris calls “Gothic flights of fancy” in there as well. (“Briefly the knife trembled close to his face. ‘Es ist, was Sie sich wünschen,’ whispered Karp soothingly. It is what you desire.”) And the dystopian fear at the heart of the book is not new — it’s been a science-fiction staple for decades. But as Harris explains, reality itself has already become outlandish and scary in largely-invisible ways.

Harris throws an enormous number of torments at Hoffmann, his billionaire hedge fund manager, but the one that really sends him and his wife over the edge is when her gallerist manages to sell out her entire art show on its opening night, for the sum of $200,000. Now that’s what I call a rich-people problem: there’s some very dark satire, here, just beneath the fast-paced surface. I hope that Paul Greengrass manages to retain it, in the upcoming movie.


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I’m a big fan of Robert Harris, but this book didn’t impress me as much as his other books. I see from the Amazon reviews that I am not alone in thinking that.

I know Harris spends a lot of time researching for his books and I don’t doubt it was the same for this book, but I wonder if he spent much time researching popular entertainment about similar subject matters. He might have found his novel wasn’t that original in concept – it’s like ‘The Terminator’ without automatic weapons.

Posted by theamblerx | Report as abusive

or, you know, time travel. Or Arnold Schwarzenegger.

Posted by FelixSalmon | Report as abusive

Thanks for letting me know of a new Robert Harris book. He’s an extremely versatile writer who has done very different works, all compelling.

Posted by Curmudgeon | Report as abusive

Try this financial thriller – it has some great Amazon reviews (and doesn’t cost a lot): ook/dp/B0058NX9N4

Posted by Gaw | Report as abusive

“Oh, and did I mention there’s even an autistic fund-of-funds manager named Ezra Klein?”

Any relation to the lobotomized blogger whose own contributions have become the weakest part of his WaPo empire?

Posted by klhoughton | Report as abusive