The Asylum

December 20, 2010
What should be a quasi-public utility—the market exchange where oil and gas are traded—is actually a madhouse of vice, vendettas, and corrupt crypto-capitalism, according to this breathless account of the New York Mercantile Exchange. Finance journalist Goodman traces NYMEX's transformation since the 1960s from an obscure market specializing in potato futures to a colossus with a stranglehold on the sale of the world's energy. Goodman explores the lurid culture of NYMEX traders, scruffy hustlers who shriek and swear and pummel each other over deals, and bring guns, drugs, and hookers right into the trading pit. It's an entertaining scene, but Goodman's account is hobbled by the strictures of the business epic, which require her to devote inordinate space to NYMEX's boardroom politics and the posturing of its chairmen. This is one of the year's most colorful business histories, but the larger importance of NYMEX remains elusive; the author paints it sometimes as a force for price transparency and stability, sometimes as a dangerously ill-regulated cesspool of speculative scams and occult market manipulations that are more insinuated than demonstrated. Photos.

December 1, 2010

A journalist specializing in finance examines the obscure but influential New York Mercantile Exchange (Nymex).

Goodman wrote about Nymex for many years for the Wall Street Journal and other publications before expanding her knowledge into a book. The takeaway is supposed to be that the rough-and-tumble Nymex traders have exercised a powerful influence on domestic and global oil prices for decades. Although the author developed remarkable access to the key players, her hypothesis is sourced more by assertion than by hard evidence. The repeated assertion that the Nymex traders influence oil prices more than oil-producing nations or national governments suggests that Goodman is inflating the importance of her subject. Still, the inside look at a mostly closed institution is enlightening. The traders cut deals on all types of commodities--potatoes dominated until the late '70s--but oil and other energy sources, including natural gas, interest Goodman the most. Her cast of characters at the beginning of the book numbers nearly 40 individuals, and less-omnipresent characters bring the total to at least 100. Unfortunately, that number is too high for the author to maintain a coherent narrative. The readability of the book is also harmed by Goodman's valiant but only partially successful attempts to explain the complex world of futures contracts, arbitrage, hedging, short selling and other artifices intended to make Nymex traders wealthy. The traders are almost all male and almost all macho, many without education beyond high school and many on the trading floor while under the influence of illegal narcotics, alcohol and tobacco. Only a handful of characters are even remotely sympathetic. Goodman's details about the infighting within the Nymex membership are astounding, mainly because the members do not seem to realize they are destroying their path to wealth. An epilogue brings readers up to date about many of the characters.

An earnest but flawed investigative report.

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