Jeffrey Keeten's Reviews > The Glass Hotel

”Leon hadn’t understood, and he’d given Alkaitis his retirement savings anyway. He didn’t insist on a detailed explanation. One of our signature flaws as a species: we will risk almost anything to avoid looking stupid. The strategy had seemed to adhere to a certain logic, even if the precise mechanics--puts, calls, options, holds, conversions--swam just outside of his grasp. ‘Look,’ Alkaitis had said, at his warmest and most accommodating, ‘I could break it all down for you, but I think you understand the gist of it, and at the end of the day the returns speak for themselves.’”

It is the perfect time to be reading this book as I watch the stock market plummet over fears of what the coronavirus will do to the ebb and flow of money. I pulled my money out years ago to invest in real estate, so I’m really rather a disinterested observer as the panic begins to gain momentum. What makes this downturn interesting is, if there are any Madoffesque Ponzi schemes operating out there, they will be exposed. As long as the markets are good Ponzi schemes work like clockwork. When markets start to get shaky is when too many calls come in too quickly for a scheming ponzi criminal to cover.

The party at that point is over.

The 2008 crash is what exposed Jonathan Alkaitis’s indiscretions. Rarely do investors hang with you when they start to see the market begin to free fall. They don’t care how many great returns you’ve given them in the past. They want their money back, and they want it back now. Remember the run on the bank in It’s a Wonderful Life? Well, that is exactly what happened to Alkaitis in 2008. There was no money to give them because there were no fresh investors giving Alkaitis an infusion of new cash. The whole scheme spiralled down the toilet.

The primary thing that drives a Ponzi scheme is greed. Frankly, I don’t care if some smooth talking, immoral Alkaitis type character takes rich, greedy people for all their money because they should know better. What really irritates me is when guys like Alkaitis take regular people for their small nest eggs and retirement funds. That’s when what he does goes from being a snake oil swindler to being a devastator of lives.

Emily St. James Mandel does a great job of laying out exactly what a Ponzi scheme is, but if you have fears that this book is all about schemes and money, don’t worry. Mandel has always been wonderful at building the emotion and authenticity of her characters’ lives.

So the way a Ponzi scheme works is that a slick talking operator with some trading experience convinces a few of his rich buddies to invest some money with him, guaranteeing them a certain rate of return. Sometimes those buddies are in on the scheme, and sometimes they are clueless, but they all feel absolutely brilliant when they start getting checks, reflecting astronomical returns. Some math would tell them that these rates of return are impossible, but that isn’t really a thought as long as the checks keep coming. Those initial investors then tell their friends and acquaintances about these fabulously large checks they have been “earning” and recruit more investors to the scheme. So Alkaitis is really just a salesman, a closer who convinces these people he is a brilliant investor, but what these investors don’t know is that he never invests their money. Their money is being used to pay the big returns to the initial investors and to support his lavish lifestyle. As long as the market is a bull market, attracting more investors is no problem, and everything works great. When the stock market tumbles, he doesn’t have the cash to pay out to the numerous, nervous investors wanting their money back.

That’s when people with handcuffs make a visit.

There is a mystery threaded through the plot as to what really happened to the woman who fell off the boat in the opening chapter of the book. She has an unusual name. She was named for the poet Edna St. Vincent Millay (can’t help noticing how closely that name reflects the author’s name), and few people forget a beautiful woman named Vincent. She becomes the trophy “wife” of Alkaitis. She is not stupid, but she sees money as a mysterious agent that seems to materalize, like magic in her new life. ”Everything in the shop was gorgeous, but the yellow gloves shone with a special light. She tried them on and bought them without looking at the price tag, because in the age of money her credit card was a magical, weightless thing.”

She was a bartender before she met Alkaitis and will be one again.

This is an effortless read. I blew through it on a flight from Denver to Charlotte. Mandel’s writing style is smooth and elegant. She is one of my favorite young writers, and I certainly look forward to her next book. If you haven’t read her work before, I would suggest starting with her book Station Eleven, which could very well prove to be her grand opus. If you like post-apocalyptic novels, you will enjoy her unique and poignant view of a possible future. If you think money is boring, which it is, but regardless you should still understand it, especially if your beloved Uncle Ted leaves you a nice packet, this book will give you some perspective and, hopefully, help you keep from falling into the honey laced traps of conmen. The sage advice, if it is too good to be true then it is really too good to be true, should always be remembered.

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