Author: Michael Lewis
Title: The Big Short
Publication Info: New York : W.W. Norton, c2010.
Summary/Review: While no amount of listening to NPR’s Planet Money prepared me to understand all the financial jibber-jabber in this book, Michael Lewis’ always engaging storytelling style made this book an enjoyable (if infuriating read). And central to this narrative is that few people understood the financial instruments that lead to the great collapse of 2008, even the CEO’s of Wall Street’s top financial firms. The heroes of this book are the odd bunch of characters who saw the flaws of bundling subprime mortgages into triple-a-rated bonds and profited by betting on their eventual collapse. The part of the book where one of Lewis’ subjects speaks at a Bear Stearns event at the same time that companies stocks are crashing is unbelievable and cinematic in its brilliance. This is a must-read for anyone wanting to learn about the fiscal crisis and the evils of the Wall Street system.
“That was Eisman’s logic: the logic of Wall Street’s pecking order. Goldman Sachs was the big kid who ran the games in the neighborhood. Merrill Lynch was the little fat kid assigned the least pleasant roles, just happy to be part of things. The game, as Eisman saw it, was crack the whip.” – p. 175
“The ability of Wall Street traders to see themselves in their success and their management in their failure would later be echoed, when their firms, which disdained the need for government regulation in good times, insisted on being rescued by government in bad times. Success was individual achievement; failure was a social problem.” – p. 210
Recommended books: The Return of Depression Economics and the Crisis of 2008 by Paul Krugman, The drunkard’s walk : how randomness rules our lives by Leonard Mlodinow, and The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb