Mar
26
2010
Quick Thoughts on Michael Lewis’ The Big Short
Just finished Lewis’ latest book, The Big Short, and I had to get something down before I lose the buzz the book left me with.
- Michael Lewis’ book is the most informative, detailed, clear, and entertaining account of the subprime-mortgage disaster that brought the economy to its knees. If you’ve read When Genius Failed or any other book that attempts to explain advanced financial instruments—then you know it’s very hard to balance detail and information without boring the reader. It can be done, but it’s not easy. And Lewis does an amazing job of it here. There are parts where you’ll second guess if you’re following the details on how these CDOs and other things were created and what they mean. That’s OK: that’s part of the deal—not even the big-bank CEOs could tell you how it all worked.
- You and I are screwed. When things like this are happening, there is nothing we can do. Unless you happened to be reading prospectuses of companies like New Century and AHM (which I did, actually, and still didn’t see any of this coming) five years ago and you also happened to be very smart and ballsy, there was nothing you could do. A select group of very intelligent, very brave people made bets that made them very rich. But the rest of us were simply along for the ride. We paid for the mess in our retirement accounts, any shares of stock we own, and we’ll be paying for it for decades to come. And if it happened all over again tomorrow, there’s nothing we could do about it.
- Steve Eisman is one cool cat. He is quite the personality, and during the time leading up to the final collapse, he was vocal about what he saw happening and the people who were responsible for it. Hats off to him for not shying away from pointing fingers at the people who deserved a good finger wagging. For more on him, check out an old Lewis piece—most of it wound up in the book.
- Is Wall Street really evil and greedy? Sure, but that’s their job in a capitalist market. The problem here wasn’t Wall Street per se, it was the ratings agencies—they were bought by the big firms making all the money and no one said a word. It’s also shocking to read how nobody at S&P or Moody’s ever stood up to say, “Wait a minute, this isn’t right.” One or two well-placed whistle blowers would’ve prevented this whole catastrophe from happening…but that’s why you need people that are incredibly smart, brave, and not interested in getting rich above all else.
Go read the book, it will be the book that everyone will reference when talking about the historic collapse of 2008.
