The Big Short: Inside the Doomsday Machine Review
I read Michael Lewis's "Liar's Poker" back in the late 80s when I was working on Wall Street. It perfectly described the bulge bracket I-banking world of that era and the culture among the well-educated 20-somethings who worked there. That book and "Bonfire of the Vanities" are classics that perfectly captured the spirit of the times.
Although Lewis's subsequent books, such as "The New New Thing" and "Moneyball" were entertaining enough, they at times were a bit fluffy; the impressive command of the subject material that Lewis exhibited in "Liar's Poker" seemed absent. In "New New Thing", Lewis became too enamored of his subject, Jim Clark, and he viewed Clark's various Internet schemes with uncritical, fawning admiration that seems hopelessly naive in retrospect.
Given this recent track record, I didn't begin "The Big Short" with the highest of expectations. Fortunately, I was pleasantly surprised. Lewis has written his best book since "Liar's Poker". "The Big Short" describes the deception, skewed incentives, greed, and ignorance that created the mortgage bubble. He makes an utterly convincing argument that the bubble and subsequent financial crisis was a completely avoidable event, the result of a screwed-up financial system where almost nobody realized how much risk was being taken.
Lewis provides us with the most thorough, detailed, yet understandable description of the creation of the mortgage bubble that you will find anywhere. But what makes the book truly stellar is his descriptions of the various individuals working within the industry who identified the blatant excesses in the mortgage market before others did and who used their knowledge to make a fortune. These guys are a decidedly quirky bunch, and Lewis's description of their eccentricities and unconventional behavior is tremendously entertaining. Still, underlying the quirkiness is an impressive work ethic and doggedness that leads them to do what great investors can do: to stand up against the tidal wave of prevailing conventional wisdom and bet against the crowd even when clients are screaming at you for doing so.
After reading "Too Big To Fail", I was sure I'd read the definitive history of the recent financial crisis and that no other book could come close. I was wrong. "The Big Short" approaches the subject from a much different perspective and is also a great book.
The Big Short: Inside the Doomsday Machine Feature
- ISBN13: 9780393072235
- Condition: NEW
- Notes: Brand New from Publisher. No Remainder Mark.
The Big Short: Inside the Doomsday Machine Overview
The #1 New York Times bestseller: a brilliant account—character-rich and darkly humorous—of how the U.S. economy was driven over the cliff. When the crash of the U. S. stock market became public knowledge in the fall of 2008, it was already old news. The real crash, the silent crash, had taken place over the previous year, in bizarre feeder markets where the sun doesn’t shine, and the SEC doesn’t dare, or bother, to tread: the bond and real estate derivative markets where geeks invent impenetrable securities to profit from the misery of lower- and middle-class Americans who can’t pay their debts. The smart people who understood what was or might be happening were paralyzed by hope and fear; in any case, they weren’t talking.
The crucial question is this: Who understood the risk inherent in the assumption of ever-rising real estate prices, a risk compounded daily by the creation of those arcane, artificial securities loosely based on piles of doubtful mortgages? Michael Lewis turns the inquiry on its head to create a fresh, character-driven narrative brimming with indignation and dark humor, a fitting sequel to his #1 best-selling
Liar’s Poker. Who got it right? he asks. Who saw the real estate market for the black hole it would become, and eventually made billions of dollars from that perception? And what qualities of character made those few persist when their peers and colleagues dismissed them as Chicken Littles? Out of this handful of unlikely—really unlikely—heroes, Lewis fashions a story as compelling and unusual as any of his earlier bestsellers, proving yet again that he is the finest and funniest chronicler of our times.
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