Lewis, Michael) The Big Short: Inside the Doomsday Machine Hardcover – 2010
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From Publishers Weekly
Although Lewis is perhaps best known for his sports-related nonfiction (including The Blind Side), his first book was the autobiographical Liar's Poker, in which he chronicled his disillusionment as a young gun on Wall Street in the greed is good 1980s. He returns to his financial roots to excavate the crisis of 2007–2008, employing his trademark technique of casting a microcosmic lens on the personal histories of several Wall Street outsiders who were betting against the grain—to shed light on the macrocosmic tale of greed and fear. Although Lewis reads the book's introduction, narration duties are assumed by Jesse Boggs, a veteran narrator of business titles (including Lewis's own 2008 book Panic!). Boggs's rich baritone is well suited to the task and trips lightly through a maze of financial jargon (CDOs, derivatives, mid-prime lending) and a dizzying cast of characters. Lewis returns on the final disc for a 10-minute interview about the crisis's aftermath, including a savvy assessment of the wisdom of the financial bailout and where-are-they-now updates on the book's various heroes and villains. A Norton hardcover. (Mar.)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to an alternate Hardcover edition.
From Bookmarks Magazine
Michael Lewis has written from the perspective of a financial insider for more than 20 years. His first book, Liar's Poker, was a warts-and-all account of Wall Street culture in the 1980s, when Lewis worked at the investment bank Salomon Brothers. Everything Lewis has touched since has turned to gold, and The Big Short seems to be another of those books, combining an incendiary, timely topic with the author's solid, insightful, and witty investigative reporting. Only the Pittsburgh Post-Gazette criticized what it felt was a rush job of writing and a failure to integrate the individual stories. Few readers will care for the message here (despite laugh-out-loud moments of absurdity), but Lewis is a capable guide into the world of CDOs, subprime mortgages, head-in-the-sand investments, inflated egos--and the big short. However, as Entertainment Weekly points at, if you're only going to read one book on the topic, perhaps this should not be the one. --This text refers to an alternate Hardcover edition.
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But this book provided details about how the Collateralized Debt Obligations (CDOs) and the Credit Default Swaps (CDSs) were constructed I learned about the few traders who figured out that the whole thing was going to blow up, and bought all the CDSs they could. Buying a CDS on a CDO was like shorting a stock. Hence, "The Big Short", the name of the book.
In spite of being full of detail about the whole thing, the book was interesting to read, and I learned a lot more than I had ever learned before. The "cast of characters" (the traders who bought the CDSs), were interesting and, a few were quite funny. I haven't seen the movie, but I think I should. I'd like to see how they turned this story into a popular film.
Lewis is a brilliant writer and master storyteller, yet he sticks to the facts and educates the reader about what really happened. It's nigh impossible to read this without getting angry and horrified about the irresponsibility of the banks and the incompetence of the regulators.
This book describes how many pension funds were ruined. Many pension funds can only invest in AAA rated bonds. Because the regulators slapped AAA ratings on all kinds of junk, those pension funds value plummeted when those bonds became worthless. Instead of punishing Wall Street, right-wing politicians blamed those with pensions (teachers, cops, firefighters), and have gone after those civic-minded workers instead of the individuals who destabilized the economy in the first place (but that is a tale for a different time and with a different book).
Near the end of the book, Lewis wrote this haunting paragraph (which has rattled around in my brain for a few years now):
"The people in a position to resolve the financial crisis were, of course, the very same people who had failed to foresee it: Treasury Secretary Henry Paulson, future Treasury Secretary Timothy Geithner, Fed Chairman Ben Bernanke, Goldman Sachs CEO Lloyd Blankfein, Morgan Stanley CEO John Mack, Citigroup CEO Vikram Pandit, and so on. A few Wall Street CEOs had been fired for their roles in the subprime mortgage catastrophe, but most remained in their jobs, and they, of all people, became important characters operating behind the closed doors, trying to figure out what to do next. With them were a handful of government officials --- the same government officials who should have known a lot more about what Wall Street firms were doing, back when they were doing it. All shared a distinction: They had proven far less capable of grasping basic truths in the heart of the U.S. financial system than a one-eyed money manager with Asperger's syndrome.
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as well as for one of the regulators.......Read more