Michael Lewis is a badass. The Big Short, from the same author who wrote The Blind Side, is a easy to read, short book about the financial crisis. It’s about half the size of Andrew Ross Sorkin’s Too Big to Fail but it adds a critical perspective on the 2008-9 financial crisis.
Lewis is well known in Wall Street circles for writing Liar’s Poker, a bestselling inside account of the bond market. But this book is far more important. Here’s why–books like this are like discovering a new planet. Suddenly, something far away and not easily understood is accessible to all. Everyone should read this for his account of how the economy went into freefall.
And here is why he is a badass. This is admittedly VERY complicated stuff. It’s a book I will have to read again and needed a laptop nearby so I could Google certain terms. But this book is now on the desk of many, many U.S. Senators. He’s like a visiting professor when he visits the Hill. Senators and their staff are using this book as a roadmap for regulatory reform issues. Good for Lewis and good for us that someone wrote this book.
Ok–a few thoughts. One, Lewis focuses on the guys who MADE money during the crisis. They shorted the market; more specifically, they created a market to short, shorted it, and then cashed out. I can’t fault them entirely–the bubble was going to pop. Lewis gives his characters a bit of a Robin Hood-esque treatment, but I’m not convinced they were unassailable.
Two: What Greed!!!!!! I cannot fathom the greed that drove this crisis to the breaking point. Unsustainable greed. It is a different world, a different culture (Wall Street) that got us here. Every $750,000 bank loan to a migrant farmer was driven by someone else at a big bank trying to juice his commissions and profits. It’s just sick.
Three: Sorkin’s book, this book, and many others have aided in a broader understanding of what really happened. Special mention goes to the group at This American Life and Planet Money, whose 1 hour programs helped dissect the crisis and explain what happened. I recommend them. I remember reading the headlines about the crisis, and I certainly understood the gravity. But it was like knowing that the car was broken and not opening up the hood. These books and radio programs (Imagine the best news coming from books and radios? Did someone put me in a Delorean?) should be required.
I will continue to be fascinated by the insider accounts of what went wrong in the latter part of the previous decade. I hope that we have done enough to prevent it from happening again. But really, the core of this book reinforced one thing–there were so few, maybe less than 25, people who predicted this. So few people thought it could burst like it did, and even fewer figured out a way to make money off of that burst. I guess my question to Michael Lewis would be–who are the 25 people we should be listening to now? Congress can do all it wants, but usually they end up closing the door so that what happened before couldn’t happen again. But what doors are left open? I don’t blame Congress for not knowing–how could they? I just think that at the end of the day, blind greed is a powerful thing, and you can’t legislate that away.