I just finished reading The Big Short: Inside the Doomsday Machine. You may recall that the author, Michael Short, also wrote The Blind Side, but his 1990 work Liar's Poker: Rising Through the Wreckage on Wall Street was his first glimpse at the corrupt world on Wall Street. Lewis, insightful as always, does an incredible job of factually depicting the recent mortgage meltdown in the United States. In both The Big Short and Liar’s Poker, Lewis exposes the ruthless greed and lack of morality that unfortunately have become the quintessential element on Wall Street. In The Big Short, Lewis skillfully weaves a story of the primary players who recognized the epidemic that manifested itself in the subprime mortgage meltdown and became very rich as a result.
Lewis explains in great detail what very few understood at the time and what most individuals still fail to understand about the crash of 2008. Essentially, banks allowed individuals to roll their large credit card debt into new interest only mortgages which began with low teaser rates that would balloon after two short years. The banks knew that these individuals would either default or be forced to refinance after two years. Not to be outdone, corrupt bond dealers wrapped these volatile loans into bonds and were able to get AAA ratings on many of these tranches. These garbage loans were then peddled throughout the world and eventually led to failure of some major banks in the U.S.
Unfortunately, the corrupt world described by Lewis in Liar’s Poker reared its ugly head again in the subprime mortgage meltdown. Not only did these fraudulent members on Wall Street evade prison, but they were bailed out by the same individuals who lost their homes as a result of these corrupt loans. Inexplicably, many of these exploited Americans, who will never financially recovery from losing their homes, want to extend the Bush tax cuts for this corrupt group of individuals on Wall Street. I highly recommend The Big Short and believe every American needs to become more educated with regard to what really occurred over the last five years and to reconsider some of their political views as well.
The average reader with some familiarity with financial products will find this a fascinating read. Wall Street types may believe that it is beneath their level of understanding, but who cares? Their mendacity and hubris led them down the primrose path in the first place.
ReplyDeleteThe Big Short is right next to Liars' Poker and Moneyball on my list of favorite reads.