Stephen's Reviews > The Big Short: Inside the Doomsday Machine

The Big Short by Michael Lewis
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Feb 29, 12

bookshelves: ebooks, audiobook, economics-finance, 2006-2010, non-fiction, history-usa, history, busyness
Read from February 23 to 28, 2012 — I own a copy

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The Subprime Mortgage Crisis...it’s too easy to just lay blame on a cabal of greed-constipated Wall Street sphincters who unzipped their consciences, yanked down their morals and dropped a huge deuce on the U.S. financial system.

In many ways it’s TRUE and it feels REALLY good to say...but it’s too easy.

There were clearly some major crooks, scumbags and swindlers involved in this monetary atrocity...a number of whom should have been taken out to the desert and shot, in my very pissed off opinion. However, more than anything else, the crisis was caused by monumental stupidity, a lack of proper checks and balances and a blind, mindless momentum that, once started and fueled by quick profits, became an unstoppable force dragging down the economy.

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Michael Lewis opens up the windows on this malodorous morass and let’s some of the stink out by giving us an easily understandable, and eminently readable, synopsis of the financial ponzi-scheme that produced the most astoundingly epic financial crisis in U.S. history.

Told through the lens of a small cast of brilliant, eccentric and highly entertaining money mavens who were the first to see that the Subprime "emperor" was naked and dangerously out of control, Lewis traces the crisis from its origins in the mid-1990s through the bursting of the bubble that began in 2007 and is still leaking all over us. Lewis does a terrific job making this painful, and still fresh memory, an enjoyable read. He also should be complimented on making the extremely compmlicated financial instruments and inner workings of the crisis understandable to the lawman by showing us their origin through the major places of the time. The primary viewpoints used include:

Those that were Right:

Steve Eisman: An anti-social, verbally abusive hedge fund manager with no ability or desire to filter content from his thoughts to his words. Reading about Steve is hysterical as he would offend almost every Wall Street type he came in contact with…and he was usually right.

Dr. Michael Burry: A trained neurologist with Asperger’s Syndrome and one eye who picked stocks in his spare time and eventually formed one of the most successful investment firms (Scion Capital) in the country by making large, large, LARGE bets against the Subprime Mortgage market.

Meredith Whitney: a banking analyst who rose to fame when she predicted, in 2007, the massive failures of Citigroup and Bear Stearns based on their involvement in the Subprime Mortgage market.

Those that were Wrong:

Wing Chau: Head of Merrill Lynch’s CDO (Collateralized debt obligations) Group who knew that he was so right about the viability of the Subprime lending market and the sustainability of housing prices that he ended up losing Billions and bankrupting his employer.

Howie Hubler: Not content to half ass it, Hubler went ahead and lost 9 Billion Dollars on a single trade involving credit default swaps*.

* While there are a book’s worth of details, in essence a credit default swap agreement is an insurance policy whereby one party (the buyer) pays the insuring party (the seller) a series of fees (like an insurance premium) and the insuring party agrees to pay the buyer the face amount of a home loan if it defaults. When foreclosures escalated in the subprime mortgage market, the seller’s of these agreements, which included most of the major WallStreet firms, were S...C...R...E...W...E...D. Very badly screwed...along with the rest of us.

Joseph Cassano: Nicknamed “Patient Zero” of the meltdown, Joe was the executive at AIG in charge of the company’s subsidiary (AIG Financial Products Corporation) that issued billions in credit default swaps (many to Steve Eisman and Michael Burry) that ended up coming due when the housing market tanked.

One of the most interesting aspects of the book for me was how eccentric the people on the "right" side of the crisis were. Lewis shows us just how bold and anti-herd mentality a person has to be in order to be convinced that everyone else in the market is crazy and that they are right. The people in this tale are very, very unique individuals and it makes the reading a lot of fun.

This is a terrific book. Well written, thoroughly engaging and paced very, very well. It entertains while showing us succinctly how we went for economic robustness to just bustness…

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Now, there are aspects of the financial meltdown that I would have liked to have seen discussed though I will not call their absence a gripe on my part. A book dealing with all of the permutations and trickle down effects of the mortgage crisis would have looked like a multiple volume encyclopedia and would be a tough read. I just would have liked a little more on the breadth and depth of the disaster that the subprime mortgage market created. The meltdown in the residential housing market following the massive short-term appreciation in the housing market caused by the proliferation of sub-prime mortgages rippled through the entire economy including:

* the massive increase in the value of raw land for residential housing developments that eventually bankrupted so many home builders who spent ungodly amounts per acre on property based on the continuing increase in home prices.

* the related surge in the price of commercial and industrial real estate that followed close behind the jump in residential land prices and led to the largest batch of commercial/industrial foreclosures in U.S. history.

There is no aspect of the U.S. economy that was not significantly impacted by the greed-fueled, short-sighted debacle of the sub-prime mortgage crisis…and no guarantee that there is not significant pain still to come.

Still, for what this book does, it should be applauded. For the reasons stated above, and because it is a terrifically told story, you should read this book.

4.0 stars. HIGHEST POSSIBLE RECOMMENDATION!!
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Comments (showing 1-24)




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Markus I really liked this, listened audiobook and also read it. Hope they make movie of this, Moneyball was good movie. Can't wait for your review.


Richard Reviles Censorship Always in All Ways Your review made me so goddamned mad I made a pitcher of bloodys and am now slurping my second. It's not helping enough. I suspect there is a trazodone in my near future.

Which means you did your usual excellent job. I could learn to hate you even more than I already do for tossing off these effortlessly funny, infuriatingly well-written reviews.


Stephen Richard wrote: "Your review made me so goddamned mad..."

It's the Snoopy photo...it gets you right here *thumps chest*


message 21: by Seak (Bryce L.) (last edited Feb 28, 2012 03:05PM) (new)

Seak (Bryce L.) Great review, this books sounds awesome. Does it talk at all about the public at large being somewhat at fault? While these were a bunch of greedy slime-balls for sure, I'm still convinced the public got in on the greed by buying way out of their ability to pay among other things.


Richard Reviles Censorship Always in All Ways Stephen wrote: "Richard wrote: "Your review made me so goddamned mad..."

It's the Snoopy photo...it gets you right here *thumps chest*"


That must be it. o.0


message 19: by Becky (new) - added it

Becky I'm kind of awed by this paragraph of your review. The euphemistic fantasticalness was perfect. Let's re-read it, shall we?
"One of the most interesting aspects of the book for me was how eccentric the people on the "right" side of the crisis were. Lewis shows us just how bold and anti-herd mentality a person has to be in order to be convinced that everyone else in the market is crazy and that they are right. The people in this tale are very, very unique individuals and it makes the reading a lot of fun."
All those descriptors, and not a single "fucking sociopath" phrase in sight. Kudos!


message 18: by Wesley (new)

Wesley Excellent review. I shall give this a go.


Stephen Becky wrote: "I'm kind of awed by this paragraph of your review. The euphemistic fantasticalness was perfect. Let's re-read it, shall we?
"One of the most interesting aspects of the book for me was how eccentri..."


Thanks, Becky...most of the real sociopaths (fucking and otherwise) were the guys on the "wrong" side of the trades (Wing Chau and Joseph Cassano in particular)...those guys did more damage with a phone call than Norman Bates and Patrick Bateman combined.


Stephen Wesley wrote: "Excellent review. I shall give this a go."

Thanks, Wesley. It is a very good book.


message 15: by s.penkevich (new)

s.penkevich The raccoon picture just made my day.


Markus Of those guys on "right" side of trades i think Dr. Michael Burry is most fascinating, one book of material can be made of his exploits.

http://www.youtube.com/watch?v=6W5zF8...


message 13: by Trudi (new)

Trudi Great review Stephen! This subject is so compelling to me ... just because of all the characters involved and how far-reaching the devastation turned out to be (and the dust has not settled yet). While disgusting, sad, and ultimately tragic, it is also Machiavellian drama on a world stage, epic hubris, and profound greed.

Our CBC network here in Canada aired an amazing 3-part documentary on this called Meltdown: The Secret History of the Global Financial Collapse. I highly recommend it (though viewing it on their website may not be available in the US).


Stephen Thanks, Trudi, and thanks for the heads up about the documentary. Sounds fascinating. I will try and track it down.


Kerem Mermutlu Great review, i've just finished reading this myself. Lewis is kind of a master at putting everything together that makes it feel like you're reading a novel at times. Fantastic read.


Mike Excellent review Steve, Lewis should get a medal for making the crisis understandable. If you haven't seen it yet, you should rent the movie "Margin Call" which highlights the moment when a major Wall Street brokerage realizes that their balance sheet is screwed due to the mortgage bonds. It complements this book perfectly.


Stephen Thanks, Mike. I haven't seen "Margin Call" but have heard it is very good. I will check it out.


Kerem Mermutlu Stephen wrote: "Exactly so, Kerem. I want to read Liar's Poker: Rising Through the Wreckage on Wall Street now."

Yeah me too, although it would be interesting to read his new one
Boomerang: Travels in the New Third World
and i did see margin call, a little disappointing for me, but still worth going to see. Inside job is far better at giving a real understanding to what happened and basically how everything is set up for the banks to win even if they screw everyone else over etc.


Stephen Thanks for the heads up, Kerem. I didn't know Lewis had a new book out as well. I will pick up a copy.


Kerem Mermutlu Stephen wrote: "Thanks for the heads up, Kerem. I didn't know Lewis had a new book out as well. I will pick up a copy."

No problem Stephen, keep writing these awesome reviews :)


Markus Boomerang: Travels in the New Third World is collection of Lewis articles in Vanity Fair, it is good read, but not in the Big Short league. Maybe better way to sell Boomerang is 'Good companion book for Big Short'.


message 3: by Bill (new)

Bill Great review Steve. I don't read much non-fiction because my reading priorities are totally taken up by my escapism needs. That's why I appreciate your reviews so much, I enjoy reading what you got from books like these.


message 2: by Cyd (new) - rated it 5 stars

Cyd Madsen Wow!!! Just getting started here on goodreads and fumbling around. You write an incredible review with such biting humorous that I'm hooked. Fantastic job.


message 1: by Anna (new)

Anna no one is talking about the REAL problem. The Federal Reserve and our fraudulent banking/montetary system. Once again the fundamental issue isn't dealt with. Debt is good for bankers. the bankers don't lose, the Fed revs up the printing press and the tax payer is ALWAYS on the hook. Read "The Creature From Jeykl Island" if you really want to know whats going on. Otherwise it's just rearranging the deck chairs on the Titanic over and over and over again.


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