Rachel C.'s Reviews > The Big Short: Inside the Doomsday Machine

The Big Short by Michael   Lewis
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's review
Sep 29, 2010

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bookshelves: non-fic, subj-finance-econ, movies-tv
Read in September, 2010

This book made me want to vomit, then take a bath in a tub of bleach. Not because it's not well-written, but because the story is so repugnant and grotesque.

Lewis' last book "The Blind Side" told the stories of a lot of people who, when faced with impossible situations, chose to do the right thing and/or work harder. This book exclusively features people who were criminally stupid, those who were just flat-out criminals, and the scumbags who were smart enough to profit from it when the financial world was burning down.

One sweetheart described himself as "orgasmic" when he received reports on the failing housing market. This guy Eisman, who Lewis places centrally in the story as if he was some kind of hero, sniffed out the giant steaming pile of crapulence early and bet heavily against it. There is no mention that Eisman ever made any attempts to contact regulators or even reporters, only that he wanted to obscure what he was doing so that he could do it longer and for increasingly greater amounts. He walked away from the debacle with a $500 million profit - and has the gall to give interviews to Michael Lewis, all indignant about how the banks were victimizing the poor?! It's psychopathic.

In addition to Eisman, several other folks in the narrative also figure out what going on. Unfortunately, none of them worked for the SEC, the Federal Reserve, the FBI or the Wall Street Journal - they all worked for hedge funds. They all actively participated in the machinery, reaped returns in the hundreds of percent on their investment, and clearly pat themselves on the back for getting out while the going was good.

As the final slap in the face, the government swoops in in the third act to pass out pallets of cash to sinking banks with almost no strings.

Yes, Main Street America got taken for a ride. Most of the people who took out these subprime loans probably had no idea of the massive financial malfeasance going on several rungs up the ladder. And the same population that saw their savings wiped out and their homes repossessed will now have the pleasure of paying for the bailout with their tax dollars for the next century.

But some of the blame lies at Main Street America's door as well. So Average Joe doesn't understand complex derivative products. He surely understands "too good to be true." Some people took interest only, floating rate, negative-amortizing mortgages. Did they really think, "I can borrow buckets of money, truly insane multiples of my gross income, make miniscule payments to start, and have the rest of what I owe rolled into a bigger principal, the interest rate on which I don't even know - this is going to end well"? I occasionally watch Suze Orman's show, and get the feeling that some Americans truly don't understand the difference between being able to afford something, and being able to afford the minimum payments on something.

That this catastrophe happened within a decade of Enron is unfathomable. And the scariest thing is, it doesn't sound like anyone - not the public, the banks or the government - learned enough to prevent this sort of thing from happening again. Apocalypse is coming, y'all.
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Comments (showing 1-8 of 8) (8 new)

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Jeff Ferry Why so angry? Being angry at financial markets is like being angry at the ocean for causing a flood. :)

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

Cyd Madsen You've summed up this book quite well and any anger is well placed. However, he does point out how Main Street was duped and some logical reasons for their participation, such as paying off ridiculous student loans. He's done a great job of letting the story tell itself and showing how corruption for all became the norm.

message 3: by Anna (new)

Anna If you want to understand the fundamental problem then read "The Creature From Jekyl Island". Our entire banking/monetary system is set up to benefit the bankers/money interests. They don't lose and the tax payer is on the hook EVERY time. This isn't over, the bail-out cycle just repeats itself over and over.

Kaddude Eisman did contact regulators about une

Kaddude I'll try again...
Eisman did contact regulators about unethical and illegal activities in earlier episodes of mortgage lending dodginess. Have another read of the book if you missed that.
However I think you are having a whack at the wrong people. Eisman, lippman and the other central characters in the book never created the ludicrous mess they encountered, not were they responsible and paid to monitor and govern those who did. There were villains in this tale but you've incorrectly identified them.

Rachel C. I don't think there were any heroes in this story, and that was part of the problem.

There's plenty of blame to go around given the extent of the catastrophe that followed. While people like Eisman didn't create the mess per se, they certainly didn't hesitate to leech on and make it worse.

message 7: by Amy (new) - rated it 5 stars

Amy Murch Awesome review.

Johnny_Dancing Why 3 stars?

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