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

The Big Short by Michael Lewis
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Feb 03, 12

Read from January 05 to February 03, 2012

I love this book. I'd read dozens of in-depth articles on the financial meltdown of 2008 but was always left with an incomplete picture of what happened, who was involved, and more importantly, why? This book fills in all the gaps and does a fantastic job of breaking it all down for non-financial folks.

Don't get the impression that this book is dry or uneventful or hard to read. Michael Lewis is fantastic at spinning reality into fiction-like tales. Good guys, bad guys, lackeys, stooges, fools, disasters, jokes...this book had it all. I think there might have even been a car chase in their somewhere. It's an incredibly easy read and I laughed out loud on many occasions.

The story follows three groups of investors who took a systemic look at the sub-prime mortgage business and saw what no one else wanted to admit. A ticking time-bomb. These investors literally had to reinvent market devices and their business persona to bet against the insanity/fraud/stupidity of the players involved. Long story short, they made out like bandits shorting the big boys because they saw how the system was gamed from the inside.

I won't go into a 5000 word analysis of the crash. Read the book for yourself, you won't be disappointed. I will tell you that anyone who speaks of the crash of 2008 and pins the blame solely on Freddie and Fannie, or Barney Frank and the Democrats, is a fucking idiot and you should walk away from any conversation at that point. The book is entirely apolitical and with good reason. The trouble started and ended in a giant circle of disaster in the heart of Wall Street.

And if you think the story ends with a great solution or some wisdom about where to go next and how to prevent the next catastrophe, stop reading. Michael Lewis makes it clear that Wall Street Investment giants have broken the traditional feedback loop between success in the markets and personal remuneration. When the CEOs and top bond traders can fail spectacularly and still walk away from the table with 10's of millions of dollars while their shareholders and customers (and ultimately taxpayers) get screwed, then there is no reason for them not to take bigger and more complicated risks the next time around.

We're through the looking glass now. The system is rigged and there is no turning back. The disgraced ratings agencies are a bought and paid-for sham, the government "Inspector Clouseau" regulators show up three years too late with a wooden pistol, and the customers (you and me) are blind-deaf-mute morons who hand over our hard earned cash with glee in our hearts for 2%.

I love this book for it's simple honesty and humor in the face of disaster. I would recommend this book to everyone.

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