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The Big Short Inside the Doomsday Machine Michael Lewis 9780393072235 Books

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The Big Short Inside the Doomsday Machine Michael Lewis 9780393072235 Books

I usually read the book before I watch the movie, but this time I didn't.

As soon as I finished watching the 2015 movie “The Big Short,” I immediately decided to read Michael Lewis’ book “The Big Short: Inside the Doomsday Machine,” which forms the basis for the film. Lewis, who was himself a Wall Street bond trader in the 1980s and 90s, is the author of several non-fiction books, many of them dealing with the world of finance.

“The Big Short: Inside the Doomsday Machine” isn’t so much “about” the financial crisis as it is about what caused the meltdown in the first place. Lewis tells his story through the actions of four separate investment groups: Scion Capital; managed by Dr. Michael Burry; FrontPoint Partners LLC, led by Steve Eisman; Cornwall Capital, co-managed by James Mai and Charlie Ledley; and Greg Lippmann, a bond trader with Deutsche Bank. These investors, each working independently from each other, correctly foresaw the collapse of the housing markets in the United States in 2007. Nobody else saw it – or wanted to, for that matter.

For years, many of the world’s biggest investment and commercial banks had been investing heavily in high-risk subprime mortgages. This caused housing prices to rise, and a “housing bubble” to form. But soon, variable interest rates on these mortgages would begin to rise sharply, and massive numbers of people with little or no income would begin to default on mortgages they could no longer afford. Our four investors each decided to “sell short” the housing markets by investing in “credit default swaps” – a form of insurance against mortgage defaults. They essentially were betting against the housing markets: when (not if) the housing markets failed, the investors would end up making millions…

“The Big Short” is a very well written book. It’s fast-paced, easy to read, and short (less than 300 pages). Michael Lewis’ story is very much character-driven. His profiles of the main players are surprisingly detailed, brutally honest, and fascinating. Some people who start out looking like villains end up as quite heroic and admirable figures. Others do not fare so well.

One of the things Michael Lewis does best is explain many of the technical aspects of the financial system in a manner that I could easily understand. Although I’m sure “mortgage backed securities,” “credit default swaps,” and “collateral debt obligations” are probably a lot more complicated than even Lewis presents them, I found his explanations simple, straightforward, and very useful. As a result, I gained a better knowledge of the financial crisis.

“The Big Short: Inside the Doomsday Machine” is a very informative and entertaining book. For those looking to understand the basics of the 2008 financial crisis, this is one very good place to start. Highly recommended.


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The Big Short Inside the Doomsday Machine Michael Lewis 9780393072235 Books Reviews

I rarely give a book five stars, but I do so without hesitation in this case. If you want to understand all the complexities of the 2008 economic meltdown, in plain English without arcane statistics, this is the book for you. Above all, Michael Lewis has laid bare the combination of corruption, incompetence, arrogance, and outright criminality at the highest levels of the American financial industry and government that produced this disaster. The book lays waste to the idea that American capitalism, as currently practiced, will produce a better world for us all. Along the way, it reveals the pure fiction behind the central tenets that guide our economic elite, such as
--The executives that control our major banks and corporations are insightful entrepreneurs with unique skills for creating wealth and new businesses
--There is too much government regulation
--Cutting taxes for the wealthy produces more prosperity for all

Remember the book destroys these myths, not as an ideological diatribe, but from the perspective of brokers and analysts who, themselves, participated in the system but saw the house of cards that their more powerful (and well paid) colleagues were building. Not only saw it, but bet their careers and economic futures that it would ultimately collapse--and they were right. It's this book's stunning, fact-based revelations of the corruption, incompetence, and greed in our corporate executive suites that makes it an instant classic. It indicts a whole generation of America's corporate and financial leaders.

And remember these same leaders, or their like-minded clones, are still in place, and already trying to turn back the meager reforms put in place to prevent a repeat of their evil. They repeat ad infinitum the shibboleth that government regulation, not corporate malfeasance, is the source of our economic malaise. They further that Big Lie by using their ill-gotten wealth to control the media and to elect their lackeys to office. They have no shame, no sense of decency. Left unchecked, they will destroy America. As they came close to doing in 2008.
Clever and intriguing with a real from the street feeling as the writer, Michael Lewis tells the story from the viewpoints of several critical, but lesser known “main players” who saw and actively partook in the Wall Street madness. Lewis spent several years on wall Street- straight outta college and he understands the games played, his earlier book “Liar’s poker” dug into this –covering the 1980’ “Greed is Good” fever. ( I will be reading that book sometime in the future). What I took away from this book is that the reason the Bush and Obama administrations did not punish these big firms and their CEOs more is that (besides the corporate money influence standing in the way), the Wall Street bond “rabbit hole” is so deep that if you pull hard enough on one firm- they would collapse and as their bonds collapse- it would pull down one firm after another as they have all bet against each other’s bonds so heavily, resulting in a colossal financial collapse. What is perplexing is why Washington gave so much of the tax payer’s money to Goldman Sachs and to Citigroup.
One warning I will share is that the language is this book goes beyond “Salty”. It was if the film “Serpico” was filmed in a bank’s conference room. The reader may be offended.
I usually read the book before I watch the movie, but this time I didn't.

As soon as I finished watching the 2015 movie “The Big Short,” I immediately decided to read Michael Lewis’ book “The Big Short Inside the Doomsday Machine,” which forms the basis for the film. Lewis, who was himself a Wall Street bond trader in the 1980s and 90s, is the author of several non-fiction books, many of them dealing with the world of finance.

“The Big Short Inside the Doomsday Machine” isn’t so much “about” the financial crisis as it is about what caused the meltdown in the first place. Lewis tells his story through the actions of four separate investment groups Scion Capital; managed by Dr. Michael Burry; FrontPoint Partners LLC, led by Steve Eisman; Cornwall Capital, co-managed by James Mai and Charlie Ledley; and Greg Lippmann, a bond trader with Deutsche Bank. These investors, each working independently from each other, correctly foresaw the collapse of the housing markets in the United States in 2007. Nobody else saw it – or wanted to, for that matter.

For years, many of the world’s biggest investment and commercial banks had been investing heavily in high-risk subprime mortgages. This caused housing prices to rise, and a “housing bubble” to form. But soon, variable interest rates on these mortgages would begin to rise sharply, and massive numbers of people with little or no income would begin to default on mortgages they could no longer afford. Our four investors each decided to “sell short” the housing markets by investing in “credit default swaps” – a form of insurance against mortgage defaults. They essentially were betting against the housing markets when (not if) the housing markets failed, the investors would end up making millions…

“The Big Short” is a very well written book. It’s fast-paced, easy to read, and short (less than 300 pages). Michael Lewis’ story is very much character-driven. His profiles of the main players are surprisingly detailed, brutally honest, and fascinating. Some people who start out looking like villains end up as quite heroic and admirable figures. Others do not fare so well.

One of the things Michael Lewis does best is explain many of the technical aspects of the financial system in a manner that I could easily understand. Although I’m sure “mortgage backed securities,” “credit default swaps,” and “collateral debt obligations” are probably a lot more complicated than even Lewis presents them, I found his explanations simple, straightforward, and very useful. As a result, I gained a better knowledge of the financial crisis.

“The Big Short Inside the Doomsday Machine” is a very informative and entertaining book. For those looking to understand the basics of the 2008 financial crisis, this is one very good place to start. Highly recommended.