The Big Short

The Big Short

Inside the Doomsday Machine

eBook - 2015
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The author examines the causes of the U.S. stock market crash of 2008 and its relation to overpriced real estate, bad mortgages, shareholder demand for excessive profits, and the growth of toxic derivatives.
Publisher: 2015
ISBN: 9780393078190
Characteristics: 1 online resource
Additional Contributors: OverDrive, Inc

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IndyPL_JasonD Jan 02, 2019

An interesting inside perspective on the happenings and errors of the financial world, all leading up to the Great Recession. This book is written quite well, with quite a few more introspective insights and details to what is actually going on as compared to the fast-paced movie that came out in 2015. I found it worth every page.

Nov 26, 2018

Between daily coverage on NPR and Marketplace and longer investigative pieces by Planet Money and This American Life, I understood, perhaps more than most, exactly what happened in 2008. (Just writing “2008” seems absurd; we’re talking about a ten-year-old catastrophe that feels like yesterday). But neither real-time contemporaneous reportage nor the long-form investigative journalism that followed really brought the calamity to life. Which is exactly what Michael Lewis does. “The Big Short” is, in short, an exhilarating read. It’s a real-life, character-driven story that also manages to dig deep into an incredibly complicated web of financial instruments and arcane terminology and explain it all without making the reader’s eyes glaze over — no easy feat.

In case you haven’t been paying attention, everything about Wall Street is, if not absolutely corrupt, at least morally bankrupt. The preposterous and dangerously cavalier approach we now accept as “normal” didn’t happen overnight, but its genesis can be traced back to 1981 when CEO John Gutfreund turned Salomon Brothers from a private partnership into Wall Street’s first public corporation. The result? Risk was transferred from the firm to the shareholders, and the shareholders who financed the risk had no real understanding of what the risk takers were doing. As the risk taking grew ever more complex their understanding only further diminished. The moment Salomon Brothers demonstrated the potential gains to be had from turning an investment bank into a public corporation and leveraging its balance sheet with exotic risks, the psychological foundations of Wall Street shifted, from trust to blind faith. After all, what privately-owned investment bank would have leveraged itself 35-to-1, or bought and held $50 billion in toxic assets?

We all know how the story ends. Nearly everyone on Wall Street got rich — on both sides of the toxic asset equation — even those who drove their companies into bankruptcy. Hardly anyone was arrested or charged, and nobody went to jail. The federal government let Lehman Brothers fail, but then intervened in nearly every way imaginable to prevent others from doing so. And when it was clear that $700 billion wasn’t enough to deal with the troubled assets acquired over the previous few years by Wall Street bond traders, the feds stepped in yet again and actually bought bad subprime mortgage bonds directly from the banks. By early 2009, the risk and losses associated with more than $1 trillion worth of bad investments were transferred from big Wall Street firms directly to American taxpayers.

Lewis’s book could — and should be — seen as a cautionary tale, even as a prime example of the necessity of financial reform and regulation, but it won’t be. As with other Wall Street scandals and fallouts before, the events contained herein were preventable, if anyone had wanted to look. Nobody did. In an economy no longer driven by manufacturing, we now make our money from money. When this much money stands to be made, who wants to crash the party? Though ten years old, “The Big Short” is still as fresh as it was the day it hit bookshelves. If you haven’t read it, and are remotely interested in the insanity that was the 2008 mortgage crisis, you’ll love every minute of this fascinating story.

Apr 25, 2018

Reading this book will make you mad that the heads of Banks and rating agencies didn't go to jail!

Mar 08, 2018

Michael Lewis does a terrific job at explaining the details and flaws of the banking system in the United States that helped contribute to the 2008 housing market collapse in this book. Michael Lewis’s depiction of banks lending predatorily to people unlikely to be able to repay loans, cooperating with loan rating agencies to mask the risk of their loans, generating an unstable housing market and then getting bailed out by taxpayers once their mistakes finally caught up with them was certainly striking. Additionally, the book is very interesting as it tells this story from the perspective of investors trying to beat these banks by betting on their failure. This is extra riveting since as one might root for these “protagonists” one must reconcile themselves for the reality that they are simultaneously rooting for the destabilization of the housing market as banks collapse. This book made me aware of the details of how the 2008 housing market collapse occurred. It also prompted me to learn more about the financial system we have today and the safeguards that have been implemented since then to try to ensure that a repeat incident is less likely to occur.
- @CookieMonster of The Hamilton Public Library's Teen Review Board

Apr 03, 2017

I expected this to be better than the film and I was right. What I really enjoyed about the book was the focus on the ratings agencies and how if their ratings had been accurate and not based on what Wall Street was telling them to rate the securities, this most likely would have all been avoided.

I highlighted many sections of this book, and one of my favourite quotes was: "A home without equity is just a rental with debt."

Awesome book and an easy read. Will definitely read again.

Feb 28, 2017

I can very deeply resonate with this book because I lived through the phenomena during 2004 to 2009, with investments both in properties and money market. When I read the book and decipher the layers, I can see what hit me during that period and how I survived the onslaught pretty much in one piece. It is a a great book to read (not meant for airports and train rides though). Highly recommended to those who want to know how the financial system can take you on a dumb ride and no protection being offered by either the Govt or the oversight bodies. Loved the movie too!

Feb 19, 2017

This book is a roller coaster and a train wreck in the same ride. You'll be amused, sad, angry, discombobulated, scared and many times all at once. Lewis does a great job of moving the story along as well as explaining CDSs, CDOs, the system that is investment banking and gambling and through his main participants the flaws, greed, lack of oversight and outright fraud perpetrated against the American public.

It's all too simple to blame the main characters on whom he focuses as being villains in all this. If it wasn't these guys figuring it out and taking advantage of the house of cards that was sub-prime mortgage bonds, than it would have been others. Ultimately, their bets against the system showed everyone that the emperor had no clothes. It was clear that they had tried to warn people of the issue but they didn't understand it or didn't want to consider the calamity that might ensue should it be true.

I'd highly recommend this be read by anyone who wants to understand why their house lost value, their 401K lost value, whole housing developments were deserted and especially how dangerously close we are to letting it all happen again with a White House that comes from Wall Street.

Jul 26, 2016


Jul 17, 2016

Could not get through this book. Writing is boring and very repetitive. Think I'll watch the movie instead....I heard it's actually good.

Jul 13, 2016

Consider this: “In Bakersfield, California, a... strawberry picker with an income of $14,000... was lent every penny he needed to buy a house for $724,000.” (The Big Short, page 97) At the other side of that loan was a lender, who was willing to assume the risk of strawberry picker defaulting. If the strawberry picker paid 100% of his income to the lender (of course this would assume that the strawberry picker didn’t spend a penny on anything else, not even food) then it would take almost 52 years to repay the loan, assuming the loan was interest free. Why on earth would the lender make such a loan?

In this masterfully written book Michael Lewis explains how investors were led to believe that there was little risk in reckless loans, of which there were millions. Defaults on these reckless loans were basically what caused the 2008 financial crisis.

Lewis’ tells the story as an engaging drama. I also recommend Robert Reich’s Aftershock. Aftershock tells the story of the financial crisis from a distance. Reich explains why there was so much money available for speculative investing, largely from a policy standpoint.

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Jun 25, 2016

'Tell me the difference between stupid and illegal and I'll have my wife's brother arrested.

Dec 26, 2015

Long Beach Savings was the first existing bank to adopt what was called the “originate and sell” model. This proved such a hit—Wall Street would buy your loans, even if you would not!—that a new company, called B&C mortgage, was founded to do nothing but originate and sell.
Because the lenders sold many—though not all—of the loans they made to other investors, in the form of mortgage bonds, the industry was also fraught with moral hazard. “It was a fast-buck business,” says Jacobs. “Any business where you can sell a product and make money without having to worry how the product performs is going to attract sleazy people

Aug 12, 2010

Up to that point, Hubler’s bet had been “stress tested” for scenarios in which subprime pools experienced losses of 6 percent, the highest losses from recent history. Now Hubler’s traders were asked to imagine what would become of their bet if losses reached 10 percent. The demand came directly from Morgan Stanley’s chief risk officer, Tom Daula, and Hubler and his traders were angered and disturbed that he would issue it. “It was more than a little weird,” says one of them. “There was a lot of angst about it. It was sort of viewed as, These folks don’t know what they’re talking about. If losses go to ten percent there will be, like, a million homeless people.” (Losses in the pools Hubler’s group had bet on would eventually reach 40 percent.) As a senior Morgan Stanley executive outside Hubler’s group put it, “They didn’t want to show you the results. They kept saying, That state of the world can’t happen.”

Aug 12, 2010

Institutional investors didn’t know what to make of him, at least not at first. “I think he has some kind of narcissistic personality disorder,” said one money manager who heard Lippmann’s pitch but did not do his trade. “He scared the shit out of us,” said another. “He comes in and describes this brilliant trade. It makes total sense. To us the risk was, we do it, it works, then what? How do we get out? He controls the market; he may be the only one we can sell to. And he says, ‘You have no way out of this swimming pool but through me, and when you ask for the towel I’m going to rip your eyeballs out.’ He actually said that, that he was going to rip our eyeballs out. The guy was totally transparent.”


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Dec 04, 2017

story of 2008 bank scandal involving bad mortgage deals.

AnneDromeda Nov 21, 2011

As author of books like *The Blind Side* and *Moneyball*, Michael Lewis is no stranger to success as a nonfiction writer. He has a talent for covering stories in ways that play up their humanity, giving niche topics like economics and sports a universal appeal. But despite his knack for reading and reflecting public sentiment, even he couldn't have foreseen the push his latest effort, *The Big Short*, would receive from the zeitgeist. *The Big Short* takes readers on a thrilling, fast-paced and sometimes baffling ride through the swell and burst of the subprime mortgage bubble. He's already written one book exposing the inner workings of Wall Street – *Liar's Poker* covered the greed, incompetence and corruption that ran rampant in the big firms of the 1980s - so when he tackled his second Wall Street opus, he was uniquely positioned to understand the complicated market machinery and labyrinthine logic driving the subprime mortgage crisis and triggering The Great Recession.<br />

Sure, it's a bit of dense information and economic terminology, but he delivers it quickly; and given that some of the brightest minds on Wall Street couldn't make sense of the complicated mess surrounding subprime mortgages, readers should forgive themselves if they get a little lost in the details. At any rate, he works these technicalities into the story well enough that they don't break the narrative’s momentum.<br />

Lewis also introduces readers to the real people making the trades, swaps and bets that left nations teetering. He takes us into the lives of those who inflated the value of investment portfolios containing subprime mortgages and disguised their risk, as well as those who discovered the risk and bet against them. Spoiler alert: the ratings agencies (like Moody's and S&P) *do not* come off at all well. Moving chronologically from the early 2000s, his prose builds a mix of disbelief, dread and outrage as events race toward the conclusions with which we're all now too familiar. Characters in the real-life drama range from iconoclastic to downright devious and smarmy, and the tale of how they manufactured investments that looked to be made of gold from groups of losing loans is riveting and angering to say the least. Even more interesting are the stories of those who identified the problem, bet against the subprime mortgages, and tried to warn others. For readers itching to know more about the events feeding the rage driving the Occupy protests, there is probably no more absorbing, enraging crash course available than Lewis' *The Big Short*.

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