The Big Short: Inside the Doomsday Machine is a book by Michael Lewis. In the circles I travel in, Michael Lewis made Moneyball famous. He didn’t invent moneyball, but he did popularize the term. Also, a great movie by Aaron Sorkin and Brad Pitt didn’t hurt.
In The Big Short Michael Lewis explores the crash of the financial system in 2008.
The real story of the crash began in bizarre feeder markets where the sun doesn’t shine and the SEC doesn’t dare, or bother, to tread: the bond and real estate derivative markets where geeks invent impenetrable securities to profit from the misery of lower–and middle–class Americans who can’t pay their debts. The smart people who understood what was or might be happening were paralyzed by hope and fear; in any case, they weren’t talking.
synopsis by Amazon.com
The Big Short doesn’t really have spoilers if you were living in 2008 and had any idea about what was happening. The economy, you know what happened. Several of the largest firms in the United States, Bear Stearns and Lehman Brothers went under. The Big Short explores not only why they went under, but who made money and how.
The writing is instantaneously recognizable as Michael Lewis. The cadence and rhythm. It is established as clearly his own. This has its own pros and cons. For one, while it definitely sounds like him talking. Though I’ve never actually heard him talk so I can only imagine, as a writer, that this is what he would sound like, since many writers and authors inject a fair amount of their own voice into their text. This leads to one of the cons. The congenial nature of his discourse sometimes lends itself to being very confusing.
Imagine having a conversation with a friend and they are telling you a new story and they introduce seven or eight people who are also talking at once and all very important to the narrative that your friend wants to tell, but it keeps switching back and forth between them. The conversational nature of his text shines through. And while it makes The Big Short easy to read and enjoy it does means a lot of the details are lost in the process.
Another weakness is that while Michael Lewis has clearly done his best to water down the market system for those who are not involved he’s even chosen his main characters as outsiders, I suppose to make the audience bond with them. Two friends working out a garage and know nothing about the business. A man who has asperger’s and makes savant-like investments. The honest to a fault man who no one believes. Michael Lewis has chosen people who come close to caricatures without actually being caricatures.
The characters do create a certain community to its disparate collection of narrators and it gets muddled. If I were Michael Lewis I would’ve cut a couple of narrators out. Not only does this shorten the book but it also decreases any confusion generated by continuously swapping narratives. In the end, many of the characters are lost in the shuffle, with no distinct sense of what is it about them that makes them special.
What you get out of this book depends entirely on your opinion of Wall Street. A lot of people I know trust it and think it is a great way to make money. Surely, invest for the future. I’ve, personally, never seen it that way. And as I read books like The Big Short and Too Big to Fail, nothing exists to dissuade that notion. The idea that “it is all behind us” is nice and all, but nothing’s actually happened to demonstrate a change in philosophy. As several different people in the book say, it’s fraud, even if you can’t prove it in court.
Given how poorly things have gone and just how deeply the Great Recession has effected everyone, it’s hard not to read this book and feel the anger roiling just beneath the surface. Not of the narrators, but in myself.
The Big Short is a good book. It deftly explains the details of “shorts” and “CDO”, all along the way distilling a complicated system. Just remember, hindsight is 20/20. Give yourself a good week to read and understand what’s being postulated here.