The Big Short: Inside the Doomsday Machine by Michael Lewis
My rating: 4 of 5 stars
This is my third Michael Lewis book, and I’m starting to detect a pattern. There’s always a guy, near the beginning, who figures “it” all out and writes as much in a newsletter, or blog. In Moneyball, “it” was that OBP was more important than batting average; in The Blind Side, “it” was that the left tackle was probably the most important player on the field after the quarterback; in The Big Short, “it” was that our nation’s economic backbone was run by incredibly stupid people.
I’m paraphrasing, of course, but “stupidity” was the overlying theme of The Big Short. Who knows, maybe Michael Lewis decided that “out-and-out” fraud was too libelous, and even guys who crashed the stock market still had enough money left over to sue him a few dozen times over. Indeed, one wants to believe the folks who run billion and trillion dollar companies are villains, not idiots. It fits a better narrative and, in the long run, is way less scary.
But what you get out of The Big Short is that the people at the top of the money-food-chain are too arrogant and complacent to see the through the many layers of obfuscation they’ve built to disguise their utter greed. And the result of this was little guys, at the bottom of the chain, finding a loophole and exploiting it.
Michael Lewis does a pretty good job explaining something that literally only a handful of people in the world really understand. More or less he beats you over the head with it, but stacking the story into a character-driven narrative and repeating the malfeasance of the corporate elite over and over again. Trust me, you won’t get it the first time he explains credit-default swaps. By the tenth time, you might.
You know what the truly horrible part of the this book was, for me? Even though all those “too-big to fail” companies failed, the stock market went kerflooey, and the US Government gave away hundreds of billions of dollars to slap a band-aid on what should have been a better regulated system… my life wasn’t really all that effected. In 2008 and subsequent years, my middle-class lifestyle was as it ever was and has been since. And this is horrible, because I’m not the only one, am I. All that money, all the stupidity, and for most of us, the only take-away was: oh goody, another Ryan Gosling movie.