The Big Short
Inside the Doomsday Machine
The few investors who saw the mortgage collapse coming, and what it cost them to be right before anyone believed it.
Lewis follows the handful of investors who worked out that American mortgage bonds were built on loans that could not be repaid, and who then had to survive being right too early. The mechanics of subprime and the instruments stacked on top are explained through the people betting against them, which is what makes an unfollowable market legible.
Recommended by 2 People
John Kay
Lewis is a great writer and this is one of the best accounts of what happened in the run up to the crash. In fact, I just recommended it to someone I was with last night who was talking about the efficient market hypothesis – which is the basic paradigm of financial economics – and I told him that if he wanted to understand why it didn’t apply in the run up to the financial crisis, he needed to go away and read this book.
Interview · October 2013
Francis Fukuyama
A lot of people on Wall Street itself say that the norms were quite different 30 years ago. When everyone was part of a partnership, there was more of a normative sense that you had a responsibility to customers and that your long-term reputation mattered a great deal. This shorter-term trading mentality has really displaced that in many firms.
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