The Big Short by Michael Lewis

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The Big Short by Michael Lewis

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Category: Business and Finance
Rating: 4/5
Reviewer: Keith Dudhnath
Reviewed by Keith Dudhnath
Summary: An excellent and important look at the subprime mortgage crisis, how it was caused, and those who truly saw the problems before everyone else. I'm surprised it's not an angrier book, but Michael Lewis' writing is as great as ever. Recommended.
Buy? Yes Borrow? Yes
Pages: 288 Date: January 2011
Publisher: Penguin
External links: Author's website
ISBN: 978-0141043531

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So. The subprime mortgage crisis, the worldwide financial crisis, people losing their jobs, their money, their houses, their security. Unregulated greed, that went on and on and on. And the people who caused it all got rich during and after, very few felt any sort of consequences, and millions of other people worldwide suffered greatly. Strip away all the intentionally confusing terminology and it all amounts to bets with unbelievable amounts of money. How did it all come about and how did it play out? Michael Lewis explains the mess as only he can. Just as his earlier excellent work Liar's Poker encapsulated the excesses of Wall Street in the 1980s, so does The Big Short perfectly tell the tale of Wall Street in the 2000s. In fact, given the extent of the current global clusterfuck, it makes the shocking Liar's Poker look positively mild by comparison.

Unsurprisingly, those who were instrumental in causing the problems are pretty tight-lipped about their involvement. Lewis follows the same path he treads in his earlier work (especially my favourite Moneyball, about the world of baseball) and focuses on the people who knew better than the accepted yet faulty wisdom. So, we meet the likes of Steve Eisman, Michael Burry, Charlie Ledley and Jamie Mai, each of whom comes to the conclusion that the big Wall Street banks were making mistakes with their handling of subprime mortgages. As each uncovers the problems, so we learn just what it all means. Economic primer and human interest story are woven seamlessly together, each supporting and fuelling the other.

It's a complicated subject matter, and even though it's written for a lay audience, there were moments when I lost track of exactly what financial deals were being constructed. Even in these brief moments, the broad sense of what's happening is abundantly clear. As you progress (and as the human interest side offers respite from acronyms) it all clicks together, and you'll end up with a clearer idea of exactly what caused the global financial crisis. I'm surprised it's not an angrier book - although largely a snapshot of its time, the deep-seated causes are addressed, and they still exist. This sort of thing could happen again - not necessarily in subprime mortgages, but in another field where people see a way to get rich, greed leads to obfuscation, and a bubble that sucks everyone in, until it bursts. The problems all sound so bloody mild - bubble. Even crisis doesn't sound... well, critical. The net result is that millions of people are losing their jobs, struggling to keep roofs over their families' heads. Billions of dollars seem so far removed from reality. Wall Street is insulated from real people, so it's understandable that, as excellent as The Big Short is, a book about Wall Street suffers by association from this insulation. There needs to be an And then...

Despite my minor gripes, The Big Short is an excellent and important read, whether you've been able to follow half or what's going on in the news over the past few years or not. Michael Lewis' writing is, as always, engaging and accessible, especially given the complicated and often alien subject matter. He's one of the best non-fiction writers around, and I'm always delighted to devour anything he's written. Recommended.

My thanks to the publishers for sending it to Bookbag.

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