The Big Short: Inside the Doomsday Machine

by Michael Lewis

Book Overview

When the crash of the U. S. stock market became public knowledge in the fall of 2008, it was already old news. The real crash, the silent crash, had taken place over the previous year, 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...

• Format: Hardcover
• Language: English
• ISBN: 0393072231
• ISBN13: 9780393072235
• Release Date: March 2010
• Publisher: W. W. Norton & Company
• Length: 288 Pages
• Weight: 1.05 lbs.
• Dimensions: 1.1" x 6.3" x 9.2"

Customer Reviews

Watched the movie! Had to get the book.

I watched the movie and really wanted to read the book.The shipping came a little bit later than expected but because the price is so good and the quality and price I got it for is impeccable which is why I'm still giving it 5 stars. They're a very good company and it save LOTS of money as a broke college girl.

Very good review of what caused the 2008 economic downturn and recession. Tells the main players from multiple perspectives and provides a general background on how the housing market collapsed.

BookForum review

In the run-up to the housing collapse of 2007-2008, houses weren't merely expensive, they were insanely expensive. Yet just when it seemed that prices couldn't go higher, some fool would come along and pay an enormous sum for a glorified hovel. You didn't have to be a genius to realize that American real estate was overvalued. It did, however, take something special to figure out how to make money off the madness. A group of between ten and twenty people did just that, making the bet of a lifetime that author Michael Lewis calls "The Big Short" The cast of characters in Lewis's highly readable chronicle of the collapse (and what led to it) includes a misanthropic former medical resident, a money manager who saw himself as Spider-Man, and a pair of men in their thirties who started with $110,00 in a Schwab account they managed from a backyard shed in Berkeley, California. "Each filled a hole," Lewis writes. "Each supplied a missing insight, an attitude to risk which, if more prevalent, might have prevented the catastrophe." Ever since he left Salomon Brothers to write Liar's Poker, the classic 1989 account of his years as a bond salesman, Lewis has been waiting for a day of reckoning. Little did he realize that the Wall Street he once knew now seems quaint. By 2007, it had morphed into a financial Frankenstein, a "black box" filled with hidden risks on complicated bets that could destroy its creators, but only if the government allowed it to do so. The first to figure out how to use the system against itself was a man named Michael Burry, who once described himself in an online personal ad as "a medical student with only one eye, an awkward social manner, and $145,000 in student loans." Burry possesses an intellect so unusual that Lewis turns his journey of self-discovery into a fascinating subplot. While working the grueling schedule of a medical resident, Burry started writing about stocks in an online forum. (He also took apart his personal computer and put it back together between 16-hour shifts at Stanford Hospital, prompting his superiors to send him to see a shrink.) When he quit medicine to start the hedge fund Scion Capital, admiring investors tracked him down and gave him money. When Burry started buying insurance in 2005 on nearly two billion dollars' worth of bonds backed by lousy mortgages, his investors thought he had gone nuts and nearly mutinied. But in 2007, when the housing market began to crumble and Burry's bet paid off, everyone realized that his predictions weren't crazy so much as a sane interpretation of a market gone mad. Burry might have set the trade in motion, but he was no salesman. The one who took his idea and ran with it, the "Patient Zero" of this tale, was a bond salesman at Deutsche Bank named Greg Lippmann, who went around telling everyone he could that the end was near. Only a few took his advice, but most who did became extremely rich. (John Paulson, who made an astounding personal profit of four billion

Liars Poker Squared

Mike Lewis has the gift for watching America and picking stories that are interesting to the public: in the last ten years Moneyball (the effect of statistical analysis on baseball) and The Blind Side (Importance of Left Tackles in American Football and rescuing an impoverished athlete). But his undying fame was Liars Poker, the story of Solomon Brothers Investment firm where he worked when 24 and made bonuses of about $200,000 without really understanding what he was doing. Possibly the most interesting part of this book is the foreward where Lewis describes how he felt when writing Liars Poker Wall Street provided worthless value to the economy and it was just a matter of years before the market recognized this. Unfortunately he was about 24 years too late. Couple this with his closing lunch with John Gutfruend and you have a great bookend for closure. Now Lewis presents us with this bookend to Wall Street, how it universally missed the bad securities being issued backed by subprime securities destroying over $1 trillion in wealth. And his vehicle for this exploration is not a complete rehash but rather documenting the very few people (he estimates fewer than 20) that recognized that market crash coming and profiting immensely, people like Michael Burry, a Stanford Medical student who left to manage his own Hedge Fund. Actually there were many more than 20 people that knew this was coming. I began giving speeches in 2004 on "The Coming Crash in Home Prices". But these people he mentioned left conventional wisdom in believing that the subprime mortgages were worthless AND discovered the newly created tools to profit from them: credit default swaps and the ABX index. With the belief and knowledge these investors were rewarded handsomely whereas the rest of us suffered through a very downbeat market. But they deserved it and in Lewis' upbeat writing style he conveys eloquently but simply how the decisions were made and how they profited beyond belief. There is one problem with this book. The subject was just covered quite well in The Greatest Trade Ever by Gregory Zuckerman which was released in November 2009. I've now read both books and there is an overlap. Greatest Trade is a very fast read and tells the story well focusing on John Paulson. This book doesn't delve on Paulson but does cover Michael Burry who was featured in the other book also. Since so many reviews seem to be more interested in giving their political view of this tragic occurence, I'm compelled to weigh in on this issue even though I know this will upset some politcally closed minds. We must recognize if it was so easy to comprehend and solve we would have all profited in the manner these investors did rather than suffer through the last two years. We wouldn't have had the meltdown that we had. The smart people on Wall Street would not have overleveraged creating the steep downward ascent in destruction of wealth as we deleveraged. Specifically, I'm sta

Informative and entertaining

Hugely entertaining look at the genesis of our current economic mess. Lewis finds the very few investors who predicted and profited from the sub-prime mortgage meltdown and follows their journey from initial realization of the impending disaster to eventual payout. Following these eccentric characters and their interactions with the big Wall Street investment banks is at turns laugh out loud funny and head shaking incredulous. Lewis knows how to turn a phrase and does a good job teasing out the dark humor of the situations. He also does a very good job at explaining the essence of very complicated financial transactions and gives the reader a good understanding of the whys and hows of the financial meltdown. While this book is an important addition to our understanding of what happened, it isn't complete as it doesn't spend any time talking about US government policies that contributed to the crash (specifically, the special legal status given to the three rating agencies, and Fannie and Freddie's role in weakening underwriting standards). Nonetheless, this is still both an important and entertaining book.