The Big Short

Have you ever woken up in the middle of the night and couldn't get back to sleep despite your best efforts? This was an issue for me for a long time, and at around 4am, I would turn on HBO and watch random movies. One night I watched HBO's Too Big to Fail, and fell in love. I have no background in finance or economics (AP Econ was the only AP exam, of 9 AP exams, that I didn't pass), but I loved this movie and probably have seen it over 20 times. Maybe because I love the way Topher Grace explains credit default swaps or maybe I love Paul Giamatti (as Ben Bernanke) eating oatmeal -- Giamatti won an Oscar for this role. For whatever reason, I turn to this movie every time I can't sleep. And I then became obsessed with the housing and credit bubble (and eventual crash).

My boyfriend is well aware of my love for this TV film, and his favorite author is Michael Lewis (who also wrote his favorite book, Moneyball, as well as Blind Side and Liar's Poker). He also was a Economics undergrad and JD-MBA, so clearly he enjoyed and recommended The Big Short. I owed it to William Hurt (Hank Paulson) and my man-friend to explore.

The Big Short by Michael Lewis

Genre: Non-fiction, Finance
Publication Date: March 2010

The title refers to individuals who foresaw the housing and credit bubble burst, and bet against ("short") these deals. The individuals are Steve Eisman, a former Wall Street analyst, Michael Burry, ex-neurologist turned hedge fund manager, and Charlie Ledley and Ben Hockett of Cornwall Capital. These odd balls and socially reprehensive men went against the grain and called Wall Street out for what they were - crooks. However, these crooks of Wall Street didn't fully know they were crooks, they were trying to make a profit and believe that the market and raters were right and everything was hunky-dory. Eisman, Burry, and Hockett thought that Wall Streeters were idiots and ignorant, who didn't know what they were doing, lending money to homeowners who were going to default. So these men bet against housing market, they knew the deals/loans being distributed were shitty and bet that Americans were going to default.

I don't know if I can write a review for this book without trying to explain the financial situation, and credit default swaps, and collateralized debt obligations (CDOs, which I still don't completely understand). However, Michael Lewis did a humorous job of depicting the outcasts/outsiders who took a risk, which wasn't really a risk for them, but came up big. These are the men who actually profited from the market crash. These are the guys who had wits to actually question what others were doing, to calling out CEOs on their jiggery-pokery, and then betting against them. To quote, "the lesson of Buffett was: To succeed in a spectacular fashion you had to be spectacularly unusual.” 

Finished reading: Friday, July 24, 2015

DD's rating: N/A
I can't rate this book, maybe because I don't understand the bets and CDOs. Maybe because I'm still so flabbergasted that AIG took on so much risk and Howie Hubler lost $9 billion but it still a millionaire. I'm still so intrigued by the situation and amazed that Wall Street doesn't have a clue what they are doing, that they want no government regulation but expect bailouts when their shit hits the fan... Thank you Michael Lewis for feeding my fascination.

Fortunately, The Big Short is hitting the silver screen, with Steve Carrell as Steve Eisman, Christian Bale as Michael Burry, Brad Pitt as Ben Hockett, and Ryan Gosling as Greg Lippman. I predict a double-feature of The Big Short / Too Big to Fail in my future!!

Next read: Killing Kennedy by Bill O'Reilly