I am not a financial expert. I understand the underpinnings of the financial crisis that started in 2008 well enough, but all of the cogs and gears within that unholy machine – the CDOs, the ratings, the tranches, the hedge bets – are a bunch of mumbo jumbo. One of Michael Lewis’ gifts is bringing the obscure workings of the financial markets into clear (if hideous) focus.
That’s what The Big Short is all about. However, instead of a rote retelling of why things went pear-shaped in 2008, he instead tackles the mirror image of that financial disaster: The story of the small group of Wall Street professionals who saw the mass of subprime mortgages for what it was and decided to bet on the whole house of cards collapsing.
One of Lewis’ greatest strengths is his ability to help us remember who the “good guys” are in the narrative – those who saw the system for what it was, as opposed to those who upheld the status quo and so allowed the financial crisis to happen. Considering the extent to which the financial industry relied on jargon and regulatory laziness to stay afloat, this is no small feat.
My only complaint about The Big Short is that one of the principals in it, Steve Eisman, sounded so different from other traders that I wanted to learn more about how he developed his personal philosophy. Alone among the traders profiled in the book, Eisman realized the social and class implications of the subprime mortgage crisis. His perspective is similar to that of the Occupy Wall Street movement, and I want to know more about how he gradually realized that the actions of the financial industry were hurting those in the lower and middle classes.
Up next: The Alchemy of Stone by Ekaterina Sedia