File Size: 1049 KB
Print Length: 287 pages
Publisher: W. W. Norton & Company; Reprint edition (May 12, 2010)
Publication Date: May 12, 2010
If you want an idea of what happened in the last 10-20 years and why we're still suffering the effects of it and why we will probably keep suffering in the future, you are going to need to read this publication, as well as Lewis' Boomerang, which I feel finishing now. I suspect you'll also need to read his other publication, Flash Boys, which I actually shall be reading very soon., Written by Michael Lewis in 2010 (other novels of interest the Cash Culture for starters (1991) the event was noted by financial analyst annually before to the 2008 catastrophe, but didn't make statements for a full year later- you now why. Like a bunch of kittens in a cover box, time had come to cover up your stinking business as best you can. That way Walls Street could add to the " misery of lower and middle class- Americans" who hopelessly became heavily in debt and many lost all that hey had accumulated for retirement and security in their golden years..
The " smart people" weren't speaking. The FED was keeping the obvious signs under wrap hoping their failure to control would lead only to a little collateral damage that could be easily swept under the Oval Office carpet. Who could possibly understand the full ramification of the rising risk reflecting in the assumption of historically high real property prices and piles of overinflated mortgages that were secured in some situations by Freddie Mac and Fannie Mae? When you consider that the relationship and real estate derivatives were invented by geeks and purchased by traders who had no idea what they really were and the fantastic risk involved in owning such paper, these flim-flam artists were installing it on this at our expense. There was clearly just one problem with this structure. Some big as well as many small players-investors were going to fall short miserably and the world was needed to bail them out.
Fool me personally once, shame on you. But if you act like you fool me 2 times, shame on me. Thank you Michael Lewis in your attempt to save all of us from the greed better known as Wall Streetitis. It's incurable., I first read Michael Lewis' “The Big Short” in 2010. I went and saw the movie version a few weeks ago and decided to read this book again. I actually probably got a little more out of it having seen the movie. Likewise in order to better be familiar with exotic financial derivatives I took a lot of Khan Academy classes in their economics division which covered mortgage supported securities, collateralized debt responsibilities etc . That made understanding the book a little more easy.
The publication covers the stories of several different investment finance managers who recognized the coming implosion of the housing market of the mid 2000s and discovered out a way to profit from the collapse of the financial tools which had put the money into the hands of recent home buyers who in any other time of less easy credit would not have been lent the money. These managers were believed that the coming collapse in housing prices, defaults, and repossessions would dwarf even the Great Depression. They generally purchased insurance that would pay them if the housing bonds they owned or operated or were betting against were to lose their value. Huge entities who supposedly hired the best and brightest financial thoughts agreed take their insurance policy payments with the promise to pay off the fund managers the value of the bonds should they lost money. The amount of money these “insurers” were obligated to pay in was many times their liquidity, nevertheless they blindly continued to create these credit default swaps which made the fund managers fabulously wealthy when the bonds collapsed in 2007.
Typically the book covers the dysfunctional position that investment bank has taken in our overall economy and the way in which it offers evolved from successfully collecting and allocating capital, to a highly leveraged house of cards, offering products which do little to help customers, provide an outsized share of the GDP to financial businesses while providing little of value to the overall economy.
Reading this book makes one wonder about the future of the economy, thinking about the attention of wealth in the top 1%. The trillion dollars that went into bonds that funded real estate from 2000 to 3 years ago. We have now all know that many many people who ended up borrowing that money to move into homes ultimately could not afford those borrowing costs. And yet the overall economy of the early 21st century in America was driven by the overheated housing market. Many, many carpenters, cement finishers and so forth were put to work building those houses for folks who ultimately couldn't afford them. How much GDP was driven by home collateral loans – people credit on unjustifiable rising house values, buying boats, holidays, kitchen upgrades on obtained money. So now look at the scenario where that trillion dollars isn't provided for housing, where really does that money go? If only the top 20% can afford to hold loans for houses, where is that trillion dollars used order to move the overall economy along? Is our problem not enough money is in the hands of potential consumers? Charles Murray in his book considers that our societal problem is more an 80-20 problem with the top 20% pulling so far away from the bottom 80%. At any rate or even enough money is in the hands of consumers, then not enough is invested in serving them, nor will be the rates of returns on invested money very attractive to the majority of middle school investors (via 401Ks) that need the investments to work in order to fund their longer life covers after their working lives end., I saw the movie first and was so impressed/interested I made the decision to read the publication and I'm very pleased I did. It can be hard to match all the financial lingo of all these complex instruments but it's meant to be that way. Since the author expresses Stock market makes things complicated so that outsiders will think they are the only ones smart enough to make sense of it. Typically the scary thing this book illustrates is that they made it so complicated even they had no clue what was going on. Just a hand full of people that did the investigator work to determine what was really happening were the ones able to income from this nightmare scenario. It's sickening how all the people who damaged our economy not only got away by it but walked away with huge sums of cash and taxpayers in the finish paid the price. I actually loved this book for delving so deep into this unfortunate situation. Typically the only way to study from mistakes is to truly understand what you did wrong to start with.
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