Book Review: The Big Short by Michael Lewis

If you like the movie, don’t miss the book it’s based on! I love books by Michael Lewis bashing Wall Street with real, fascinating stories. On 2008 the meltdown, Mr. Lewis wrote:

The casino has judged, badly, the odds of its own games.

Well said! Investment banks are just like Vegas casinos. Average investors can come to the casino to play zero-sum games. You win some, you lose some. But at the end of the day, the HOUSE ALWAYS WINS.

The Great Recession brought down Lehman Brothers. A historical financial services firm, Lehman Brothers survived countless crisis. What was so special about 2008 and how did it deal the final blow to this powerful firm?

There are many other interesting questions:

  • What caused the greatest recession since the Great Depression in the 1930s?
  • What’s subprime mortgage and mortgage bonds?
  • Why were the banks “too big to fail”? Why could CEOs left unscathed, having caused such huge mess? Weren’t they ultimately responsible?
  • Who foresaw the meltdown? How? What had they done at the time when everyone was bathed in a bubble?

It is 2018 now. Ten-year anniversary of the Great Recession. The global economy has not recovered completely despite low unemployment rate, high GDP, and all those pretty numbers. One can feel the aftermath of 2008 today by merely visiting the bottom percentile of the income ladder. The wealth divide keeps getting bigger and whatever “recovery” and “economic growth” are concentrated on the top 1% disproportionately.

I can go on and on about The Big Short. But it’s more fun to just read it. Enjoy!!