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The Big Short: Inside the Doomsday Machine Paperback – February 1, 2011
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The #1 New York Times bestseller: "It is the work of our greatest financial journalist, at the top of his game. And it's essential reading."―Graydon Carter, Vanity Fair
The real story of the crash began 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 their debts. The smart people who understood what was or might be happening were paralyzed by hope and fear; in any case, they weren't talking.
Michael Lewis creates a fresh, character-driven narrative brimming with indignation and dark humor, a fitting sequel to his #1 bestseller Liar's Poker. Out of a handful of unlikely-really unlikely-heroes, Lewis fashions a story as compelling and unusual as any of his earlier bestsellers, proving yet again that he is the finest and funniest chronicler of our time.
- Print length291 pages
- LanguageEnglish
- PublisherW. W. Norton & Company
- Publication dateFebruary 1, 2011
- Dimensions5.5 x 0.8 x 8.3 inches
- ISBN-100393338827
- ISBN-13978-0393338829
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Editorial Reviews
Review
― Michiko Kakutani, The New York Times
"Superb: Michael Lewis doing what he does best, illuminating the idiocy, madness and greed of modern finance. . . . Lewis achieves what I previously imagined impossible: He makes subprime sexy all over again."
― Andrew Leonard, Salon.com
"One of the best business books of the past two decades."
― Malcolm Gladwell, New York Times Book Review
"I read Lewis for the same reasons I watch Tiger Woods. I’ll never play like that. But it’s good to be reminded every now and again what genius looks like."
― Malcolm Gladwell, New York Times Book Review
About the Author
Product details
- Publisher : W. W. Norton & Company; Reprint edition (February 1, 2011)
- Language : English
- Paperback : 291 pages
- ISBN-10 : 0393338827
- ISBN-13 : 978-0393338829
- Item Weight : 2.31 pounds
- Dimensions : 5.5 x 0.8 x 8.3 inches
- Best Sellers Rank: #12,299 in Books (See Top 100 in Books)
- #4 in Journalism Writing Reference (Books)
- #16 in Economic Conditions (Books)
- #23 in Economic History (Books)
- Customer Reviews:
About the author
Michael Lewis, the best-selling author of The Undoing Project, Liar's Poker, Flash Boys, Moneyball, The Blind Side, Home Game and The Big Short, among other works, lives in Berkeley, California, with his wife, Tabitha Soren, and their three children.
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Customers find the book easy to read and informative. They appreciate the insightful storytelling that details the financial mess. The characters are well-developed and readers feel connected to them. Many describe the story as scary, shocking, and devastating. The pace is fast-paced and the book moves on quickly to the next situation.
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Customers find the book easy to read and engaging. They find it insightful and worth their time. The writing style is eloquent yet simple, conveying important information clearly.
"...This work is a truly masterpiece...." Read more
"...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..." Read more
"...There's more, but hopefully you've gotten the point. This is a very interesting, entertaining and informative book that accomplishes what it sets..." Read more
"...It reads like a John Grisham novel, yet John Maynard Keynes is a far likelier neighbor on a library shelf...." Read more
Customers find the book insightful and informative. They say it details the situations and characters involved in the financial mess. The book is engaging and explains in great detail how it all happened. Readers appreciate the author's gift of taking complex issues and synthesizing them easily.
"...P. 107 This book is incredibly insightful regarding the motivation of homo sapiens in a capitalist society, how we think, what we overlook..." Read more
"...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..." Read more
"...First, I have to say Lewis provides the most entertaining account of the crisis...." Read more
"...This is a very interesting, entertaining and informative book that accomplishes what it sets out to do. Chances are you'll enjoy it." Read more
Customers enjoy the engaging stories and characters in the book. They find the first two chapters interesting and helpful for setting the groundwork. The book provides a lot of facts and information, is well-researched, and has terrific sections. Readers appreciate the subplots and how the reporting blends with factual analysis.
"...It's your character, tenacity, insight, intelligence and unwavering commitment to a pursuit of the truth amidst a sea of deception, which will..." Read more
"...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..." Read more
"...Capital and Eisman, all make for fascinating characters and fascinating stories...." Read more
"...Lewis is a brilliant story teller, finding subplots in all his books that really turn what could be a generic story into a barn burner...." Read more
Customers enjoy the book's engaging characters and stories. They feel connected to the characters and appreciate the author's ability to weave seemingly disparate characters and stories into a coherent narrative. The book is described as an engaging read that focuses on John Paulson.
"...Lewis has an uncanny ability to use interviews and the sheer creative power of his mastery of language to explain terribly complicated concepts in a..." Read more
"...Greatest Trade is a very fast read and tells the story well focusing on John Paulson...." Read more
"...-sellers, Burry, Cornwall Capital and Eisman, all make for fascinating characters and fascinating stories...." Read more
"...guess the author did want it to read like a story and illuminate some specific personalities, which will probably make the book easier to make into..." Read more
Customers find the book entertaining and educational, with a dash of horror. They describe it as a truly scary tale of the building of the current financial psychoses. The vivid description of the madness in the financial markets is appreciated. Many readers appreciate the raw emotional spilling and how the authors researched, agonized, and withstood the battering from the financial markets.
"...I found the book both fascinating and disturbing...." Read more
"...to achieve the clarity of LIAR'S POKER, but most of this sad tale is understandable (in hindsight) by anyone...." Read more
"...A truly scary tale of the building of the current financial psychoses at their inception...." Read more
"...what Mr. Lewis has been telling you all along is that this is a dangerous market...." Read more
Customers find the book's pace fast and easy to follow. They find it timely and insightful, with a good storyline that moves quickly.
"...It turns out, it is. The Big Short is fast-paced, straightforward, conversational and salty--very much like his earlier works...." Read more
"...The gain occurred virtually overnight. This is not Lewis's best book...." Read more
"...That's my problem though so don't let it put you off. The book is timely, it is insightful, it becomes almost a page-turning thriller at times, so I..." Read more
"...The timing is great for getting an educated perspective on some of the current election issues, too...." Read more
Customers enjoy the book's style. They say it's well-written and clearly explains in footnotes what is being discussed. The book creates a wonderful frame, with interesting characters. The writing is detailed yet flows smoothly, setting the scene and creating a baseline for each story. Readers appreciate the author's wry and engaging style that keeps things real.
"...Warning: This magnificent work is crafted in such a way that sampling the first few pages will transform your day (as it did mine) into devouring..." Read more
"...It's written with zest and style - and he tells it like it is - or was...." Read more
"...It's this book's stunning, fact-based revelations of the corruption, incompetence, and greed in our corporate executive suites that makes it an..." Read more
"...He has an almost avuncular style, stopping to clearly explain in footnotes what were abstruse jargon, that energetically drives his story to an..." Read more
Customers have different views on the book's coverage of corruption. Some find it provides an inside view of greed, fraud, and incompetence in the financial world. They say it gives a basic understanding of the great swindle and the effects of unchecked capitalism. Others describe the book as dishonest, deceitful, and biased against the financial world.
"...It's this book's stunning, fact-based revelations of the corruption, incompetence, and greed in our corporate executive suites that makes it an..." Read more
"...This inconsistency permeates the book, and tonight on 60 Minutes I heard Lewis repeat what his major thesis is: Wall Street did not know what they..." Read more
"...This is a morality play told in a non-preaching manner...." Read more
"...At best, they are delusional, dishonest and corrupt, and at worst, dangerously catastrophic...." Read more
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Top reviews from the United States
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- Reviewed in the United States on March 21, 2010Economics is a social science. It is predicated on an understanding of human behavior, among other things. It's also recognition that what we think we know may be incorrect. In their recent book, From Poverty To Prosperity - Intangible Assets, Hidden Liabilities and the Lasting Triumph Over Scarcity, Nick Schulz and Arnold Kling posed the following question to Douglass North, Nobel Laureate in Economics (1993). North is the Spencer T. Olin Professor in Arts and Science at Washington University in St. Louis:
Here's the question from Schulz and King: "What other obstacles prevent economists and policymakers from seeing what really matters?"
North's response: "Until they understand that our understanding of the world is very fragmentary, is not complete, is - I believe - partially incorrect, no matter how intelligent we are, we're not going to make sense of the world." p. 151.
We live in a world where we must listen for the voices of dissent - the contrarians. When Michael Lewis' The Big Short was delivered, I thought I might pick it up and read a few pages. Warning: This magnificent work is crafted in such a way that sampling the first few pages will transform your day (as it did mine) into devouring this masterpiece cover-to-cover. It is a book about the dissenters, the contrarians, "the few who truly knew" - who developed and exercised the foresight to comprehend the emerging financial crisis in the U.S. (and around the globe). It is a story from the perspective of a very few who recognized that "a great nation lost its financial mind." P. xiv
As Lewis writes:
"A smaller number of people - more than ten, fewer than twenty, made a straightforward bet against the entire multi-trillion-dollar, sub-prime mortgage market and, by extension, the global financial system. In and of itself it was a remarkable fact: The catastrophe was foreseeable, yet only a handful noticed." P. 105
"Even as late as the summer of 2006, as home prices began to fall, it took a certain kind of person to see the ugly facts and react to them - to discern, in the profile of the beautiful young lady, the face of an old witch. Each of these people told you something about the state of the financial system, in the same way that people who survive a plane crash told you something about the accident, and also about the nature of people who survive accidents - all of them were, almost by definition, odd. But they were not all odd in the same way." P. 107
This book is incredibly insightful regarding the motivation of homo sapiens in a capitalist society, how we think, what we overlook, and the necessity to learn to question the world around us. Consider the following excerpts from this book:
"All shared a distinction: They had proven far less capable of grasping basic truths in the heart of the U.S. financial system than a one-eyed money manager with Asperger's syndrome." Lewis' commentary on the failure of foresight by Paulson, Geithner, Bernanke, Blankfein (Goldman Sachs), Mack (Morgan Stanley), and Pandit (Citigroup) vs. hedgefund manager Michael Burry of Cupertino, CA P. 260.
"I hated discussing ideas with investors," he said, "because I then become a Defender of the Idea, and that influences your thought process." Once you became an idea's defender you had a harder time changing your mind about it. P. 56 - quote from Michael Burry.
"In retrospect, their ignorance seems incredible - but, then, an entire financial system was premised on their not knowing, and paying them for this talent." --- Lewis' characterization on what percentage of credit default swaps were sub-prime. P.88
"Lippmann soon found that the people he most expected to see the ugly truth of the subprime mortgage market-the people who ran funds that specialized in mortgage bond trading-were the ones least likely to see anything but what they had been seeing for years. Here was a strange but true fact: The closer you were to the market, the harder it was to perceive its folly." P. 91
"The markets were predisposed to underestimating the likelihood of dramatic change." P.108
"Just throw your model in the garbage can. The models are all backward-looking - the models don't have any idea of what this world has become." P. 176 - quote from Steve Eisman.
Lewis has an uncanny ability to use interviews and the sheer creative power of his mastery of language to explain terribly complicated concepts in a way the layperson can comprehend. Regarding the design of Morgan Stanley's Credit Default Swap (CDS), Lewis uses the following phrase to characterize this instrument - "what amounted to home insurance on a house designated for demolition." (P. 202). In terms of the CDO market, Lewis says: "Their trade now seemed to them ridiculously obvious - it was as if they had bought cheap fire insurance on a house engulfed in flames." P. 164 --- ...you get the point.
If you think that Lewis' "The Big Short - Inside The Doomsday Machine" is "just another book" about a vanilla investigative perspective regarding the U.S. and global financial crisis - YOU'RE WRONG. Don't succumb to this deception! This book is truly unique and will/must be enjoyed by a very broad audience.
This work is a truly masterpiece. If you're interested in human behavior, cognitive economics or yearning for a "can't put it down" or how "a great nation lost its financial mind," --- this particular work stands out from all the rest of the pack. Buy it. Devour it. Think about it. Act upon it. Buy three for your colleagues and friends.
If you're a U.S. citizen, it's your patriotic duty to read this book. If you are employed in the financial services sector of the global economy, this is required reading.
My most heartfelt gratitude to Michael Lewis for sharing the stories of the few who truly knew: Those who "had the nerve to bet on their vision. It's not easy to stand apart from mass hysteria -to believe that most of what's in the financial news is wrong, to believe that the most important financial people are either lying or deluded - without being insane." P.xviii
To Michael Burry, Steve Eisman, Vincent Daniel, Danny Moses, Jamie Mai, Charlie Ledley, Ben Hockett, and your families; here's something from my family to you and yours:
You're "not nuts." You're the folks who provide me with the essential courage to inquire, think, ponder and wonder about the prospects for a better future in this world. You exemplify the few who have lived their lives, embraced incomprehensible pain and sacrifice, and paid an unimaginable personal price --- in pursuit of exposing systemic deception and, begin to restore my faith in the inherent value in the necessity for the contrarian among us. It's people like you who give me hope as my family, my community, our country, and our world continue to struggle as "collateral damage" in the ongoing, ever-unfolding, yet-to-be-experienced, dimensions of the aftermath of this fiasco.
I needed to believe in "heroes" again. Thank you for being "something" in the midst of nothing. It's your character, tenacity, insight, intelligence and unwavering commitment to a pursuit of the truth amidst a sea of deception, which will endure with me. True stories of human heroism will never lose their charm. Thank you for living these truths for us.
- Reviewed in the United States on March 15, 2010Mike 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 startled how many people want to blame politicians and FNMA/FHLMC. As a seller of $1 billion a year to these entities and some knowledge of their loss history as well as debating this issue with a former Vice Chairman of one of these entities who is a neighbor, it is shocking when you hear people talk of the subprime mortgages that FNMA/FHLMC owned. Did they do some such targeted loans? Yes. But half their losses came from their foray into Alt A loans. Coupled with the drop in property value and low equity position (they were leveraged at an unsafe 30 to 1 ratio) their insolvency was guaranteed if there was a downturn. Why were they not managing for this? It wasn't politically motivated. It was profit motivated. Quasi-guaranteed by the govt. they could issue callable agencies, their drug of choice, and arbitrage this money into a higher yielding security which they did. UNTIL the losses started. With 3% equity/custion, the 30 to 1 leverage immediately worked against them. Where were the regulators? Where was management managing risk? As the Vice Chairman said, the problem was property value drop. Well, with much advance notice and concern, WHY WEREN'T YOU MANAGING FOR THIS?????
With that as a background, let's approach the question of should there be a FNMA/FHLMC? I believe there should be. Exactly what do they do? When they are not leveraging for earnings which BTW they started in the early 90s when loan volume dropped and they recognized they needed to do something else to "gin" earnings, they perform their intended function to make borrowing cheap for homeowners. If there were no FNMA/FHLMC for the past two years 30 year mortgage rates for the last two years would not have been 4.25% to 5.25% but rather approximately 5.75% to 7.50%. In addition there would have been a lot more balloon or adjustable rate loans. Now, does America want this higher rate when an effective "NON-Profit" or govt. entity could maintain this function? I think not and I think we need to recognize that the recovery would have been much slower if many people would not have had the availability of this lower cost money to buy homes and refinance to lower rates. Enough with policy and now back to a conclusion.
But Lewis' writing style makes this book and his credibility from having written Liars Poker and the unique perspective of having worked in the industry and left it will make this a big hit. I strongly recommend this well written, important book.
Top reviews from other countries
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Jannet LazimiReviewed in Mexico on October 7, 2024
5.0 out of 5 stars Interesante
Interesante ❤️
- VSReviewed in India on December 27, 2024
5.0 out of 5 stars Must read for Upcoming investors
Must read for Upcoming investors. Gives the story behind 2008 and beyond. Recommended for reading and keeping as a collection
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InteligenterosReviewed in Poland on August 22, 2022
5.0 out of 5 stars Super
Wszystko super, ciekawa książka
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Renato Ruas PintoReviewed in Brazil on October 10, 2017
5.0 out of 5 stars Mais um bom livro do Michael Lewis
Gosto muito do estilo claro e direto de Michael Lewis, do qual já li também "Flash Boys". O filme "The Big Short" (A grande aposta) foi muito bem transposto para o cinema, mas falha em explicar melhor o que são os CDOs, origem da confusão toda. Acredito que Lewis conseguiu explicar bem para um leigo o que é e como surgiram esses títulos e, principalmente, como conseguiram transformar um título composto de dívidas duvidosas em títulos avaliados como AAA pelas agências de créditos. Além disso, o livro desce um pouco mais a fundo na perspectiva daqueles que perceberam com muita antecedência que os títulos estavam destinados ao calote e apostaram contra, além de explicar melhor também como foi feita essa aposta.
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Ivan CerraReviewed in Spain on November 13, 2017
5.0 out of 5 stars Excelente libro
Excelente libro que explica perfectamente lo ocurrido en la crisis financiera del 2007. Muy recomendable. La película también es buenísima.