In one obvious respect, The Big Short follows Michael Lewis’s winning formula for a blockbuster book on sports or finance: character sketches so compelling, funny, and sympathetic that he makes an arcane industry understandable by the average reader.
Less recognized, but even more impressive, however, Lewis bucks the dominant trend in media coverage of the 2008 Crisis. Lewis does what almost nobody else in journalism has even tried over the past few years, namely, he makes the short-sellers the heroes. He makes us root for:
- The plucky one-eyed neurologist Michael Burry with Asperger-spectrum personality, whose investors repeatedly tried to betray him
- Steve Eisman, a down-beat and beaten-down stock analyst covering the least glamorous industry, subprime lenders
- Two entrepreneurial founders of a seemingly Too-Small-to-Succeed hedge fund Cornwall Capital
Only Deutsche Bank mortgage trader Greg Lippman gets profiled as the arrogant gunslinger that we’ve come to expect from financial journalists, and the profile is so specific that you can’t help but think Lippman must be exactly like that.
Most coverage of the Crisis gives the strong sense that innocent homebuyers were tricked by greedy bankers and their Wall Street enablers into mortgages they could not afford to pay back. The popular press rarely mentions the basic idea that lending to people who cannot and will not pay back their mortgages is not a strategy or a goal of bankers and their Wall Street enablers. It happened, but it was not their plan.
Lewis’ has the gumption not to defend, but to celebrate, the few clear-headed folks who managed to profit while the financial herd – bankers and borrowers alike – ran themselves off the edge of a cliff.
Start with The Big Short to get a clear sense for the players, triggering events, and financial technology of the Great Credit Crunch of 2007 and 2008. It’s as good as anything else written on the Crisis to date.
Also see my review of Michael Lewis’ Liar’s Poker - The best book on Wall Street ever.
and see my review of Michael Lewis’ Boomerang – Funny, if not terribly substantive.
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