Just finished reading Michael Lewis’ The Big Short and it is easy to see why it has been on top of the best seller list for so many weeks. While he is ostensibly telling the story of some of the few investors who managed to see the financial melt down in subprime loans coming and to make a killing while the rest of Wall St. went down in flames, he also makes clear who the real villains in the story are, and how most of them managed to walk away from the disaster with huge fortunes. Whether they were criminals or just plain incompetent, they got away with their booty and left much of the country out on the street with home loans they couldn’t afford and all of the tax payers with the bill for their failure.
The common wisdom is that the aggregated bonds these Wall St. bankers created to leverage debt in the credit market are far too complicated for the ordinary person to understand. Indeed, they seem to be too complicated for the supposed experts to understand, and purposely so. They are couched in misleading terminology — tranches and mezzanines. They hide behind meaningless initials — CDOs and CDSs. They are rated for safety by people who have no idea what they stand for. Regulation, it didn’t exist, and for all intents and purposes it still doesn’t.
The Big Short is really an indictment of this country’s financial system, the men who run it and the politicians who let them do it. Somebody, many somebodies, should be in jail. But they’re not. They’re retired on their yachts, or they’re still in their offices looking for new ways to scam the rest of us. There’s the haves and the have nots, and no matter what happens, the haves seem to keep having. This is a book everyone needs to read.