8 guys in Wall Street, one with the Asperger syndrome, found
out that the world’s financial system was about to collapse. MICHAEL LEWIS’s
book is the story about their journeys to bet against the market and make a
profit from the incoming catastrophe.
Throughout the book, we are introduced to the inside of Wall
Street firms and the money making machine by harvesting the average citizens.
There are 2 ways to read the book: you read the book first or you can watch the
movie first. However, I suggest the movie should be considered first because no
matter how much MICHAEL LEWIS was trying to simplify those confusing financial
terms (some of them were so complicated that even analysts in Wall Street at
that time could not understand. That was one of many reasons that led to the
crisis: the lack of complete understanding), he would never be as good as “Margot
Robbie in a bubble-bath to explain”. FYI, Michael Lewis was also the author of "Money Ball", which Brad Pitt made a movie out of it and gained much attention in 2011.
I have to admit that I am a fan of this book. Michael Lewis made everything so clear and obvious that usually in the first chapters we jumped to some questions,
or conclusions such as: “Why did they do that? That was wrong” – “It made no
sense” – “Come on, the bankers, the analysts in Wall Street, they were supposed
to be the best of the best: why couldn’t they see what was coming?”. However, in the following chapters, MICHAEL
LEWIS had a special way to answer those questions. We just needed to pay much attention to every single words in the book, especially at the end of each chapters, and then the answers would appear.
All of the nonsense often
came from 2 things and the first one was greed.
Without greed, the bankers in Wall Street would not lower
the credit standard in order to produce more mortgage-backed bonds. Without
greed, the borrowers would not fall for the teaser fixed interest rate and
would not have loans that were over their capability. Without greed, the Wall
Street firms would not fool the market by marking those “triple B” as “triple A”.
The second thing was what our guys taught us: “The most
difficult subjects can be explained to the most slow-witted man if he has not
formed any ideas of them already; but the simplest thing cannot be made clear
to the most intelligent man if he is firmly persuaded that he knows
already, without a shadow of doubt, what is laid before him”. Mike Burry, Steve
Eisman, Grep Lippmann did not keep for themselves what was wrong with the
market. They even tried to share it with everyone but no one listened to them. Those "analysts", in fact, did not analyze anything. The investors trusted the rating agencies. The rating agencies trusted the big Wall Street firms. The Wall Street firms believed in their bankers and analysts. That was like a chain reaction. One thing failed and others would blow up.
The bets against the market, the system in the book gave us a lesson:
the market was not always right and functioning correctly. The 2008 crisis was
not the first one, and perhaps, not the last neither. There is always chances
for us. Just remember to open our minds to let new ideas in.
Karl Zed
