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piiskoor

Another fine mess

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The Big Short: Inside the Doomsday Machine - Michael Lewis I get actively annoyed by two things above all others. (In repressed WASP-speak, "actively annoyed" means I'm punching walls and raging, but inside, where the soundtrack is always ass-kicking and all stupid people feel the lash of my tongue and my car is decked out with spikes and nitrous and I will drive you right into a ditch when you sit on cruise at 46 in the fast lane and I never feel bad about anything.) Wait, what was I saying? Oh yes, two things annoy me more than others: the smug incompetence of others and me not knowing enough to slap that smug right off the face of the incompetent.

Thank you, Michael Lewis, for a) a resoundingly clear and rigorous revelation of the smug incompetence of the great Wall Street con and b) a particularly precise explication of what the whole sub-prime mortgage* fiasco really was. You have armed me; cue the ass-kicking soundtrack, and let me slip on my leather driving gloves.

Lewis is such a funny, curious writer that you could slip into The Big Short as you do with so many of his other works: there's a gee-whiz enthusiasm in his depiction of the central protagonists, almost always eccentric outsiders whose attention to information is flat dismissed by the broader industry in which they work, until events come to show that they were/are in fact absolutely correct, and they succeed--usually by making shitloads of money. Check--BS definitely has this, in spades.

But beneath this familiar, incredibly enjoyable rendition of that old underdog success story, beneath Lewis' self-deprecating humor and the wit of the telling, there is a bubbling rage. Lewis isn't just exposing a particular variant of BS on Wall Street--his scorn is all-encompassing. Wall Street has been a viciously self-absorbed bastion of smug incompetence at least since the '80s--and he notes that, in writing his first book (the very fine Liar's Poker), he fully expected he was chronicling its passing. Wrong. Cue Lewis' own ass-kicking soundtrack, and prep his leather driving gloves.

But inside. On the surface, this is another gleeful portrait of how smart people make stupid people look even more stupid, how an intelligence about information can challenge the systems which habituate our failure to attend to information. It's damn, damn good writing and a great story. And you will walk away with a better understanding of one particularly opaque aspect of this mess we're in.


*I cannot explain the sub-prime mortgage fiasco the way Lewis can. Read the book. But in a nutshell, these are all those mortgages passed out to debtors with shaky (or often no) means for repaying. But Lewis' central attention is not on that scheme--he points out how misguided it was, but his concern is in how the system didn't just reinforce but actively expanded and exploited that "market." Once they're making money hand over fist giving out credit to everyone, the big banks assume that the housing market will just keep expanding, so that what is mere paper early on will grow into real money, as the price of that house the buyer couldn't afford explodes, thus making it a profit for all. But even that isn't Lewis' central obsession. He pays some attention to how everyone ignored the Ponziesque nature of the housing market, and hid their heads in the sand when all evidence showed imminent failures of that market. But even that isn't Lewis' central obsession. He is most interested in the sub-prime bonds market--basically, a glorified Off-Track Betting where anyone could gamble on bundles of these bad mortgages. Anyone! I could basically look over and say that your bank is going to lose a shitload of money on those mortgages, and bet that they would indeed fail. I put out a little bit of money per bundle, and if they fail in a certain period of time, you owe me a lot of money. Lewis' central obsession is this bond market--created in the '80s--which is (see his first book) not trading in goods or services or worth but simplistic betting on "value." It's meta-stock market trading, and it's a con game designed to reap huge benefits for traders, and does nothing for the health of the system.

I mean, WHAT? I'm going to go driving. Where's that AC-DC cd?