Another excellent book. In it, Michael Lewis follows a handful of investors who foresaw the bursting of the subprime mortgage bond bubble. They made massive bets on the collapse of the financial system that nearly brought the world to a halt in 2008. Of course, they made tens of millions of dollars each during that crisis.
While the narrative is certainly sapid, the most salient point is made in the epilogue: the financial system is still broken. Maybe these few investors were vultures in making obscene amounts of money betting on a collapse, but the bigger problem is that no real measures were taken to prevent such a collapse in the future. The US government just threw money at the problem to make it appear to go away. No lessons were learned.
It is difficult to get a man to understand something, when his salary depends upon his not understanding it. - Upton Sinclair
A collapse will happen again. Maybe something else will trigger it next time. But in one way or another, greed will rear its ugly head. With a vengeance.
Lewis makes credit default swaps and collateralized debt obligations understandable to non-finance types like me. Who knew the roots of the recent financial upheaval - the mess that decimated my savings - could make for such good reading! Now that our government is considering regulations to stem the abuses, we all need a good primer on what went wrong. Lewis' book is a sweet way to digest a bitter pill.
ReplyDelete