While all of my previous blogs reviewed dystopian novels, this week I will be reviewing a story that captures a real historical event. Interestingly, the event was such an incredible catastrophe that it probably would have been considered “dystopian” before it actually happened. The name of the novel is The Big Short by Michael Lewis, author of other iconic stories such as Moneyball, Liar’s Poker, and The Blind Side. Lewis’ ethos as a great storyteller certainly did not disappoint in this work, as it makes the complexities and intricacies of the 2007-2008 economic recession personable and understandable to someone completely unfamiliar with the financial sector.
One of Lewis’ greatest feats is his characterizations of the wall street insiders that foresaw the collapse of the U.S financial and housing markets such as Michael Burry, Jared Vennett, and Steve Eisman among others. Each character is depicted in a way that juxtaposes any stereotype of a wall street analyst, with unbelievably eccentric and unorthodox behavior. Burry, for instance, is portrayed as a slightly autistic, but brilliant money manager who actually made it through most of medical school before discovering his affinity for trading stocks. His impeccable ability to focus intently on tasks that interest him leads him to read thousands of reports on mortgage backed securities and realize the discrepancies between actual risk and how the securities are being evaluated by rating agencies such as Standard and Poors. Consequently, he allocates most of the money in his hedge fund towards “shorting” (or betting against) these mortgage backed securities, inducing the fervent anger of his shareholders. Despite this, Burry remains a brick wall, doubling down on his “billion dollar” bet against the housing market by freezing the positions of his shareholders so they are unable to withdraw any funds. In the end, after years of confusion to Burry as the mortgage securities remained valuable despite the underlying assets failing, he is heavily rewarded on his initial bet, earning himself and his shareholders hundreds of times their initial investment while the rest of wall street struggled to avoid bankruptcy.
The Big Short serves many different functions at once; it acts as both a story of the past and a warning for the future, a reflection upon tremendous feats of human intelligence and a reflection upon tremendous stupidity and greed. Regardless, it is undoubtable that the “The Big Short” has captured the attention of readers intrigued more to learn about how the system of American banking, which seemed so stable, could have been so corrupt and negligent. Moreover, it made Wall Street something that we could relate too and realize that it operates with far more informality and uncertainty than we would ever except.
Hi, I think the very structure of the book is interesting. The fact that these few guys were able to predict the crash but major wall street analysts is just ironic. I also thought your last sentence was very thought provoking. Overall, this was a good book review.
I’ve heard of this movie, but I never heard of the book! How you explained this book sounds fantastic, especially laying out the caliber of books this author has written in the past about true, inspirational stories (Moneyball/The Blindside). These guys were very good at what they did pre-recession, and you made me very interested in reading this book, and rewatching the movie!
I have never heard of this book before, but you made it seem very interesting with this review! I liked how you vividly described Michael Burry’s character and explained how his personality led to the plot of the book.