As the poet once wrote: Cleveland city of light city of magic
Cleveland city of light you're calling me
Someday the world may agree, but not this week.
I read “The Big Short” by Michael Lewis this week and can recommend it without reservation, but with two warnings. The first is that it is fairly technical. When you finish you will have a much better understanding of the difference between CDO’s and CDS’s, and you’ll learn the importance of tranches and how Goldman Sachs and other thieving Wall Street bastards used them to obfuscate their schemes to defraud their customers and dupe the ratings agencies.
Lewis worked as a bond trader at the old Solomon Brothers twenty years ago and wrote his first best seller, “Liar’s Poker” based on his experience there. In the opening pages of “The Big Short” he talked about how the wretched excesses of the early ‘80’s on Wall Street shocked him, and how sure he was that they were ripe for a fall. He admits to finding that notion quaint today in light of what was to come.
This leads me to the second warning. This book is likely to make you angry, depressed, or both. (I finished it the same day as game five of the Cavs-Celtics series, so imagine how I felt!) Lewis tells the story of the sub-prime mortgage melt down through the words of a half dozen professional investors who saw it all coming, told anyone who would listen for several years, withstood the ridicule and scorn their opinions brought down on them, and ultimately, made hundreds of millions of dollars by betting on their beliefs.
Lewis puts to final rest the fantasy espoused by Wall Street CEO’s and government officials that the meltdown was an event of such unforeseeable randomness that no one could possibly be blamed for not having seen it coming. It also removes any doubts about the rapacious disregard Wall Street had (and has to this day) for its customers, its shareholders, and for the good of the country. And it kills the myth of the “Wall Street genius.” They might be able to kick your ass on an SAT test, but only a collection of stupendously dumb shits could have produced the end result brought about by Goldman and their imitators. Hundreds belong in jail. I hope they go and I hope they get remedial math classes while they are there.
Lewis is a wonderful writer and makes the story feel like you are reading it in real time.
I’m going back on the road for a while; I’m driving north for the summer, stopping for three rounds of golf in South Carolina, dinner in Charlotte, baseball and an endoscopy in Winston-Salem (don’t ask), and a couple of other fun things before I get to New York just in time to clean up and head out again for my daughter’s graduation in Boston. I may be out of touch for a while, but feel free to talk amongst yourselves.
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