The Big Short, by Michael Lewis, narrated by Jesse Boggs

Some twenty years after writing about his own experiences as a 1980s stock trader in training at Goldman Sachs, Lewis turned his surprising financial expertise (surprising at least to those readers who are not familiar with his financial writing, and are more familiar with his sports-oriented works like Moneyball and the The Blind Side) in the aftermath of The Great Recession to a set of unusual people who predicted the financial meltdown with unusual prescience. The narrative includes as its heroes a one-eyed reclusive hedge fund operator suffering from Asperger’s Syndrome, a foul-mouthed and transparently greedy Deuchebank trader peddling shorts on credit default swaps, a group of three accidental institutional investors with a marked social conscience whose contrarian ways lead them to turn an initial $110,000 into hundreds of millions of dollars in wealth, and a somewhat antisocial scion of stockbroking royalty and his analytical associates. And if one thinks the heroes are a weird lot, assembled from rejects superhero origin stories, the villains of the story are sometimes equally odd and colorful, including clueless Wall Street CEOs and foolishly greedy operators cooking up, super-villain like, ever more complicated financial schemes that can only end in catastrophic ruin once lettuce-picking migrant workers are able to borrow three quarters of a million dollars for a house in Bakersfield or the Jamaican immigrant maid of one of the story’s heroes ends up owning investment five townhouses in Queens. This is the story that can only end tragically, and it ends up being a Greek tragedy of sorts, under the doric and ionian columns of the offices of Wall Street financiers and their willing accomplices and unwitting dupes.

In terms of its contents, the book tells a story that is almost too weird to be believed. Part of the weirdness of the story consists of the people themselves, in that it was mostly a group of misfits and outsiders that predicted what should have been obvious to everyone who was sane, but whose outsider status was what allowed them to be at least somewhat inoculated from the insanity of the world that they were dealing with. It is an unusual story in that even the losers and fools, the ones who bet on their own financial prowess in selling and holding onto subprime mezzanine trench loans that were obviously going to fail, ended up rich themselves but lying low in the crisis’ aftermath, hoping no mobs of angry peasants with pitchforks and torches were going to come after them and demand their pound of flesh. Part of the unusual nature of the story is the long and delayed nature of crisis, in that there were obvious tells, obvious, at least to those who took the time to read the fine print and reflect upon its implications, which is admittedly not a large number of people. And part of the unusual nature of the story is in the sheer weirdness of its events, which include a subprime investor conference featuring uncomfortable dinners hosted by investment firms pairing up smart and dumb money as well as fun times on the shooting range. This is stuff too bizarre to be made up, where some weird financial alchemy transforms 80% of crappy loans on lenders not terribly unlike myself into investment-grade securities marketed to conservative-minded German investors in Dusseldorf. One has to think long and hard after reading or listening to this account spun out in a complicated web.

Reading a book like this is a cautionary tale on many levels. For one, it reminds us of the wisdom of laws that enforce restraint and separation between speculative economic bets and the sort of mundane and ordinary financial behavior that benefits ordinary people. It reminds us of the fact that years, and even decades, are sometimes necessary for the recognition of reality in the midst of prolonged periods of financial insanity, and that the profits of that insanity can blind people to the reality of the financial situation until it is too late. It is also a reminder that justice is rather imperfect, and that those who are responsible for regulating the behavior of others are not always savvy enough to do their jobs well in the face of the immense creativity and inventiveness of wickedness. There are strong political undertones to this work, and a reminder that those who are wealthy and powerful often do not want lassiez-faire for themselves when they are in trouble. A picture of crony capitalism at its least appealing, this is a book that leaves a sour aftertaste even for those who were able to correctly predict the fall of subprime mortgages, because betting against insanity was what gave liquidity to that insanity, allowing it to get even worse.