walkitout (walkitout) wrote,
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Michael Lewis, _The Big Short_

Subtitled: Inside the Doomsday Machine

For Monday's book group in Mayberry [<-- not its real name], NH. I suppose I don't need to warn people this time that I believe in spoilers, given that it is non-fiction, right?

I don't typically read Michael Lewis; I find him superficial, in a way that makes me feel argumentative. That said, I enjoyed _The Big Short_ more than I expected to. Lewis, as always, is highly readable: he makes it easy to keep track of the players and he keeps the story moving along at a good pace. Of course, in a piece of technical non-fiction, that's going to have some downsides.

Lewis spends a chunk of the book on Michael Burry, and really goes out of his way to make it excruciatingly obvious that Burry has ASD, and then makes a big deal out of Burry himself learning this when his son is diagnosed (I'm using the DSM V term, since it's now official; in the book, the diagnosis is Asperger's). I kept waiting for the other shoe to drop on some of the other individuals in the book, since it seemed pretty obvious to me that Eisman, at a minimum, was getting the same kind of set up (right down to a description of his mouth and gait which sounded like motor planning issues). Shoe never dropped. *shrug* I always assume that when people supply that level of description, they "get it", but sometimes, they're just describing things about a person that strike them as unusual, without putting the pieces together to understand what that pattern of unusual means.

Burry gets a mis-diagnosis of bipolar, for example, and Lewis does not ever point out _why_ that happened, focusing on the, but I'm never depressed! part, which is pretty bizarre when you consider the mood descriptions of Burry. In any event, Burry got the bipolar diagnosis because he was exhibiting fairly clear symptoms of mania and, since "there is no unipolar mania" is dogma, that gets you bipolar. Did that paragraph of explanation have to be cut? Did Burry even know? And if he didn't, _as a neurologist_, why the fuck not?

It's these little mysteries that result in Michael Lewis' work driving me utterly bananas. Not that it should -- the book isn't really about that. The book is about a small cast of characters who all saw the problems with the securitization of subprime mortgages and sidebets thereon, pushed to make sidebets going the other direction, and made money as a result, when everyone else was losing money. The good news is, John Paulson is barely mentioned.

The tail end of the book was particularly interesting to me, because _lots_ of people saw this coming and did not make bets on it happening, and the ones who were primarily invested in equities and equity like instruments didn't even necessarily do a ton of repositioning in advance of the crash (altho of course a lot of them did reposition into cash and cash-like instruments, gold funds and similar, with a view to being able to pick up stuff on the cheap after the dust had settled). Financial Times had been covering securitization's magical disappearance of risk and how that was all going to go bad for a while before it did (I do not understand why this doesn't show up in _The Big Short_, but I suppose it would interfere with the narrative). I had been mystified how you could see this coming, but not also understand that the policy response would Matter, and the probabilities associated with the possible policy response were worth trying to predict as well (I was so freaking bad at it -- I didn't think the Bush administration would do anything at all, and when TARP was proposed, I just gaped at the screen and went, "I wonder how long he's been walking around with that in his back pocket".). While I certainly recognized that this could potentially have Ended Our Country/Financial System/blah blah bleeping blah, I didn't really believe we'd be quite that stupid -- altho we were less stupid than I expected, in the end.

But if Lewis is representing the characters accurately, they didn't anticipate the policy aftermath whatsoever. And that I find a little bit shocking. Not a lot. But a little.

What I find even more shocking was how late it was in the game before the Cornwall Capital crowd (easily the most likable of every person described in the book, imo) thought to hedge their counterparty risk, altho it turned out they had a great exit opportunity anyway.
Tags: book review, non-fiction
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