The Big Short
Michael Lewis · 2010
The Big Short (2010) is a book by Michael Lewis on Financial crises & markets. Michael Lewis follows a handful of outsiders who bet against subprime housing and won, using their disbelief as a lens to show the 2008 crisis was built into Wall Street's incentives, not its morals.
The 2008 crash explained not as a story of greed, but of a machine that paid everyone to look away.
Two of the ideas you’ll keep
The Clif summary of The Big Short pulls out 7 insights. Here are the first two.
- The catastrophe lived in the AAA tranches, not the subprime loans: Morgan Stanley's Howie Hubler lost ~$9 billion, the largest single trading loss in Wall Street history, betting the 'safe' top slices were safe. They held the same doomed mortgages.
- A CDO was financial alchemy: take the risky BBB tranches of many mortgage bonds, repackage them, and stamp the top AAA. It laundered garbage into gold while hiding that every piece was correlated to one failing housing market.
The other 5 — and the full 11-minute summary — are in the app.
What’s inside: 9 chapters
The whole summary runs about 11 minutes, read or listened to.
- Poltergeist: The Author Who Wrote the Eulogy Too Early
- A Secret Origin Story: The Analyst Who Got Angry
- In the Land of the Blind: The Doctor Who Read the Fine Print
- How Can a Guy Who Can't Speak English Lie?
- How to Harvest a Migrant Worker: The Alchemy of the CDO
- Spider-Man at the Bellagio: Meeting the Other Side
- The Great Treasure Hunt: The Salesman and the Infinite Copies
- The Long Quiet & Two Men in a Boat: Right, and Nearly Ruined
- Everything Is Correlated: The Disease Was the Design
Finish The Big Short tonight.
Read or listen to the full summary in about 11 minutes, then keep the ideas with a minute of review a day. Start with the 2-minute quiz — no card required.
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