For this first book report I will be going over the book The Big Short by author Michael Lewis. Published in 2010 the book discusses the main people on Wall Street who predicted the housing and credit bubble collapse of 2007-2008 before anyone else, and eventually profited off the collapse because of it. The book was eventually adapted into a movie that came out in 2015 which starred the likes of Steve Carrell, Ryan Gosling, and Brad Pitt.
The Big Short follows tells the story of the people who believed the markets were going to burst like Meredith Whitney; who predicted Citigroup and Bear Stearns would fall, Steve Eisman, who managed a billion dollar hedge fund; Gregg Lippmann, a trader for Deutsche Bank; Eugene Xu, a quantitative analyst; Michael Burry, an ex-neurologist turned hedge fund manager; and the founders of Cornwall Capital, who founded a small hedge fund with $110,000 and eventually turned it into over $100 million after the market crash. Author Michael Lewis puts the reader in an interesting state of rooting for these eccentric high-finance people, who saw a rare opportunity to bet against the health of America's financial system to make money. Lewis does a good job at describing the flawed systems that were filled with greed, hypocrisy, and lack of supervision that caused America's Great Recession.
What makes The Big Short even more interesting is how Michael Lewis connects it to his previous books that he wrote involving Wall Street. He argues that the roots of the economic meltdown can be traced back to the 1980's in which he wrote the book Liar's Poker about. It was during that period in which the bonds like subprime mortgage, or collateralized debt obligation (CDO), were developed. These were the complex bonds that led to the amount of debt that piled up eventually leading to the recession.
The Great Recession was the worst economic period in America since the Great Depression of the 1930's. Relating this back to class during the recession of 2007-2008, the internet saw a 69% increase in people going online to get help with their own economic problems, according to Pew Research Center of Internet and Technology. To go along with that statistic, 41% of online Americans used the internet in search for new jobs and 67% used the internet to search for the possible lowest prices of products. Nowadays using the internet for such things is common practice but over a decade ago it was still a relatively new concept.
The Big Short retells the events leading up to the Great Recession and the few people who were able to profit off of it. Personally, I'm not a big reader myself, but when I started reading the Big Short I found it hard to put down. It's a big eye opener in how careless the world of high-finance can get with other people's money. I would highly recommend this book to anyone because it shows a greatly historical period in our countries history that left lasting impacts. For those who have very little idea how financial markets work and feel that this will effect your experience reading the book, the author does a great job explaining how all these complex financial services worked.
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