I recently finished reading Michael Lewis’s The Big Short: Inside the Doomsday Machine. First let me say that, on my own, I wouldn’t have picked up this book. While I find economics/business history interesting enough, sitting down to entire book on the subject isn’t high on my priority list. What thrust this book on my “to read” list was its use as an incoming freshman text at Southern Methodist University, where I’m teaching. I like the idea of an all-school or an all-freshman read, but I had wondered about the choice of this particular book. Having read it, I can say that this was a pretty good choice. I can assume that much of the impetus behind the selection of this text came from those in the Cox School of Business, and I can understand them lobbying for a book that would be of interest to their particular freshman class. And kudos to the committee that chose this book, because not only is it a work that would obviously appeal to business or economics majors, but it’s also a pretty good narrative that tells a compelling story. What makes Lewis’s book successful is the way he narrates the subprime mortgage crisis. Instead of giving us a broad, detached historical overview of the events, he chooses to present us with a series of individual life stories, a collection of mini-biographies of some of the players in the financial meltdown. These are the people who were in many ways outsiders to Wall Street and the bond markets and who could clearly, at least much more so than about everyone else involved, see through the bullshit that was being shoveled…and being created out of almost nothing. It was an engaging read, and it pretty much kept my attention all of the way though. I had been warned that the first 40 pages or so were rough going, and that it got better after that. But I didn’t feel that the first part was off-putting or unusually difficult. What I read in the first couple of chapters more or less reflected the way I felt about the entire book and its readability.
That being said, I did find that the terminology and much of the esoteric practices were nonetheless a bit cloudy, even by the end of the book. I believe that Lewis tried his best to explain to the common reader, or at least a reader unfamiliar with the trading world, the culture surrounding the bond market and its many terminological creations. But I’m not entirely convinced that he was completely successful at getting this across. It seemed as if the author was trying, through sheer repetition, to forge an understanding of the practices and terminology, and that by encountering the same words and ideas over and over again, the reader would eventually understand what so many in the business failed to understand. To a point, this works. But not completely. I still had a lot of questions by the end, although I feel that I got the gist. Overall, it’s a pretty good book and a useful introduction to the crap that helped to get us where we are today, economically speaking.