The Gospel Coalition

This is now the fifth book I’ve read dealing with the financial crisis, understandably quite a popular theme on the New York Times list of bestsellers so far this year. Five books later I am seeing certain themes repeat themselves but I still can’t say that I really understand the heart of the crisis. The financial context that led to it is so deep, so complex, that I just can’t wrap my mind around it. And I suspect that most people are in the same boat I am. Very few of us have the knowledge and expertise to really put the pieces together.

In The Big Short Michael Lewis, best known for authoring The Blind Side and Moneyball, takes a look at the crisis from a slightly different perspective. He looks at it from the perspective of those who saw the crisis coming and who shorted the market, making themselves rich in the process. As he does in Moneyball and The Blind Side, he writes about people more than events. He tells the story of the coming crisis through men like Steve Eisman, who saw the derivatives market for what it was–a whole lot of fictitious wealth that at one time or another would have implode. Both outraged and greedy, he went all-in against it.

Lewis may not come down entirely against the derivatives market in The Big Short and yet he certainly does seem to offer criticism of those who caused billions and billions of dollars to evaporate into thin air. (If money can evaporate into thin air, did it really exist in the first place?) But in doing so he seems to forget that just a few years ago he was championing these very derivatives. In a 2007 article he wrote “None of them seemed to understand that when you create a derivative you don’t add to the sum total of risk in the financial world; you merely create a means for redistributing that risk. They have no evidence that financial risk is being redistributed in ways we should all worry about. They’re just …worried. But the most striking thing about the growing derivatives markets is the stability that has come with them.” Some stability. Not surprisingly, he does not mention that he himself was once enamored by the very means that brought about the crisis. Take that as just an interesting little historical footnote.

The men who are the protagonists in this story are people who are outrageously greedy. It was not good motives that drove their action. It was not concern for their fellow man or even the desire to earn a living. Rather, it was the desire to become outrageously wealthy by risking all they had. It is like the man who found buried treasure in a field so he sold all that he had to buy it. Except that in this case he wanted to profit off misfortune and off the near downfall of a whole economic system. There is no Michael Oher here to draw you in–instead there are just greedy and grouchy Wall Street goons who, though they had foresight, had little in the way of ethics.

But then again, maybe I am being unfair. These men did nothing illegal; they just made themselves rich by betting against a market that was already teetering on the edge of collapse. Isn’t greed at the very heart of so much of what transpires on Wall Street? And weren’t these men just the few who played the game most skillfully? Maybe we shouldn’t hold their success against them. They had the foresight to, essentially, take out hundreds and hundreds of life insurance policies on companies that were already on life support and very nearly ready to flatline. That the economic system allowed them to do this just shows how bizarre and convoluted it had all become.

The Big Short is no The Blind Side. It may be an unfair comparison, I suppose, but somehow I was hoping for more interesting characters and, at the very least, more likable ones. That would have set this book apart from the many others that deal with roughly the same topic, albeit from a different perspective. As it is, there are better options out there if you want to figure out just what went wrong with America before and during the crisis. It’s not so much that there’s anything objectively wrong with The Big Short–it’s more that Lewis has written a book that has stiff and ultimately superior competition.

Verdict: Read it if you’d like a lighter take on the coming of the financial crisis