He has discussed how the pursuit for huge profits, idiocies and financial hypocrisy led to the financial crisis.Īlthough Lewis has revealed the challenges of the Wall Street market, he has not provided a macro perspective of the financial crisis. Lewis has shed light on the monetary calamities of the Wall Street through his nimble narration of the experiences of some investors, who gained or made losses in the stock bazaar. Although many monetary institutions ignored government regulations, they insisted on being rescued by it when they plunged into crisis. The American Insurance Group was one of the companies that invested in the Credit Default Swap and made huge losses when the stock bazaar collapsed. Some investors gambled against the Collateralized Debt Obligations and made profits however, some individuals incurred serious losses. Many unscrupulous property developers hurriedly bought these mortgages without carefully evaluating their capacity to repay them. These mortgages were auctioned in the bond market. Sub-prime mortgages were consolidated and dubbed Collateralized Debt Obligations.
![the big short by michael lewis the big short by michael lewis](https://images-na.ssl-images-amazon.com/images/I/61Jh7fBVTkL.jpg)
He notes that dominant financial institutions in the US invested heavily in sub-prime mortgage schemes. Lewis has also attempted to give a good clue of how the Collateralized Debt Obligations and Credit Default Swap were created by some investors.
#THE BIG SHORT BY MICHAEL LEWIS FREE#
According to Lewis, an investor who fled the stock bazaar and joined the bond bazaar exemplified a small fuzzy creature reared in an island free of marauders, but unfortunately plunged into a pit crammed with pythons. Therefore, this book has confirmed a popular assertion by Karl Marx that capitalism has its own contradictions that compel investors to take high risks. For example, many people failed to pay their mortgages and made serious losses because they were misguided by lending institutions. Lewis notes that most evaluation techniques were entrenched in the rising property prices, which gave a false impression of the future financial situation. Monetary institutions also manipulated the rating of bonds to attract more clients.įor example, some companies listed in the Wall Street bribed rating agencies to incompetently rate risky bonds.
![the big short by michael lewis the big short by michael lewis](https://d1w7fb2mkkr3kw.cloudfront.net/assets/images/book/large/9780/1419/9780141983301.jpg)
Companies listed on Wall Street were able to conceal the risks of investing in unsecured mortgages by making them incomprehensible. He asserts that the financial products, which increasingly became complicated, were supported by unsecured mortgages that had flexible interest rates. Lewis contends that the 2008 financial crisis had its origins in the 1980s when financial institutions created composite monetary products such as mortgage derivatives. Lewis also mentions how financial experts warned about the impending financial crisis, but investors ignored their advice. Lewis underpins his arguments with factual accounts of investors that gained and made irreparable losses during the financial crisis. As the title of this book suggests, Lewis reveals how dozens of financial experts and investors created and benefited from loan schemes. In writing his book, Lewis conducted an in-depth analysis of the financial trends in Wall Street.