The Big Short: Inside the Doomsday Machine

The Big Short: Inside the Doomsday Machine

by Michael Lewis

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The #1 New York Times bestseller: "It is the work of our greatest financial journalist, at the top of his game. And it's essential reading."—Graydon Carter, Vanity Fair

The real story of the crash began in bizarre feeder markets where the sun doesn't shine and the SEC doesn't dare, or bother, to tread: the bond and real estate derivative markets where geeks invent impenetrable securities to profit from the misery of lower- and middle-class Americans who can't pay their debts. The smart people who understood what was or might be happening were paralyzed by hope and fear; in any case, they weren't talking.

Michael Lewis creates a fresh, character-driven narrative brimming with indignation and dark humor, a fitting sequel to his #1 bestseller Liar's Poker. Out of a handful of unlikely-really unlikely-heroes, Lewis fashions a story as compelling and unusual as any of his earlier bestsellers, proving yet again that he is the finest and funniest chronicler of our time.

Product Details

ISBN-13: 9780393078190
Publisher: Norton, W. W. & Company, Inc.
Publication date: 02/01/2011
Sold by: Barnes & Noble
Format: NOOK Book
Pages: 320
Sales rank: 59,614
File size: 667 KB

About the Author

Michael Lewis is the best-selling author of Liar’s Poker, Moneyball, The Blind Side, The Big Short, and The Undoing Project. He lives in Berkeley, California, with his wife and three children.

Date of Birth:

October 15, 1960

Place of Birth:

New Orleans, LA


Princeton University, B.A. in Art History, 1982; London School of Economics, 1985

Table of Contents

Prologue Poltergeist xiii

Chapter 1 A Secret Origin Story 1

Chapter 2 In the Land of the Blind 26

Chapter 3 "How Can a Guy Who Can't Speak English Lie?" 61

Chapter 4 How to Harvest a Migrant Worker 85

Chapter 5 Accidental Capitalists 104

Chapter 6 Spider-Man at The Venetian 136

Chapter 7 The Great Treasure Hunt 160

Chapter 8 The Long Quiet 179

Chapter 9 A Death of Interest 200

Chapter 10 Two Men in a Boat 226

Epilogue Everything Is Correlated 253

Afterword 265

Acknowledgments 269

Index 271

What People are Saying About This

Dick Durbin

I’ve joined a lot of other people in just finishing Michael Lewis’s book, The Big Short, and it’s really an eye-opener of what was going on at the time that this real estate bubble was created.

Carl Levin

I read it, marked it up for my staff, underlined it, made copies and asked them to read it.

Harry Reid

I recommend everyone within the sound of my voice to read [this] book.

Jackie Speier

[A]n incredible piece of commentary on Wall Street.

Byron Dorgan

If you’re wondering if there’s importance or an urgency to this issue, read the book The Big Short by Michael Lewis, and then, when you’re finished reading, come back to the floor and say that you support this amendment [on financial reform].

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The Big Short: Inside the Doomsday Machine 4.1 out of 5 based on 0 ratings. 980 reviews.
PTrubey More than 1 year ago
Hugely entertaining look at the genesis of our current economic mess. Lewis finds the very few investors who predicted and profited from the sub-prime mortgage meltdown and follows their journey from initial realization of the impending disaster to eventual payout. Following these eccentric characters and their interactions with the big Wall Street investment banks is at turns laugh out loud funny and head shaking incredulous. Lewis knows how to turn a phrase and does a good job teasing out the dark humor of the situations. He also does a very good job at explaining the essence of very complicated financial transactions and gives the reader a good understanding of the whys and hows of the financial meltdown. While this book is an important addition to our understanding of what happened, it isn't complete as it doesn't spend any time talking about US government policies that contributed to the crash (specifically, the special legal status given to the three rating agencies, and Fannie and Freddie's role in weakening underwriting standards). Nonetheless, this is still both an important and entertaining book.
TheReadingWriter More than 1 year ago
It seems ridiculous for me to urge you to read this book. Don't read it. You'll sleep better. But please don't go investing on Wall Street if you don't read it. This book took my breath away. I learned things and feel oddly vindicated and cheated at the same time. I knew dumb people were making money with my money: vindicated. I thought some people in the government might be smart enough to realize what happened and know what to do: cheated. Michael Lewis did the plebian job of untangling a very messy ball of knotted threads and on the other hand did a herculean job of elevating the discussion above the rock-slinging and shouting to which some angry losers are wont to resort. His characterizations of those involved on both sides of the trades are intimate enough to involve our emotions as well as our interest, but I think what really charmed me was the absurdity of some phrases that matched so perfectly the absurdities he was describing: 'Inside Morgan Stanley, the subprime lending boom created a who-put-chocolate-in-my-peanut-butter moment.' (p.201) Osama and his team of bombers couldn't have done what our own Wall Street firms and their rating agencies and regulators did to the to the U.S. people and to the credibility of the U.S. government: 'It was as if bombs of differing sizes had been placed in virtually every major financial institution. The fuses had been lit and could not be extinguished. All that remained was to observe the speed of the spark, and the size of the explosions.' (p.225)
ELKMA More than 1 year ago
Michael Lewis does a terrific job of explaining the esoteric world of sub prime mortgages, collateralized debt obligations and credit default swaps and provides a very accessible understanding of the near melt down of the financial system. The book is also highly entertaining with a cast of characters that will play well in the movie version.
suzabelle More than 1 year ago
After having listened to Michael Lewis on Charlie Rose for the hour, I went out to buy this book, and could not put it down. It reads like a "who dunnit", and you will now not believe the players who say no one knew what was going on. It is unbelievable what they did. Lewis has written this like a narrative, using the players to tell the story of the great financial hoax, and it is a literal page turner. A terrific book that everyone should read. Suzabelle
JGN_from_Maine More than 1 year ago
An easy read, although those without a deep background in Finance (such as myself ) will find it a bit intimidating. Lewis follows the moves of a few people who understood the house of cards that the sub-prime mortgage (SPM) market became in the 2007-2009 period. Lewis highlights, in lucid fashion, the role that the ratings firms (Moody's and S&P) played; in that their ignorance and incompetence allowed the SPM market to reach the point where its inevitable unravelling had such catastrophic results. Particularly compelling are his accounts of the events of March, 2008 (Bear Stearns) and September, 2008 (Lehman Brothers); which events proved to be the eventual triggers of the current Recession. While the book is well worth reading, it could have benefited a great deal by the inclusion of supplementary material. In particular, the addition of: (a) A Glossary, (b) A Time-Line of Events, and (c) An Index would have been of great value to the reader. One suspects that there was a rush to publication in order to "capture the moment".
Anonymous More than 1 year ago
I am a pretty big fan of Lewis' work and also an expert on financial markets. This book disappointed me. I cannot pinpoint my problem with this book. Maybe I'm just uncomfortable with its investigative reporting tone and what I found to be a monotonous style. I can assure you that I understand credit default swaps and CDOs as well as anyone and yet the explanations weren't clear. The book droned on and on until I found that I couldn't put it down just because I wanted to get it over with and move on to the next book in my stack to read. I probably would not have said all this, or said it this way, had I not just finished reading Scott Patterson's excellent book called The Quants. Same basic subject (Wall Street meltdown), but much better written and amazingly (given the title), much easier to read and follow. I wish I could be more specific about what's wrong with this book but it was just a gut feeling that this subject is done much better by Patterson. Nonetheless, I'm not recommending you don't read this. Just read them both and see if you don't wish you had read Patterson and skipped Lewis. Ok, well, if you have enough time you can afford to read both and indeed some will say the two books are complementary, not competitive.
curious100 More than 1 year ago
I've already given this book to several people who tell me they've enjoyed it as much as I did. Lewis has an accessible style that makes me feel like I have an insider friend who's telling a rollicking good story just to me. He does it by focusing on some of the "characters," who saw the mortgage meltdown coming and figured out ways to make money on it. Lewis makes credit default swaps and collateralized debt obligations understandable to non-finance types like me. Who knew the roots of the recent financial upheaval - the mess that decimated my savings - could make for such good reading! Now that our government is considering regulations to stem the abuses, we all need a good primer on what went wrong. Lewis' book is a sweet way to digest a bitter pill.
VoraciousPager More than 1 year ago
Outstanding story teller that he is, Michael Lewis conveys the essence of the subprime mortgage debacle in a unique, captivating manner. While other "tell all" books on the subject focus on Paulson, Bush, Bernancke, Obama, et. al. Lewis instead portrays some of the mid-level traders and analysts who properly identified the approaching meltdown. Although each character arrived at his conclusion differently, each of them share the same queasiness about betting against the masses and are constantly trying "reality checks" as a result of the overwhelming giddiness surrounding the subprime mortgages and their derivatives. The reader can feel their trepidation as they continue as candles in the wind while the frenzy grows. I alternated between wanting to read it in one sitting and not wanting to finish it so that I'd have something to look forward to each night. Once you read this it will readjust your opinion of the "sophistication" of wall street analysts and will absolutely ruin your faith in the debt rating agencies. It also turned on the light bulb for me as to how interwoven all of the trades became and why backstopping some of the Bulge Bracket firms was even considered. The average reader with some familiarity with financial products will find this a fascinating read. Wall Street types may believe that it is beneath their level of understanding, but who cares? Their mendacity and hubris led them down the primrose path in the first place. The Big Short is right next to Liars' Poker and Moneyball on my list of favorite reads.
judymcbee More than 1 year ago
A reader friendly explanation of very complicated financial insruments and some of the reasons for the bond market debacle; the same people were betting for and against the ups and downs of the market, using other people's money; and all the eggs were in the same insurance basket. At least I think that's what happened -- it is still confusing to some degree. I wish I had known some of this before investing in the bond market & losing part of my 401K money. It will be very difficult for me to ever take the ratings agencies seriously again. Somebody needs to go to jail for fraud.
Anonymous More than 1 year ago
A very engaging recount of the subprime mortgage / financial crisis. Frustrating to be sure, and never boring, the story is told with good pace, relevance, and in a way that is understandable to the lay person. Highly recommended to anybody that wants the behind-the-scenes picture of the seedy underbelly of the US financial system.
Tandy More than 1 year ago
As a real estate agent who watched the whole sub-prime fiasco take place, I always wondered why no one seemed concerned about the obvious greed and theft that was taking place. And even if you knew about it, who was there to tell? And who cared? I am not a financial specialist but I enjoyed reading this book and understanding better what was going on behind the scenes as Wall Street melted. This book has been even more insiteful while watching the televised interviews of Goldman Sachs and Congress. Michael Lewis explained it so I could understand as best I could. Greed, greed, greed!
chrissundberg More than 1 year ago
I've read almost all of Michael Lewis' previous work, and The Big Short doesn't disappoint. I feel like I have a much firmer grasp on the financial meltdown now that I've finished this book. Not only was it informative, it was also very entertaining. The way Lewis paints the characters in this story is remarkable. I feel like I know each one of them. I could not put this book down, and would highly recommend it for anyone who has even the faintest interest in how this whole mess happened.
cez819 More than 1 year ago
Excellent reading if you want to know why the mortgage meltdown took place this is the book for you. Very well written and informative.
Dan Nieves More than 1 year ago
This is a must read for anyone interested in understanding what really happened in this latest market collapse. Let me warn you, as with any explanation of a complex topic, it requires some focused attention. This isn't the type of book you read while watching television. The payoff is a an entertaining read that will leave you stunned at the ineptitude of the so-called experts handling hundreds of billions dollars. It will also leave you outraged at a system that encourages complexity for the sole purpose of ripping you off.
Tone-A More than 1 year ago
Learn what caused the sub-prime financial meltdown from the few who saw it for what it was...a crazy scheme to make money for nothing. The people who actually unraveled this mess couldn't stop it, but they did the next best thing...they made a killing off it's Wall Street perpetrators.
dried_squid More than 1 year ago
I had seen Michael Lewis on Charlie Rose. He said he wrote narrative, not an explanation. Me, I like stories. When I saw the book in the store, I read the preface and read some passages. It was not intimidating, the shards of dialog were colorful, and the style was story-like. I read it in three days. Loved it. It just carried me along. I've recommended it, and offered to lend it to my 30-ish young (compared to me) nephew and niece. The characters are well-fleshed and vivid. I still can't quite fathom short's on mortgage bonds, basis points, and how the money was made. But I'm working it. But that single point does not diminish my good feelings from a story well told. Wish I had made some money too.
skippster123 More than 1 year ago
I liked the book. It's interesting how some people like Steve Eisman really think outside the box. He was also involved in the for-profit scandal a few years later. At a conference he referred to the student loan scam to be the same subprime lending. There is a new book out about it, "Online Education Fraud: The Diary of a Short Seller."
Anonymous More than 1 year ago
Curious about how the financial crisis came about? This book certainly addresses the question in a matter of fact way. Many of the challenges the country now faces stems from the greed of some which led to the downfall of many. It does a wonderful job explaining how Wall Street changed the subprime mortgage market by morphing it into the biggest panzi scheme the world has seen. Anyone who's worked in the industry had to have seen the business could not sustain itself and realize it was only a matter of time before it began to digest itself. I wish I'd had the ability and financial intelligence to capitalize on it as Mr Burry did for his investors; as well as, others who gambled against the pump and dump experienced at the height of the subprime craze.
Anonymous More than 1 year ago
Thank you for the best read I've had about Wall Street to date. Informative, suspenseful, and mind boggling. It's terrifying that so many people hold so much power over our money yet many have no clue what they are doing with it. Highly recommend this book.
oldsmores More than 1 year ago
My knowledge of investment banking is minimal, but Lewis does a great job of explaining the complex and opaque investment instruments that led to the crash of 2008. Full of amazing characters, and written like a crime novel, there were many times that I found my jaw literally dropping at what these people did - and largely got away with. A great story of greed and stupidity among The Masters of the Universe (with apologies to Tom Wolfe). A perfect example of truth being stranger, and scarier, than fiction.
FuriousGeorge More than 1 year ago
I tend to frequently start many non-fiction books to feel good about reading thoughtful things instead of crappy science fiction, but it's extremely rare that I actually finish them. The Big Short is in rare company as one that I had a really, really hard time putting down from cover to cover. For about a week I was going to sleep far later than intended because I couldn't stop reading this gripping account of the lead-up to the financial crisis. Michael Lewis spins a fascinating tale from the point of view of the people who saw the crisis coming and profited from it, calling out the laziness, greed, and stupidity of the other players in the financial market that created the shocking housing bubble. I can't imagine that there is much better than the Big Short if you want to understand how and why the crisis happened. Obviously, Lewis has a perspective - he is much more inclined to blame the crisis on the aforementioned laziness, greed and stupidity in financial institutions than on the members of "Main Street" who took out mortgages they had no hope of paying back. But, for the most part, he makes a very convincing case - it doesn't feel slanted. The only exception to this is the coverage of the actual crash and bailout period towards the end of the book, where I felt he got a little too vitriolic without taking the time to explain why he felt that way. But, regardless of that minor shortcoming, I can't give any book a higher recommendation than I would the Big Short.
Anonymous More than 1 year ago
Una entrenida forma de leer la crisis.
FinMac More than 1 year ago
Michael Lewis tackles a weighty subject in The Big Short and he does it extremely well. This is an absolute must read for anyone even remotely interested in learning about the subprime mortgage crisis. Lewis takes very complicated concepts and makes them accessible to his reader. I have read criticisms that his "heroes" in the story were actually responsible for drawing out the madness leading up to the crash, but I don't think he ever suggests that they did not play that role even going so far as quoting his characters as admitting they "fed the monster." But his characters did what good investors do, they did not create the mess, and it was not their job to try to prevent it. In the end I think that Lewis does an amazing job of giving a balanced account of who did what and it's impact in the collapse. Fantastic book.
Anonymous More than 1 year ago
I had been looking for an interesting book on the financial crisis that would also help me understand it just a little better. This book does not disappoint. It reads as an unfolding drama and explains many aspects of the subrpime mortgage mess along the way. Although this book focuses mainly on the subprime mortgage aspect of the crisis, it provides other valuable insight into how the financial firms operate and think. I'm sure there are other books out there which cover other contributing factors to the current financial crisis, but I'm not sure how many would be as enjoyable to read. Overall, this is a very interesting and entertaining account of how several individuals were able to see what almost nobody else could or wanted to, and ultimately profit from it.
Anonymous More than 1 year ago
Seldom has a book about Wall Street caught my attention as much as this. Michael Lewis has brought to the attention of the public sector a tragic era that will live in infamy for years to come. Naming names and using the actual events to tell this tale of horror, Mr. Lewis has opened my mind and eyes to the reality of a self-serving industry. Well written and current, this is a must read for all investors and up-coming traders.