New Michael Lewis book: the Big Short

[oddlots]

Rave review on Michael Lewis's new book:

http://bnreview.barnesandnoble.com/t...hort/ba-p/2298

Apparently it's an expansion on this piece in Portfolio:

http://www.portfolio.com/news-market...-Streets-Boom/

... which was absolutely brilliant.

[GRG55]

Re: New Michael Lewis book: the Big Short

Rave review on Michael Lewis's new book:

http://bnreview.barnesandnoble.com/t...hort/ba-p/2298

Apparently it's an expansion on this piece in Portfolio:

http://www.portfolio.com/news-market...-Streets-Boom/

... which was absolutely brilliant.

Janet Tavakoli strikes again...:cool: . This time she has Michael Lewis in the crosshairs of her gunsight...:eek:

A good read posted by her on HuffPost...

Michael Lewis: Junior Salesgirlieman


Janet Tavakoli

President, Tavakoli Structured Finance, Inc.
Posted: March 15, 2010 06:26 AM

I was in the Salomon Brothers' 1985 training class that Michael Lewis lampooned in his amusing book, Liar's Poker. Imagine my surprise to see him billed as a trader on 60 Minutes, since he was actually a junior salesman. Well-heeled male peacocks strutted the trading floor, and junior salesmen were girlie-men, mere eunuchs serving their pashas.

Michael hit the roof when I ribbed him about the mischaracterization.* Yet, in January 2007 he didn't spare the "wimps, ninnies, and pointless skeptics" at Davos. I wasn't at Davos (Michael wasn't either), but he derided people who staked their reputations--as I staked mine--on the fact that the financial system was in peril. One might think he'd have a thicker skin, when turnabout was fairplay and truth was his casualty.

Michael had asserted "Davos Man...will brood about virtually anything, no matter how little he knows about it." He ridiculed their concern of a pending crisis due to the surge in derivatives demand and called it "this year's case in point." Then Michael showed how dangerous it is to be a brilliant writer with a poor command of facts and their true meaning:

"...None of them seemed to understand that when you create a derivative you don't add to the sum of total 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..."

Actually, there was a lot of evidence that risk was being "redistributed" in ways we should all worry about...

...Other serious people also spoke and wrote eloquently and accurately about the risks. They were often ridiculed by mainstream media girlie-men and intimidated by their bosses. Some--like my friend, Arturo Cifuentes--stood their ground and were maliciously fired for it.** Meanwhile, Michael was still cheerleading Wall Street:

"...But the most striking thing about the growing derivatives markets is the stability that has come with them..."

Derivatives had destabilized the global financial system, albeit Michael was clueless. Leverage was much more dangerous than at the time of Long Term Capital Management's implosion. Then Michael gave us the payoff:

"...If they really believe the markets mispriced risk...they must also believe they could make vast sums of money if they quit their day jobs and opened a hedge fund to take the other side of stupid trades..."

...Michael had it wrong in more than one profound way. The markets weren't just "mispricing risk," those in-the-know were manipulating prices--covering up malfeasance and losses. Meanwhile, some members of the fourth estate used their pernicious pens as pawns in the cover-up...

[ViC78]

Re: New Michael Lewis book: the Big Short

Yeah, that was quite a smack-down by Janet, quite an eye-opener for those of us with short memories.

[ThePythonicCow]

Re: New Michael Lewis book: the Big Short

Janet Tavakoli strikes again...:cool: . This time she has Michael Lewis in the crosshairs of her gunsight...:eek:

Whoa! Remind me never to piss Ms. Tavakoli off. That's one heck of a fine rip.

[oddlots]

Re: New Michael Lewis book: the Big Short

Yikes, that is pretty damning. The alleged misrepresentation of his stature for one. And the hook-line-and-sinker view on the role of derivatives in finance for another.

I couldn't get through Liar's Poker. Don't care enough about the money culture. But it does strike me as odd to characterise Lewis as a Wall Street cheerleader: his stuff for Bloomberg is often extremely biting in its criticism. I just cannot connect up the thumbnail portrait here with what I've read of him.

Nevertheless, I thought the Portfolio piece was valuable because it exposed the ironic twist involved in the "synthetic" phase of CDO manufacture: it tells a great tale of a self-styled heroic short who realises that he is actually aiding and abetting the final, terminal phase of the CDO mania rather than, in Chanos or Einhorn style, profiting from exposing fraud. For that alone I think its worth reading.

[Chris]

Re: New Michael Lewis book: the Big Short

Rave review on Michael Lewis's new book:

http://bnreview.barnesandnoble.com/t...hort/ba-p/2298

Apparently it's an expansion on this piece in Portfolio:

http://www.portfolio.com/news-market...-Streets-Boom/

... which was absolutely brilliant.

I liked Michael Lewis' books but took them factually with a pinch of salt. And that was before reading the Tavakoli article...ouch!

Another classic about the Wall Street game is Adam Smiths' (pseudonym) - The money game.

http://www.amazon.com/Money-Game-Ada.../dp/0394721039