You
may have seen The
Big Short,
the movie with Brad Pitt. The movie is great, but, I promise you,
the book is even better.
The
Big Short
charts the months leading up to the 2008 financial crash – from the
point of view of people who predicted the crash, and profited from
it.
Go here to buy it on Amazon.com Go here to buy it on Amazon.co.uk
Go here to buy it on Amazon.com Go here to buy it on Amazon.co.uk
If
you ever wondered what, exactly, caused the crash, this book makes it
very clear in a way that's both easily understandable and, in fact,
funny. It will put a smile on your face and may even make you laugh
out loud.
The
author, Michael Lewis, manages to make what you may see as a dry
subject engaging and entertaining. He achieves this largely through drawing short but very effective portraits of each character.
The
Big Short describes
a handful of people in the world of high finance who could see
what was coming. They (probably) weren't psychic, they just paid
attention. Their colleagues and wives (these experts were all male)
thought they were crazy. Nobody wanted to get on board with their
predictions, but, somehow, they managed to find each other, and to
come up with different ways to profit from the situation.
For
example, Michael Burry auto-enrolled his finance clients in his vehicle. He had created this vehicle specifically in
order to bet against the market. He was paying huge insurance fees
every month but, when he hit, he hit big. He, and all of his
clients, made enough money to keep them and their families for
generations to come.
Have
you ever read a book that's so good you never want it to finish?
That's how I feel about The
Big Short.
I keep putting it down and picking it back up again a few months
later. As a result, I have read – and enjoyed - some parts over
and over again.
Thus,
I have come to understand, in a certain amount of detail, exactly how
and why the 2008 crash happened.
It
was a combination of greed, stupidity and hubris
– the belief on the part of those who manipulated the financial
markets that they were right, no matter what.
As
I said, I never wanted this book to end. But we all know how it
ended. People lost their jobs, people lost their homes, and people –
like you and me – had to endure years of austerity. For example,
government cuts, reductions in services for the elderly and the
disabled and, certainly in the UK, cuts to the health service. And
some financial services had to accept that they were not “too big
to fail”. Meanwhile, the rich continue to get richer.
If
you want to understand how, read this book.
And
bear in mind, this can all happen again.
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