The Big Short
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The Big Short

Michael Lewis

4.4928 learners

Michael Lewis’ *The Big Short* pulls back the curtain on the 2008 financial crisis, following a ragtag group of misfit investors who saw what Wall Street, regulators, and rating agencies refused to acknowledge: the U.S. subprime mortgage market was a ticking time bomb. From the socially awkward doctor-turned-investor Michael Burry, who first used credit default swaps (CDS) to bet against overvalued mortgage bonds, to the fiery Steve Eisman, who spent years exposing the industry’s systemic fraud, and the small-time Cornwall Capital team that turned a $30 million stake into $800 million, these outsiders navigated a rigged system to profit from the crash. Lewis lays bare the greed, corruption, and collective denial that fueled the bubble—from banks packaging toxic loans into AAA-rated CDOs to rating agencies rubber-stamping garbage assets—while capturing the hollow victory of those who won, even as ordinary Americans bore the brunt of the crisis.

Wall StreetMortgage-Backed SecuritiesSubprime Mortgage CrisisCredit Default Swap (CDS)Collateralized Debt Obligation (CDO)
Quote

Eisman on Ratings

"The ratings agencies are just whores." Eisman said this because they gave AAA ratings to junk subprime bonds for money.

CorruptionSteve EismanRatings Agencies
Scenario

Eisman vs Zhao Wen

At a 2007 dinner, Eisman argued with CDO manager Zhao Wen, who admitted he only cared about fees, not loan quality.

GreedSteve EismanCDO
Method

Eisman's Research Method

Eisman's team analyzed loan data to find risky subprime bonds. They looked for no-income-verification and adjustable-rate loans.

ResearchSteve EismanSubprime
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Eisman on Crisis

"We're in a crisis because of greed." Eisman said this to explain why the subprime crisis happened—Wall Street prioritized profits.

GreedCrisisSteve Eisman
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