Author Lewis Says Wall Street Is `Making America Worse'



hi I'm Eric Schadt scre here in the Bay Area talking to author Michael Lewis the man behind liars poker Moneyball and The Blind Side for his newest book the big short Michael spent a year in hedge fund land looking for the small handful of people who anticipated the subprime mortgage collapse he wanted to know why why they spotted the catastrophic bubble that everyone else missed this is one of the great mysteries of the last few years in finance there emerges on the scene this really really smart trade buying credit default swaps on subprime mortgage bonds their limited downside your buying insurance on subprime mortgage bonds limited downside you're paying a couple of percent premium a year for a bet that you know maybe it's not sure to pay out but the odds are better than 50 to one the other they will I mean it's a really it's a it's a really obvious smart bet and many thousands of investors could have made this bet not individual investors for the most part but most a lot of institutional investors could have made this bet in the end only about it doesn't make it in a huge way most of them are outsiders are people who are kind of on the fringe of certainly on the fringe of the credit markets they're not people who are bond market people they're people who they were for the most part stock market people sort crawfished into it because they they could see that the stocks that they were trying to understand we're going to be driven by this event that was going on in the subprime mortgage market so they had to understand stay in the subprime mortgage market and then the more they came to understand that the more Paul they were about how that market work and the more Paul they became the more they began to think about really out of bet against it in each case I mean I learned something about investing from this book because I've always thought of his kind of antiseptic event and kind of a purely intellectual event and it was pretty clear to me in each case these characters had a very an emotional insight / some psychological dimension to them that enabled them to get where they are you note early on in the book that John Paulson made more money than anyone had ever made so quickly on Wall Street so why not make him more part of the story I spent time with him and he's very was very friendly I mean I could have made him part of the story very easily but I had a purpose for the story and the purpose was I wanted to explain to the reader what on earth had happened and and to do that it helped that the characters themselves had had to learn about these markets that they didn't understand these markets to begin with so they could they could the reader could learn with them John Paulson happened to be just aa oddly positioned inside the financial markets and that he was one of the few people who made his living shorting bonds and looking for bonds to short and and so and he was also his motives were to me less interesting he's much more a purely economic animal and so he didn't have a great distance to travel to get to the trade the people who I was interested in were the people who would kind of laid it all on the line where they they'd start out thinking yeah a nice little trade and they ended up essentially if this didn't work out their careers were over and Paulson had very cleverly but from the character logical point of view less interestingly structured his financial life so that he was going to kind of win either way they're not protagonists but you do identify some of the people on Wall Street who figured out the subprime bubble early Gregg Lippmann from Deutsche Bank for example gene Park at AG financial products I'm curious why no central character from Goldman Sachs because it was Goldman that created the synthetic CDO in the first place that's right I mean gold is in the book in a big way if I suppose if they would have let me speak honestly – Jonathan Eagle the trader there or an deed album in the salesman who sold the the credit default swap bought credit for swaps from AIG but put AIG into the subprime mortgage market I might have developed them further as characters but Goldman uh the last thing they want someone like me writing about goldman sachs they're very careful about what what they'll divulge the people inside the Wall Street firms who are more interesting to me were the people who had first tried to scene this scene the opportunity and they weren't many I mean Greg Lippmann is the exception Goldman Sachs was shrewd and finding AIG to be the turkey at the table and shrewd and getting them to ensure subprime mortgage balance the goldman sachs was not set up at the you know when they're doing that to make money if the subprime mortgage bond market collapsed not I mean if the subprime mortgage bond market had done what was supposed to do and collapsed maybe a year or a year and a half earlier than it did Goldman would have been buried they were long so they they were the dumb money too so that they weren't that interesting for that reason the one guy who was really interesting as kind of smart money inside a Wall Street firm was Greg Lippmann I mean Lippmann was a Deutsche Bank subpar asset backed trader who was at war with his own firm because the whole rest of the firm is long in the market and he's saying this isn't it's gonna this is going to be disaster and he and Lippmann was the proselytizer of of the trade I mean the bond market is the Wild West the what goes on in the bond market would never be allowed to go on in the stock market investors in the bond market know that if goldman sachs with deutsche bank comes as you want and wants to sell you something you don't want to buy it and so the Greg Lippmann is running around selling the single greatest trade in the history of the bond market and nobody believes him it tells you something about the bond market they don't they don't he can't get the message across because where he where he comes from then the other you know broadly speaking character on Wall Street who was interesting to me was who was in a big way the dumb money on the other side never nowhere else on Wall Street was there a single trader I don't think who will who making a directional bet on the subprime mortgage market who lost as much as how Hubler did at Morgan Stanley he lost nine point four billion dollars now I think anybody's ever done that on Wall Street and that this guy had done it and he was basically anonymous was amazing to me Michael Lewis says it's just wrong how a single Wall Street firm could do so much to fuel the subprime bubble find out which one when we come back when it comes to picking the biggest villain in the mortgage meltdown there's a lot to choose from Michael Lewis narrows it down to one firm if I had put my finger on one person or one kind of person one role player in this crisis who I would like to string up or rather I'd like to have him just have to answer questions honestly to the public I think it would be it would be the the people who I know knew better it would be it would be I would like for the people who designed synthetic CDOs at Goldman Sachs and persuaded AIG to insure them to essentially take all the risk in the subprime mortgage market in 2005 I would like for them to explain what they thought they were doing there was nothing illegal about what they did it was just exploitive it was just wrong but they were smart enough and their position in the society was elevated enough that you would have thought that there they would have paused and said I have some responsibility here not to do this or to prevent this from happening not to actually make it happen so I hold there's a very obvious status structure on Wall Street ratings agencies aren't even in it but it but but at the very top of the status structure as Goldman Sachs certain traders at Goldman Sachs and hedge funds and when the people at the top set such a bad example everything else in a weird way follows from it and I'd like the I like the the genuine elites to explain why they did buy the behave in the way they did because because I think in the end if you're going to get back to a a saner relationship between the financial our financial system and the rest of the economy the rest of the society you have to have people at the very top of that structure who have some sense of social obligation and they don't right now and it's a question kind of how do you how do you restore that I think you restore it with shame it was a sense of you you should be a shame that you did not behave in the way you should have behaved does that make Goldman evil evils too strong a word it I think the system is evil and the system is capable is now obviously capable and likely to do great wrong and the rules in the system need to be changed I mean one of the things I learned writing the book and it just reinforced what kind of I always suspected was it how amazingly powerful incentives are and you just can't ignore them and you've got to be very careful about the incentives you give what you give people and people are just badly incentivized and they're badly incentivized inside Goldman Sachs and I'm sure individually they're all great you know they're all smart I'm sure that there some cases delightful absolutely maybe not the end of their careers but certainly the beginning and and and so it's not that these are bad people and it's a mistake to say to say oh what you need to do is get rid of some bad people and put some good people in because you put the good people into the same system they'll become bad people it's there bear badly incentivized so what happens though if the rules of the game aren't changed the popular thing to say is oh it's all going to happen again but all if it does happen all happen against Kevin in such a different way it's going to it's going to require in an elaborate explanation to show people how it all connects up but it will all happen again and but the bigger problem is what is Wall Street supposed to do it's supposed to it is it is not a creator of wealth it is a it is a handmaiden to creators of wealth it occupies a essentially parasitic but usefully parasitic relationship with the rest of the society it's totally out of control it is not making America a great place it's it's it's making America a worse place right now and that you that so that's the problem it finance needs to occupy a healthier more productive relationship with the rest of the society on and and it isn't just an economic relationship it's a suit it's also it's got the social cultural component to it that it is not healthy that our financial system has rules in it that enable the returns to individual traders that it enables and it leads you know half the smartest kids from the best schools wanting to be more than anything else in their lives bond traders or investment bankers it's a waste of talent it's wrong SiC the wrong economic signals are being sent by the system that's in place that I think if the rules are changed and it was in some obvious ways the returns to the finance sector would decline and and and the talent would find more useful avenues of a never michael lewis knows as much about trader psychology as any author but even he was surprised that what he learned whiting the big short will have that when we come back writing the big short michael lewis got close to the most toxic trades in history they taught him something critical and frightening about the culture of Wall Street in the Wall Street firms I should have known it but I didn't know it I didn't know quite how cynical they could become and just just how detached from their original purpose they could get and this surprised me because the Salomon Brothers I left in 1989 was a fractious violent body interesting place but there was a personal attachment that people felt to the institution people were angry with me for writing the book because they thought I had betrayed Salomon Brothers The Wall Street that I walked back into to do the big short it wouldn't occur to anyone that you could betray your Wall Street firm because there isn't that relationship at the heart that the relationship doesn't exist anymore everybody is a free agent there's no there's no sense of loyalty to an institution or a cause greater than yourself or all that stuff and so the it was what I learned was just how purely financial and commercial the place had become that and how denuded of essentially what was denude of is the partnership Senate sediment there was the residue of the partnership sentiment that it was still around hovering around Salomon Brothers when I got there because it had been a partnership not that long ago and that had been completely replaced by this new antiseptic raw financial relationship and that is that was curious to see that the people could function in that environment and feel like that was a satisfying thing to be doing with their lives a lot of people would say this the most jaded most cynical out there would say that there never ever was a golden age of Investment Banking even when the firm's were privately held that was all partners capital inside you agree with that well Golden Age might be a big bit strong but I think there was there are much saner structures the incentives were organized senator I organized much more properly the rights incentive now is the hedge the hedge fund incentive it's the it's the I mean they're things that are screwed up about it but typically the person who runs the hedge fund has all his money is on hedge fund and that's kind of how it's got to be and he's on the hook for four losses the problem now is there's no long term greed it's all short-term greed there's no instance not institution building or career building it's it's quick kills and and so I do think that that that aspect of the business that approach to finance is a healthier more golden age like approach then what we have now but you know I I'm not arguing that the investment banks were ever perfect institutions oh yeah and that's silly I'm just saying that there's a smarter way to organize them did you learn anything about Wall Street that you didn't know before in the course of reporting them yes I did I mean if I hadn't if I hadn't learned a lot I wouldn't have been interested in doing it but I I learned first about investing it was it was very interesting to me to see just how people's personal investing decisions can be just how in the end a lot of it comes back to who you are as a person that you're all guided by all sorts of things that I wouldn't have thought would have informed investment decisions so just how human the financial markets were on the on the buy side was really interesting to me there were several layers to the interest but I can remember the first thing that grabbed me was I was shocked that these big firms that used to essentially be the smart money at the poker table had become the dumb money and I was really curious how that had happened I was curious you know I'd watch them change over the years and adapt to uh-uh to the world in a way that in ways that enable people to keep in you get paid large sums of money in them I mean the outrageous behavior that I described in liars poker and something that didn't exist on I mean the place has got much more corporate much more sanitized all in the service of preserving the paychecks next Wall Street subprime strategy finds a new home overseas the story of toxic derivatives didn't end with subprime mortgages it's still unfolding today in Greece the parallel gets even more elaborate because Goldman Sachs appears to advise the Greek government on how to disguise its in the level its level of indebtedness so it feels as if Wall Street went into entire countries and persuaded them to take out subprime mortgage loans you know in effect or help them enable them and taking out a subprime mortgage loans so yes we're living we're living through this period where we are reckoning with the real consequences of financial engineering and that financial engineering gone wrong and the very small bore version of this was the financial engineering that enabled some poor schmuck in Chico California who had no income to buy a million dollar house and the the big version of this is is grace to what degree should we point the finger at derivatives would any of this have happened if derivative contracts did not offer unlimited opportunities to take risk I have a friend who says derivatives are like guns it's not it's not you know guns don't kill people people do it's not it's not the derivatives it's the way people use them and that is true it's true that in better hands there's no reason derivatives by themselves would cause problems derivatives are just ways of carving up the risk and redistributing it it's also true that there is no way than this allocation of capital in the last few years would have occurred without delicious that you need it the only way it happens is it so complicated people can't understand it that when and and so they were a necessary ingredient to this catastrophe but not single-handedly responsible heavily responsible so I do think that more generally not just derivatives but financial innovation now needs to be regarded with skepticism that we have come through a age where people just assume that anything that was invented on Wall Street must be good for the rest of the society because someone was making money from it that it was that all innovation led to greater a fish in a fish efficiency we can now see examples of innovation that led to greater inefficiency so the question is how do you parse this innovation and decide what's good and what's bad it was insane the credit default swaps were not regulated as insurance and that they aren't it's interesting that they're not that everything that's every new security that's created is not traded on screens with a clearinghouse so people can see what the prices should be the problem is it's totally hidden that nobody knows people could tell you who owns the subprime mortgage loans they can't tell you who's on the other side of the credit default swaps no one knows which firms are on the wrong side of this bet there's no exchange the bets allegedly they want there they're in their private transactions between consenting adults and no one knows how much of it there is this creates uncertainty if you want to know why the panic happened in 2008 it was because no one knew who had what losses and the reason no one knew who had what losses is there are all these private transactions of enormous size enormous and indeterminate size that weren't undisclosed it wasn't so long ago that Wall Street was a hidden world where what traders bought and sold didn't matter to the rest of us not anymore when we come back Michael Lewis explains why welcome back Michael Lewis started his career at Salomon Brothers in the 1980s I wanted to know 25 years later how did Wall Street become so dangerous I think the seeds of this catastrophe go back to the 80s and that the source of a lot of the problems are people's incentives being screwed up it's not right they're certainly not satisfying to say a Wall Street's just greedy got too greedy and that was the problem Wall Street's always greedy people go to work on Wall Street or greedy that's why they go to Wall Street and I've got a wall street because they have a calling and Finance I mean a handful of people do but most part people go there cuz that's where the money is they want money you can't you're not going to change that what changes is this are the rules that channel degree the system the channels agreed and so the the the greed came to be channeled in very short-term ways so people became very short-term greedy the greedy for the next quarter greedy greedy for the next bonus rather than greedy for a long and lucrative career what caused that firms ceasing to be partnerships is the beginning of it that a Wall Street firm that has is investing its own money whose own the people inside is their money that's a stake are going to behave very differently from people who were a public corporation you're using shareholders money no public corporate noble partnership would have ever allowed itself to own billions of dollars of triple-a rated CDOs backed by subprime just wouldn't have happened because they would have scrutinized it in a different way nobody will say that on Wall Streeters say that's true they'll say we behave just as we would as if it was our own money but they don't and that nor would you expect them to people are very it's amazing how powerful incentives are to the business got intellectualize in the 1980s the proximate cause the intellectualization was the black-scholes option pricing model but just generally it got more complicated and so as it got more complicated it got harder and harder for normal people to understand it and easier and easier for smart people to persuade dumb people to do things they shouldn't do and easier and easier for smart traders to disguise what they were doing from their bosses but because it's so complicated that was absolutely necessary one of the signature traits of this crisis is that the people on the top of the firms clearly didn't know what their firms were doing that they were buffaloed by people underneath them and they all feel betrayed by their employees when they're speaking and privately about that privately about them but this is why they could be because the business got too complicated for the people who ran them the the the finally this is a really really big one and related to the other two the relationship between Wall Street and its customers the legitimate business of Wall Street is to allocate capital the traditional businesses on Wall Street the alakay traditional capital allocation businesses have gotten less and less profitable all these new markets these financial innovation is a response in part to Wall Street's need for profits then and profits drying up and say old fashioned stock broking because you can now go on the internet and and buy a stock for to move and pay a tiny commission rather than call your guy at merrill lynch and pay a fat one so Wall Street if you look at how firms make their money especially if you've been inside one of them you realize that increasingly especially in the bond markets where more the profits are than in the stock markets Wall Street has become increasingly trade against its customers rather than on their behalf it's acting not as an intermediary but as it's actually essentially is a big proprietary trading fund that is using its customers to get itself out of the positions that doesn't want to be in to take the stupid side of a smart trade they want to do so on and so forth there is a poisonous interface between these big firms and and their customers in the bond market and everybody now takes it for granted it shocked me when I saw in nineteen eighty-seven six at 87 but it's now just normal start to be normal and that is the that is the the minute the minute you're starting to think the way I make money is exploiting the idiocy of my customers is a minute you start creating securities that are designed to explode that you could do on the other side of the minute you're not thinking you're thinking less like a handmaiden to productive enterprise and a useful allocator of capital to your becoming just a becoming the the jerk in the zero-sum game and and they've become the jerks in the zero-sum game so you've got back away from it all and you say look at what these people did and it's and and the shocking thing is is what they did was legal you say how do you change the rules what do you do here one of the things you obviously do is you have to you have to you have to destroy this this notion that it's okay to trade against your customers you have to you have to say you may be what you say is you you can be a firm like Schwab that has customers but you know trade in anything for yourself or you can be a hedge fund but you can't be both because the minute you start to trading it's the customers is the minute you start designing things that are good for the customers and then you start designing things for that good for the customers you start designing CDO still with subprime mortgage plots you start to you start to miss allocate capital you trying to miss allocate capital and that's that's crazy I mean since it's insane but it is the normal on Wall Street and so breaking it up is as you can see changing it is going to be a violent act because it's become so assumed it's just it's so deeply embedded as the assumption of this is how the business is want to know what gets Michael Lewis really worked up it's outrageous if the markets had been allowed to function if the government had not stepped in to rescue the firm it all be out of this all I'm getting a sense of Michael Lewis right now and what he thinks and there's quite a bit of you in the epilogue to this book you talk about the fantastic handouts given to the tarp recipients how they were unnaturally selected for survival and how it was shocking for the Fed to buy mortgage-backed securities are you personally outraged yes it's at because it's outrageous I'm absolutely you know look they are if if the if the markets had been allowed to function if the government had not stepped in to rescue these firms they'd all be out of business all of them they all they're all failed the different degrees of idiocy and you know maybe Goldman Sachs doesn't fail because it has lots of subprime mortgage bonds on his books it fails because it's got credit default swaps with people who do but nevertheless it fails because they are the position they occupy in the in the financial system they can't be allowed to fail I think that that all right you can forgive that that step I can forgive I can completely understand I can understand the way the how the decisions that were made were made in the midst of the crisis were necessarily self-contradictory ad hoc hard to understand in retrospect all the rest but now we're out of that when I find outrageous is the that the people who were in positions of influence and power when it all when when the crisis occurred were by definition people who didn't see it coming they were by definition ignorant of what was going on right under their noses and that they are that there is there's been so little change in that regime is is as bizzle is a little outrageous to me I think it's outrageous that essentially the US government took the position unlike say the UK government that these firms were so central to our way of life that not only could we not let them fail but we can't even suggest their creditors take a hit that we that that essentially their failed institutions that we need to prop up so we are going to gift them money until they get out of their problems which they appear to be doing now that's what we've done though we've gifted the money some in the beginning we gifted them money in a very overt ways direct investment in the firm's or buying their securities or whenever I play today's but now that the their ability to tap the Fed for for money at 0% reinvest the money in agency bonds and take the spread is a form of the gift so it's outrageous that is it that they're essentially being gifted out of their problems and that their view is that their employees deserve a large chunk of the rewards of those of those gifts I think that but it's outrageous on the other hand it's understandable because they have a way of life that has existed for 30 years on Wall Street it's very hard to change people's habits especially if they don't have to change and they've proved that they don't have to change I think that the the end result of this however is just to stoke the political anger that is going to change the system so I think that in the end in a weird way the behavior of the Wall Street firms currently is I is the best friend that reform has because because the because we're because they're not that they're not they're not doing a very good job of disguising their interest in the rest of the world the firm's that survive may be even stronger now than they were before and a whole lot of the people the traders for example who lost their jobs are back employed by the firm's that survive so where is the justice it's not over I mean we're living through this big transition right now I think but Wall Street has changed in Wall Street's relationship to the rest of the world has changed dramatically and the way people view Wall Street is changed dramatically these firms have gone from being unquestioned masters of the universe and in question kind of upper class that everyone aspired to be to being essentially enemies of the people inside the last two years I mean they do have a lot of political influence and there is natural resistance and impediment to changing the rules of their road but there is also on the other side of that enormous anger and cynicism that is going to find a political expression and you can't expect democracy to move as quickly as finance financial markets panic they they change very rapidly democracy moves very slowly in 1929 the markets collapsed it was until 1933 that glass-steagall is introduced it's not it took several years to have proper proper hearings in Congress the reason for that is that the engine of our Democratic changes elections and elections don't happen every day there's something about Michael Lewis that sets him apart from other writers when we come back the author tries to handicap his own success what is it about Michael Lewis that makes him different what's the thread he followed from Wall Street to Silicon Valley to baseball and football and back to Wall Street again I wanted to know my own explanation for why I've always been so interested in this man interested in why anybody would pay me a lot of money to advise people to give to what to do with their money I mean that that was the beginning of liars poker I think it's uh that I grew up in a city in a culture New Orleans that was uh had experienced enormous status collapse it was experiencing it and things that I cherished and valued were no longer valued or being less and less valued by the world and things that made for a happy life were less and less valued in the world and I think that that that as I enter adulthood when I'm in my late teens early 20s I am perplexed by what people think is important and valuable and so I'm probably drawn to that subject in part for that reason but other than that I don't I don't have I don't have a self-conscious obsession with the subject if you had to handicap it what would you say has been the key to your success sloth then never tell you I mean this is not a completely a joke into indolence rather more than sloth that I think that the fact that I'm inherently a little lazy and you may not believe this but if you just ask my wife she will tell you that it means that I have to be really roused to do anything I have to be really interested I don't write a book because I need to write a book because I really don't need to write a book I write a book because I'm really interested in it so that really helps it really helps that it's not exactly a lack of ambition but a kind of a kind of I'd rather be laying in bed reading a book or watching TV or playing with my kids or see that it helps it helps to have to be roused to action rather than just be always ready for action I think it's helped me that I have a pretty low threshold of boredom that if I'm if I'm not humored and interested by that I just drop it were you surprised by the commercial success of the blindside both as a book and now as an oscar-winning movie I was so taken with the story but I couldn't believe it took so long for the movie industry to to be interested in it what it did and it only got made accidentally got made because of the intercession of Fred Smith the head of FedEx has a movie company he knew the story personally he lives in Memphis and he made it happen I think is what happened but so I can't I can't say I wish I could say I was really surprised I was I'll say this about it that when I wrote it it was it was very different from anything I've written and I was surprised my publisher didn't give me more grief about writing it they were we were wonderful about it and they probably shouldn't have been and we found it in the first instance the hard book to sell it did not sell well as a hardback it's it's so well now because in the movie but if anything I was surprised I didn't do a better job selling it when it came out I thought I would do better than it did well nobody expected Michael Lewis to write a tearjerker me me neither and I still cry when I see it so how does that work it was all but it's also very fun I mean the movie maybe a little less so but there's a lot of humor it's a pretty funny story at the same time is any funny and tragicomic in a way well but this is actually I think something is basically universally true is that in some weird way all emotions are the same that that the presence of humor makes it even easier to evoke tears that that crying laughing you're feeling something and this is a story in which you felt so much so I which is why I thought it would be a movie because Holly was naturally attracted to that sort of story but I felt so much of it when I was riding team is your family Michael when you look at him with the Oscar success of his book The Blind Side Hollywood Beckett coming up Michael Lewis and I talked about his other movie prospects Michael Lewis wrote liars poker Moneyball and The Blind Side more now from our conversation about his newest book you hope the big short gets made into a movie well I got bought paramount and Brad Pitt bought it you know this is what I've learned about the movie business so far it is pointless to hope it does anything because you have no control over it I'm even sure has control over itself so it's like it's like this raving lunatic wandering the street you don't want to hope things for it because your hopes are just going to be dashed I try to keep my emotions detached from it not get too worked up about it of course it's better if it gets made into a movie than not because even if the minitor crappy movie more people will read the book so sure and I actually don't care whether it's a crappy I mean I'd like it to be a course it's better if it's a good movie in a crappy movie but I'd rather make a crappy movie in the no movie at all because it drives it drives traffic to the book if it did get made into a movie have you given any thought to whom you'd like to see play I own character I have I think Philip Seymour Hoffman should play Steve Osmond that he's so perfect for it that it just it's just not true I think Matt Damon should play Michael berry they even look a little alike but Matt Damon I think he could do Asperger as well and he hasn't done it yet and everybody should do Asperger's once it's at least once in my career right then there are these three essentially kids that they're in their early 30s but they're sort of young men with the Schwab account and I think I would cast them out of the Judd Apatow universe of actors Seth Rogen yeah Seth Rogen and Seth Rogen and the super bad guy and it's a Jonah Hill and yeah that I would cast essentially comic actors in that in that role would you want to go back to writing about things that people never saw before people never heard of before and as a result gave your audience kind of a strategic roadmap for what was going to happen yes uh it bothered me about the big short that it wasn't the defending are the greatest financial crisis in the history of the world was was not a secret I would like to I would like it to have been a secret but on the other hand it's nice the subject is obviously important I can't generalize about where I'm going to find a story I mean so happened that I found what I thought was a really riveting story inside this big event so wasn't the whole event it was this very narrow story inside the event and having said that it still bothers me a little bit that the events so obvious I mean any idiot can write a book about the financial crisis so I would like to all things being equal I'd rather nobody I've ever heard when I'm writing about because it's there's a freshness to that you feel like you can you're you know you're you can invent the world in in some way that you can't do if everybody you know your reader comes with so much baggage to a story about the financial crisis that they don't bring two to a story about a poor boy no one's ever heard of so all things baby nobody was doing it that's right so all things being equal I'd rather go I'd rather I'd rather farm land that's not being farmed but all things are never equal and I did I actually don't know when I'm exactly what I'm gonna do next Michael Lewis started his latest book the big short with a mixture of fascination curiosity and awe how could so few people have spotted the financial meltdown and made so much money doing it he walked away with a sense of outrage and a conviction that something on Wall Street has to change or will surely end up with another crisis I'm Eric Schadt scre thanks for watching you

29 thoughts on “Author Lewis Says Wall Street Is `Making America Worse'

  1. Greedy cunts with no regard for human life or the wellbeing of their fellow countrymen. Humanity doesn’t prosper in an every man for himself set up

  2. And now look, Gary Cohen from Goldman Sachs, ensconced as a member of Trump's criminal gang. WALL STREET LOVES THE GOVERNMENT. IT'S ALL ONE AND THE SAME. CROOKS, CROOKS ALL.

  3. I loved Steve Carrell in this film, but wow… if Philip Seymour Hoffman would have had an opportunity… ALL the top Oscars would have been a lock.

  4. Synthetic CDOs is a derivative of the idea of packaging debt and selling it to another bank in order to free up capital to lend more, being that at that time interests rates were so low. Problem being, as with most things in business, another smart guy comes along and uses a good idea to make lots of money in the short term knowing they will leave a trail of fire down the road.

  5. why not, why Goldman should not do it (screw the people) ………….. they managed to beat down and enslave the american masses by taking their down payments and then kicking them out of their homes and to a lesser degree the Europeans who bought their bad papers ………… why not, if your objective is to put people to work really hard, you have to first empty their pockets and than show them a pie in the sky, ………… than you can ride them like $20 hooker ……… 🙂

  6. Wall Street is still a morally bankrupt problem. The only things that keep them viable in public opinion are pensions and 401K's. All lost money soon enough.

  7. Lewis Says Wall Street Is `Making America Worse'  … He's got it wrong, criminal behavior is making America and the world worse. And it can be in anything anywhere. It can be from rich people or poor people,  and from respected people and notorious people. Bad people have no boundaries.

  8. So glad this book is now made a good movie with big stars to help remind and explain to people how we were fleeced by the financial systems and our government. One of the more candid interviews from that time that I've seen. Definitely worth listening to this interview. This interview should have a million views. Where is the outrage!?

  9. Well, these short sellers knew, because they had looked, (a) mortgage bonds were stuffed with crappy loans that likely would not be repaid and, the more recent the bonds, the crappier their content; and (b) The variable rate loans with teaser rates would become very much more expensive by 1Q 2007. They were structured that way. They then investigated particular markets, like Florida, Southern California, and Las Vegas, and found the markets already cracking. Going short with this information was a very good bet. (Much better than trying to guess when the rain would fall).

  10. The right answer at the wrong time is wrong. The only thing that made these particular short sellers "right", in financial terms, was the timing, which was something totally beyond their control, as well as beyond their vision or ability to predict WHEN the collapse would take place.. How is that any different from taking credit for the rainfall? "The market can remain irrational longer than you can remain solvent" J.M. Keynes

  11. The beauty of hindsight is that its 20:20, but how many of us didnt know that there were people at the big end of town who have absolutely no interest in the impact of their activities on the real world. Their world is a penthouse in Manhattan, and that's all that matters – who cares if people in Buffalo or Sydney or Durban lose their homes and their livelihoods ? Obama had the opportunity to read the Wall St bankers the riot act – he gave them a slap on the wrist and sent them on their merry way, and we'll all pay the price for that.

  12. I'm not a fan of wall street either but its not a Ponzi scheme. Its a Good-ole-Boy network of ignorant fools who know more about high pressure sales tactics than they know about real investing. Only a fool trusts wall street.

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