The Big Short: Inside the Doomsday Machine
by Michael Lewis [Compact Disc 330.973 Lew]
Did anyone know that the housing crisis was coming? Yes. A few very minor players, Steve Eisman, Michael Burry, Greg Lippman, and Gene Park, did. Lewis tells the story of this financial debacle through their eyes. Greg Lippman, a bond trader for Deutsche Bank, noted before home values declined, that people whose homes appreciated 1 - 5% in value were four times more likely to default on their loans than those whose homes appreciated over 10%. His colleagues ignored his observation. Michael Burry correctly assessed the impact of "teaser rates" and interest rate re-sets on sub-prime loans. Those very low rates that were good for only two years. And then those adjustable rates made a dramatic raise. Lewis tells the story of AIG's financial products through Gene Park who realized that AIG was relying on homeowners with poor credit ratings to fund the mortgage-backed CDOs (Collateralized debt obligations). Michael Lewis has written a very readable and informative book about greed in the financial world. -- recommended by Donna G. - Virtual Services Department
[Also available in Print format.]
[ Wikipedia page for Michael Lewis ]
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1 comment:
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.
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