The Big Short by Michael Lewis


On January 30, 2007, Jamie Mai wrote an email to his partners Charlie Ledley and Ben Hockett. "If a broad range of CDO spreads starts to widen," he said, "it means that a material global financial clusterfuck is likely occurring." On January 31, 2007, a broad range of CDO spreads started to widen, dramatically. The long-feared meltdown was upon us all -- not that most of us knew it, at the time -- and a very small number of investors was about to get paid out on the trade of their lifetimes. Mai, Ledley, and Hockett were part of that select group, whose tale is grippingly told by Michael Lewis in The Big Short. The Big Short is not the story of the crisis, as the crisis is commonly understood. The failure of Lehman brothers and of Fannie Mae and Freddie Mac; the stock-market crash; the bail-out of Detroit; the fevered all-nighters pulled at Treasury and the New York Fed; the fears that the entire global financial system was on the brink of collapse -- little if any of that is in this book.