Liar's Poker by Michael Lewis
My rating: 3 of 5 stars
Liar's Poker
It's hard not to compare this book to the Big Short. For one thing that book was my introduction to Michael Lewis, and my introduction to reading popular nonfiction about the financial industry. Unfortunately, the book doesn't stand up to the comparison well.
There are two major problems with this book. First and foremost, the events discussed are coming up on 30 years old. It's hard
to get too excited about financial misdeeds that have been so thoroughly overtaken by events.* Second, it's just not as
interesting as The Big Short was. The middle third of the book which delves into the formation of a real estate backed bond market
is much too light on story or details. Michael Lewis's talent is creating engaging biographical sketches of the people who are involved
in these world changing actions, but for the stories that he didn't participate in directly, his access wasn't good enough to tell a compelling or plausible story.**
By way of comparison, The Big Short managed to both explain how the Mortgage Backed Securities crash happened, and tell an engaging story about how certain individuals figured it out and bucked the system.
Despite it's shortcomings, this is a pretty important book. It meticulously documents just how awful the world financial system is. Moreover, the observation that money shouldn't be the end goal*** is highly relevant in today's political landscape. But it doesn't offer much in the way of solutions beyond: "the only way to win is not to play."
* Of course, that being said, it's downright chilling to read about the original formation of the mortgage backed
securities that would lead to the financial crash 25 years later (And which Michael Lewis would also write about...)
** For example, it's never made terribly clear why Lewie Ranieri was so insistant on forming that particular bond market.
Many reasons are given for why it's a bad idea, and obviously it ended up being very lucrative, but how did this guy know? We're left wondering...
*** Which I acknowledge is an attitude that can only be adopted by someone who is extremely privileged to begin with. (As Randall Monroe put it: "'Because it's there' is more poetic than, 'I'm rich enough that my goals are arbitrary.'" http://www.xkcd.com/1110)
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