What is your author’s central argument or thesis?
In ‘The Big Short: Inside the Doomsday Machine by Michael Lewis, the central argument revolves around the great stock market crash of 2008. The author examines the reasons behind this great plunge, one of them being the stark decline in property prices in the year 2007 when the real estate bubble burst. Lewis also explores the bond market and exposes the institutions, banks, governments, and people who were aware of the impending doom on the stock market and the crisis but chose to stay quiet due to personal greed, shock, or to protect the interests of their large financial houses.
The author centers the theme around four groups of subprime traders who were primary short sellers in the market and had foreseen the impending doom on the stock markets. The author exposes how the financial institutions exploited and misused one of the most reliable assets of the financial industry, bonds. Even banks were engaged in the shameful practice of selling subprime mortgage bonds to create default swaps in a bid to destabilize the entire economic system.
What is the author’s perspective or point of view?
Michael Lewis reflects his personal experiences in the book. Reporting the facts of the great stock market crash in 2008, the author shares his perspective based on his personal experiences during this great fall. The author truthfully speaks of the facts which led to this fall, providing a clear perspective of the selfish people who had foreseen the fall but had chosen to remain silent for their own personal reasons.
Being a stockbroker on Wall Street, Michael Lewis feels strong resentment for the selfish actions of the fund managers and bankers on Wall Street. During an investigation for the right investment opportunities for his clients, he had found that the bond market was artificially inflated and nearly valueless.
What evidence does the author provide to support her/his central argument?
In the book, Lewis relates several short stories about the short selling on Wall Street and the resultant collapse, which affected the lives of many in 2008. Lewis tells the personal stories of his chosen traders, reflecting the flaws in the stock trading system.
In each chapter, the author provides several pieces of evidence to support his central argument. Lewis demystifies the working of Wall Street with the help of human characters such as Steve Eisman, a Wall Street broker, Michael Burry, a physician turned into a stock picker, and Greg Lippman, a bond salesman at the stock market.
For example, in chapter 2, Lewis gives very comprehensive descriptions to validate his points. For instance, his compelling accounts about the Greece economy busted the many myths about the country’s repute as a holiday paradise. Lewis exposes the greed and corruption of the Greek government, which borrowed money from the Greek banks and misused it. Lewis presents a stark picture of reality showing the corruption, greed, and infighting within the country’s top government financial institutions. Lewis exposed the real nature of the Greeks, who avoided paying taxes to the government. The parliamentarians cheated their country by creating false value of their real estate properties.
Would you recommend this book to others? Why or Why not? How valuable is this book?
Yes, I would recommend this book to others. It is a valuable book for understanding the dynamics of an economy. The book reveals how reputable banks can conspire to increase prices even when the value of securities is low. Lewis gives a clear and truthful account of the corrupt practices occurring at the highest financial levels in nations and how executives are either unaware of the malpractices or choose to remain silent to protect their institutions, putting the innocent public at risk. Indeed, ‘The Big Short’ provides the reader with a true and honest account of the great crash of 2008. The book reveals the character and motive of individuals and financial institutions, busting the myth surrounding them.