Monday, July 30, 2012

An entire industry devoted to ripping people off

I'm reading The Big Short: a simultaneously entertaining and infuriating account of the subprime mortgage meltdown that sent the U.S. economy into a tailspin from which it has yet to recover, and permanently compromised the financial futures of millions of middle-class American families, my own included. Michael Lewis tells this story of epic hubris and greed thru the eyes of several inside-Wall Street players including Steve Eisman, one of the few who prophesied the coming apocalypse, and I would add, profited handsomely by betting against the conventional wisdom. Based on what I've read so far I find Eisman a fascinating though not very likeable character, and not the knight in shining armor he seems to see himself as. Nevertheless, I can relate to this. . .

In his youth, Eisman had been a strident Republican. He joined right-wing organizations, voted for Reagan twice, and even loved Robert Bork. It wasn't until he got to Wall Street, oddly, that his politics drifted left. He attributed his first baby steps back to the middle of the political spectrum to the end of the cold war. "I wasn't as right-wing because there wasn't as much to be right-wing about." By the time Household's CEO, Bill Aldinger, collected his $100 million, Eisman was on his way to becoming the financial market's first socialist. "When you're a conservative Republican, you never think people are making money by ripping other people off," he said. His mind was now fully open to the possibility. "I now realized there was an entire industry, called consumer finance, that basically existed to rip people off."

Quote from The Big Short: Inside the Doomsday Machine (Norton, 2010)

1 comment:

Alexander said...

Nice review!

I just wrote one as well: