The Big Short!!

I am a huge Sucker for books based on Finance. My favorites include Monkey Business and Liar's Poker. Some other books that I have enjoyed include the Predator's Ball, Barbarians at the Gate, When Genius Failed and Den of Thieves. All these books have a very vivid description of some of the major financial events in the US Economy, including the Stock Market Crash of 1987, the evolution of Junk Bond Markets and so on. I was waiting for someone to write a book on the recent Mortgage crisis that hit the US Economy and led to a worldwide recession. And I was not disappointed. Michael Lewis, the author of Liar's Poker came up with the book called " The Big Short" that describes the current financial crisis.

And as all Michael Lewis books, this book is brilliant. If you have to read only one book about the recent financial crisis, then let it be this book. Lewis tells his story through the eyes of a few small hedge fund mangers who were easily among the first to recognize that not all was well with the US Sub prime markets and the housing bubble was supposed to bust..and soon. They further found ways to bet against these sub prime mortgages and make money out of it, even when the rest of wall street thought these guys as crazy!!

Michael Lewis explains in an extremely lucid and concise manner how the crisis was unfolded. He goes on to explain how sub prime mortgages were created and CDO's originated. However he does it in a way that a layman can comprehend. You don't have to be a finance geek to enjoy his book.

A great deal is discussed about the entities that were responsible for the crisis, be it the loan originators who provided housing loans to people who could not afford one, the agencies who turned the package of these loans into CDO's, the rating agencies who rated the mortgages as AAA's without really understanding them. But more so, the Investment banks who bought and sold CDO's without really comprehending the risks associated with them. The term here is 'risk'. Since all the players were able to shift the risk to one another, it was left on to the gullible investors to bear the risk and ultimately the US Taxpayers who had to spend billions of dollars to bail these banks out.

This book is another example of how greed and wall street excesses can time and again disrupt the financial markets and challenge the whole financial system of the country. Only with the advent of Globalization, such excesses can lead to whole world plunging into recession.

Highly recommend this book to anyone who is interested in Finance and World Economics!!