The Big Short: Inside the Doomsday Machine

In the middle was John Paulson. At the top was Steve Eisman.

called Whitney again to ask her, as I was asking others, if she knew anyone who had anticipated the subprime mortgage cataclysm, thus setting himself up in advance to make a fortune from it. Who else had noticed, before the casino caught on, that the roulette wheel had become predictable? Who else inside the black box of modern finance had grasped

confess some part of me thought, If only I’d stuck around, this is the sort of catastrophe I might have created. The characters at the center of Citigroup’s mess were the very same people I’d worked with at Salomon Brothers; a few of them had been in my Salomon Brothers training class. At some point I couldn’t contain myself: I called Meredith Whit

From that moment, Meredith Whitney became E. F. Hutton: When she spoke, people listened. Her message was clear: If you want to know what these Wall Street firms are really worth, take a cold, hard look at these crappy assets they’re holding with borrowed money, and imagine what they’d fetch in a fire sale. The vast assemblages of highly paid people

In the two decades after I left, I waited for the end of Wall Street as I had known it. The outrageous bonuses, the endless parade of rogue traders, the scandal that sank Drexel Burnham, the scandal that destroyed John Gutfreund and finished off Salomon Brothers, the crisis following the collapse of my old boss John Meriwether’s Long-Term Capital M

Somehow that message was mainly lost. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State University who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.

Howie, inside Morgan Stanley, would lose $9 billion on a single mortgage trade, and remain essentially unknown, without anyone beyond a small circle inside Morgan Stanley ever hearing about what he’d done, or why.

And that’s pretty much how I imagined it; what I never imagined is that the future reader might look back on any of this, or on my own peculiar experience, and say, “How quaint.” How innocent. Not for a moment did I suspect that the financial 1980s would last for two full decades longer, or that the difference in degree between Wall Street and ordi

My book was mainly about the bond market, because Wall Street was now making even bigger money packaging and selling and shuffling around America’s growing debts. This, too, I assumed was unsustainable.