The Big Short: Inside the Doomsday Machine

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

“That’s when I decided the system was really, ‘Fuck the poor.’”

What are the odds that people will make smart decisions about money if they don’t need to make smart decisions—if they can get rich making dumb decisions?

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.

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

That was the problem with money: What people did with it had consequences, but they were so remote from the original action that the mind never connected the one with the other.

One man’s liability had always been another man’s asset, but now more and more of the liabilities could be turned into bits of paper that you could sell to anyone. In short order, the Salomon Brothers trading floor gave birth to small markets in bonds funded by all sorts of strange stuff: credit card receivables, aircraft leases, auto loans, health

The accounting rules allowed them to assume the loans would be repaid, and not prematurely. This assumption became the engine of their doom.

A society with deep, troubling economic problems had rigged itself to disguise those problems, and the chief beneficiaries of the deceit were its financial middlemen.