Wednesday, December 21, 2016

Author Spotlight: Michael Lewis

I came to Michael Lewis' works via the 2015 movie adaption of The Big Short. I was a bit obsessed with that movie, watching it almost every night after my husband went off to work. So I was happy to see Lewis' books in my local base library. I read the following four books in 2016:

http://michaellewiswrites.com/index.html#liars-poker
 
Liar's Poker: Rising Through the Wreckage on Wall Street - 5 stars
Read in November 2016
 
This was a real page turner. Lewis takes the reader back to the late 70s and all through the 80s and tells the story of one "rogue" investment bank, Salomon Brothers, Inc. There is a big section of this rather short (249 pages) book that is devoted all to Lewis Rainrie and his newly conceived mortgage backed securities (MBS) trading department - this is the beginning of what would lead to the global recession of 2008. This section really helped give the reader more understanding and insight into Lewis' other book about MBS, The Big Short. The other big section deals with Lewis' experience as a bond trader in London. Lewis is funny, honest (he often talks about how he was at times fearful or completely out of his depth), and observant of human behavior and interaction.
 
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The Big Short: Inside the Doomsday Machine - 5 stars
Read in June 2016
 
ONE BIG CAVEAT to reading this book: You must have a firm knowledge of financial lingo and some concepts featured in this book (mortgage backed securities, credit debt obligations, credit default swaps, etc). This is not a textbook for the layperson - this is inside baseball style. This is a great addition to those other books about the financial crash of 2008, but can't serve as "the go-to guide".
 
This book is different enough from the movie (The Big Short starring Brad Pitt, Christian Bale, Steve Carell, and Ryan Gosling) to really be a separate thing; this works if you didn't care for the movie but still was interested in the story. For me, I loved the movie and I also really loved this book, but for different reasons; I will note that watching the movie before reading the book made the book easier to understand (also I got to picture Bale every time his character shows up in the book, which makes any reading much more enjoyable).
 
I had already liked and appreciated Lewis' style of writing from reading Flash Boys, and this book follows the same formula - follow the outsiders who mastered (and yes, profited from) the complicated web that is the US financial system. These are not just outsiders, these guys (yes they were all males featured in this book - Meredith Whitney was only mentioned in the introduction) were not the Wall Street type of guys, so very few insiders took them seriously. Lewis' writing does have a snarky bent at times, but it was in the more light-hearted moments, so he didn't come off as mocking. Due to the subject matter, this is a bit dark and cynical look at Wall Street. There are winners (our outsiders) but even they didn't feel like much of a winner after seeing the destruction caused by Wall Street greed. There is a section on the taxpayer bailout in the epilogue and my copy (library loan) was the updated version with a new afterword (describing the reaction the book and Lewis himself got after publication).
 
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Boomerang: Travels in the New Third World - 4.5 stars
Read December 2016
 
This book is a collection of articles written for Vanity Fair about the sovereign debt crisis that happened in the aftermath of the global recession in 2008. I didn't know about this book until I was perusing my library's non-fiction shelves and saw Lewis' name on another economic book. I had to read it, and so glad I did. The reader is taken to Iceland, Ireland, Germany, Greece, and finally Southern California (one of the biggest areas of the mortgage meltdown that triggered the recession). I learned a lot about the economic and culture of the countries from reading this and know understand a lot more about the undertones of the political strife now going on in Europe as a result of the sovereign debt crisis. Lewis keeps his entertaining and charming way of writing while getting to the heart of what led to the crises felt all over Europe. The book also goes into the bankruptcy of Vallejo, California and the public financial crisis of San Jose, which also helps understand the political climate in California. I read this just after finishing George Friedman's Flash Points: The Emerging Crisis in Europe and would recommend the two books together.
 
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Flash Boys: A Wall Street Revolt - 5 stars
Read June 2016
 
This was the first Lewis book I read. Great book detailing how High Frequency Trading (HFT) is scalping ordinary investors, penny by penny. What The Big Short did for the bond community, this books does to the stock/equity community. You do need a basic grasp of investing concepts and lingo to understand what Lewis is describing, but he does use easy to understand examples to illustrate how HFT works. Much of HFT happened during the time of the subprime mortgage bubble, but came more to light after the post-bubble burst consequences had subsided. HFT has caused short-term crashes and will probably continue to do so, so investor beware and be aware.
 


 


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