Investors who predicted the financial crisis of 2008

The author of “Liar’s Poker” which told the tale of money-mongering Wall Street investors of the 1980s, returns with a new non-fiction which picks apart the rubble that was the American economy in 2008. “The Big Short: Inside the doomsday machine” explains the workings of the US mortgage system and the events that led to its crash that affected every individual in the United States.

The ignorant reselling of subprime mortgages (which was based on a complex mathematical calculation that financial execs did not understand themselves) is primarily responsible for the downfall… that and mass delusion. In a 60-minute interview with CBS the author explains that the incentives for Wall Street brokers go so screwed up that the people working there lost sight of everything except their own long-term interests. The short-term interests were to overpowering causing brokers to act contrary to logical behaviour.

As a result, the finest minds in the stock exchange lost US$1.75 trillion in subprime mortgage markets. The insanity of traders continued to grow despite the growing fragility of the underlying subprime loans until the bubble burst. More than just an 18-month investigation into the crisis, the book recounts the stories of some renegade and savvy traders who predicted the crisis and cashed in on it, to become a very few who made money in 2008.

“The Big Short: Inside the doomsday machine” is available on WantItAll for the Best Price of R427.