Retrospective rubbernecking at the subprime mortgage disaster
As I mentioned once before, I have a block on ‘formal’ book reviews, so consider this just a friendly little chat, okay?
I trust Stacy’s opinions implicitly, particularly on matters of journalism, so when in passing she praised Michael Lewis’ The Big Short, the very next thing I did was hit the library web site to reserve a copy.
However, even with her endorsement I was so put off by the summary blurb that I almost abandoned it right there. “… Tells the story of some of these short-sellers, exposing many of the systemic flaws in the financial markets along the way.” Um, yawn? The first user review on the library site gave five stars but somehow managed to sound dry as dust. Maybe there just isn’t a way to make ‘sub-prime residential mortgage crisis’ sound compelling in three sentences, I don’t know.
Before giving up entirely, however, I ran a general web search and turned up an excerpt published in Vanity Fair last year. You should read it, and if you find it as fascinating as I did, you’re a good candidate for the rest of the book. This piece showcases the most pleasant surprise for me: the author’s attention to characterization.
He sensed that he was different from other people before he understood why. Before he was two years old he was diagnosed with a rare form of cancer, and the operation to remove the tumor had cost him his left eye. A boy with one eye sees the world differently from everyone else, but it didn’t take long for Mike Burry to see his literal distinction in more figurative terms. Grown-ups were forever insisting that he should look other people in the eye, especially when he was talking to them. “It took all my energy to look someone in the eye,” he said. “If I am looking at you, that’s the one time I know I won’t be listening to you.” His left eye didn’t line up with whomever he was trying to talk to; when he was in social situations, trying to make chitchat, the person to whom he was speaking would steadily drift left. “I don’t really know how to stop it,” he said, “so people just keep moving left until they’re standing way to my left, and I’m trying not to turn my head anymore. I end up facing right and looking left with my good eye, through my nose.”
His glass eye, he assumed, was the reason that face-to-face interaction with other people almost always ended badly for him. He found it maddeningly difficult to read people’s nonverbal signals, and their verbal signals he often took more literally than they meant them. When trying his best, he was often at his worst. “My compliments tended not to come out right,” he said. “I learned early that if you compliment somebody it’ll come out wrong. For your size, you look good. That’s a really nice dress: it looks homemade.” The glass eye became his private explanation for why he hadn’t really fit in with groups. The eye oozed and wept and required constant attention. It wasn’t the sort of thing other kids ever allowed him to be unself-conscious about. They called him cross-eyed, even though he wasn’t. Every year they begged him to pop his eye out of its socket—but when he complied, it became infected and disgusting and a cause of further ostracism.from “Betting on the Blind Side”, Vanity Fair April 2010
Michael Lewis is … well, he’s just an extremely good writer, for one, but he’s also got to be one hell of a meticulous researcher. He’s gone back and pieced together a detailed timeline, cross-referencing with dozens of interviews and using the email archives of his chief subjects.
This resulted, for me, in a sort of retrospective rubbernecking. As he stepped through the relevant events of 2005 through 2007, I found myself remembering where I was and what I was doing at those times … and how little I knew about events already in play that would completely transform my life in 2008 and beyond.
For example, in October 2006 Jak and I decided to buy a house — a path that was doomed before we’d even conceived of it, because of some esoteric choices made by people I’d never met, working at companies I’d never had contact with. That kind of blows my mind. I long ago accepted that many things about my own life are beyond my control, but I honestly have never felt quite so helplessly (if retroactively) ignorant. (The fact that only maybe a couple of dozen people in the entire world were less ignorant than I was should diminish the sting more than it does.)
The flip side is that I feel a lot more informed now, after reading The Big Short. Lewis does an excellent job of taking obscure concepts like ‘collateralized debt obligation’ and ‘credit default swap’ and breaking them down into comprehensible English.
Also, if you’re having any doubts about where most of the fault for our continuing economic collapse lies, this might make things a bit more clear. Though I’ve seen people argue about whether the individual actions taken by the banks, insurance companies, and ratings agencies were based in amoral greed or egregious stupidity — Lewis tends to come down on the side of ‘a little greed, but mostly stupidity’ — I’m not sure it matters. Personally, I’d tend to hold them responsible either way.