The Big Short

“How do you make poor people feel wealthy when wages are stagnant?” asks Michael Lewis in The Big Short. “You give them cheap loans.”

This is as pithy and insightful a summary of the last 100 years as I have ever read.

I finished The Big Short on the train ride from NYC back up to the quaint and scenic Hudson Valley.

I can’t say I understood more than 20% of the book’s financial analysis – despite the fact that Lewis writes in his prologue that he pictured his ideal reader as his mother, an intelligent woman of a certain age who reads a lot of murder mysteries. That sounds like me, right? But I still have no idea what a credit-default swap or a collateralized debt obligation is.

That’s not Lewis’ fault: He takes great pains to try and explain them. The fact is these concepts are so abstract – the slope of lines tangent to curves that are themselves slopes of lines tangent to curves, reductio almost to the point of ad absurdum – that he might as well have been trying to explain particle physics to Koko the Signing Gorilla. (For the record, I don’t have a particularly good grasp of particle physics either.)

“The Big Wall Street firms,” Lewis writes, “Bear Stearns, Lehman Brothers, Goldman Sachs, Citigroup, and others – had the same goal as any manufacturing business: to pay as little as possible for raw material (home loans) and charge as much as possible for their end product (mortgage bonds.)”

This clarifies the process through which the events leading up to the Great Recession of 2008 took place, but doesn’t do much to illuminate what is the essential paradox in this book: the shimmering, ephemeral nature of money.

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Here’s what I know about money:

• You probably have more of it than I do.
• It’s still coupled with labor (i.e. earning capacity), but labor is actually looked down upon as a means of accumulating it – a fact that’s brought home to me twice a week when, as a volunteer tax preparer, I view the discrepancies between taxes on labor (high) versus capital gains (low).
• Uncoupled from any standard – gold, silver, moon rocks, oobleck, angel dandruff, a dying god’s slow-congealing thoughts – it’s a completely imaginary construct.

Yet money drives everything we do in the little human ant farm we call society. It’s the cetis parabus premise from which everything else is assumed.

Which is quite staggering and weird if you really start to think about it.

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I was crushed by the 2008 recession. I lost everything. Literally. My home, my business, my husband, practically everything I owned. I now live in a kind of pastoral afterlife; the human equivalent, perhaps, of one of those sanctuaries for abused animals. Bitter much? Oddly enough, not. Most humans on this planet have had a far worse time than I've had, and truth be told, I’ve never aspired to a lifestyle more luxurious than the one I enjoyed as a grad student.

But I find it quite bemusing that the people responsible for creating the financial collapse as well as the people who wagered that it would happen walked away with hundreds of millions of dollars.

And this is why I think that any rating of the Obama Presidency has to give the man a D+ at best: He bailed the fuckers out; he ensured the maintenance and servicing of the Doomsday Machine so that it would continue to operate. He put Timothy Geithner, Lawrence Summers, and all those other Bush team operatives in charge.

I don’t care if same-sex marriage was legalized under Obama’s watch, or if Obama imposed a creaky system that essentially redistributes the cost of health care so most of the burden now is carried by members of the risk pool themselves (instead of the corporate health care providers) and trumpeted this as reform.

The only reason I don’t flunk Obama altogether is because I’ve liked him in this last year and a half, now that he doesn’t give a fuck about being reelected. I think the Iran treaty is a good thing, and I can’t wait to take a trip to Cuba.

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Anyway, The Big Short. Excellent book. And damn! Michael Lewis can write.