Inside Job

The Big Short: Inside the Doomsday Machine by Michael Lewis (Norton, $15.95, 291 pages)

“The problem wasn’t that Lehman Brothers had been allowed to fail.   The problem was that Lehman Brothers had been allowed to succeed.”

If you read The Blind Side by Michael Lewis, and think this is going to be another warm and fuzzy story, think again.   This is a former insider’s telling of the reasons the American economy was virtually destroyed by greed in the early 2000’s and it will get you angry – or at least it should.   Here’s one example pointed out in the book…

It’s late 2006 and U.S. home values have just suffered their greatest decline in 35 years.   And, so, Goldman Sachs selected this time to give a bonus to each and every one of its employees – a little bonus of $542,000 (not salary, but some extra spending cash for the holidays)…   How does this make you feel?

If you’re a normal human being without any ties – familial or otherwise – to Wall Street, you should be infuriated by the knowledge of these practices; and there are dozens of examples provided by Lewis.   Yes, this is a tale of incredible hubris.  Lewis, who had once worked at Solomon Brothers, notes that Wall Street traders saw themselves as geniuses who were above reproach:  “(They had) the ability to see themselves in their successes and their management in their failures.”   In fact, however, Lewis well makes the case that these same self-proclaimed geniuses simply didn’t grasp the details of the game that they were playing.   And we all paid the price for their failures.

In just a few years, “One trillion dollars in (subprime-related) losses had been created by American financiers…”   Lewis is honest enough to say that if he’d remained on the Street, he might have been part of the problem:  “If only I’d struck around, this is the sort of catastrophe I might have created.”

“This woman (Meredith Whitney) wasn’t saying that Wall Street bankers were corrupt.   She was saying that they were stupid.”

This is also the story of one Dr. Michael Burry, a man who figured out that big money could be made off of the Street’s losses and ignorance – he decided to bet, big-time, against subprime mortgage tranches and won big-time.   Burry was a man who figured out early on (in 2007) that Wall Street’s rating firms were engaging in massive cheating – rating as solid risks mortgage packages that were pure losers.   One single pool of “crappy mortgages” (falsely rated) – based on home loans made between April and July of 2005 – was allegedly worth three-quarters of a trillion dollars, but the entire pool was basically worthless.

The problem with Lewis’ account, which he states began as a policy paper on the roots of the modern-day American fiscal crisis, is that it reads like a dry white paper.   There’s no sense of outrage, no moral center.   Even while Lewis complains that the U.S. government (and, specifically, the White House) transformed Wall Street firms into public corporations, which were then deemed to be “too big to fail,” there’s no sense of anger.   Thus, we’re left with a sense of amorality, instead of immorality, in this presentation.

This is an interesting and easily read account, but it’s quite frustrating and not recommended.   If you want to enjoy something written by Michael Lewis, try The Blind Side.

Joseph Arellano

This book was purchased by the reviewer.  

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A review of The Big Short: Inside the Doomsday Machine by Michael Lewis, author of The Blind Side.

Don’t Dream It’s Over

The Imperfectionists: A Novel by Tom Rachman (The Dial Press; $15.00; 281 pages)

Perhaps the sub-title of The Imperfectionists should have been Related Tales of Dark Humor and Irony.   This is the fictional story of a second-rate international newspaper based in Rome, a poor cousin to the International Herald-Tribune.   It has never had any more than 25,000 subscribers and readers, and it has no website.   It is, therefore, doomed.

The Imperfectionists is not actually a novel but rather a grouping of eleven short stories concerning the wild and wooly characters who work at the rag before it enters its death spiral.   One copy editor is smart enough to depart early…  She finds an apparent life raft in the International Finance Department at the Milan Office of Lehman Brothers.   Welcome to the Titanic!

This may give you a bit of insight into author Rachman’s wicked sense of humor.   Rachman could likely write about anything – even a crew of sanitation workers – and make it sound interesting and engaging.

“You can’t dread what you can’t experience.”

The reporters and allied staff members at the nearly defunct paper truly dread – like they fear their own deaths – its inevitable closing, but they take some comfort in the fact that their pink slips mean they won’t actually experience the lights being turned off for the final time.

One of the opaque characters is a copy editor who simply pretends to hate her job because she loves it too much.   “I get to stay…” she thinks as she avoids a round of lay-offs, while grousing that she wishes they had let her go.   Then there’s the veteran war reporter who is completely nuts but quite successful (like the one my wife and I had drinks with once).   These gruff and nicked guys are far more interested in telling their literal war stories than in observing anyone’s reaction to them…  They’re a bit like wild animals whose press badge serves as their “If lost, return to —” tag.

The paper in question is owned by Oliver Ott, a man who inherited the paper and who is – quite naturally – completely clueless as to its operations.

“The paper – that daily report on the idocy and the brilliance of the species – had never before missed an appointment.   Now it was gone.”

Arthur Gopal, the often-pitied obituary writer, survives to find a plum job as a top reporter in Manhattan, while the publication he so carefully wrote for expires (“Overnight, the paper disappeared from newsstands…”) without the benefit of a beautifully written send-off.   Such is life.

The Imperfectionists would be virtually perfect but for an abrupt, flawed and somewhat frustrating ending.   Be forewarned.   Still, this is well recommended.

Joseph Arellano

This book was purchased by the reviewer at Lyon Books in Chico, California.

A Must to Avoid

The Weekend That Changed Wall Street: An Eyewitness Account by Maria Bartiromo with Catherine Whitney (Portfolio; $26.95; 232 pages)

There are a number of very good books dealing with the financial crisis that struck Wall Street and this country beginning in September of 2008.   This is not one of them.   In fact, like the title of the song by Herman’s Hermits, this one’s A Must to Avoid.

Firstly, it’s not really an eyewitness account.   Unlike the accounts in which the writer was an earlier participant in the events, Bartiromo does not claim to have been present in the financial firm board rooms as things melted down.   Instead, she appears to rely on the other accounts previously written adding only a few quotes from on-air interviews she conducted between 2008 and 2010.

Secondly, there are only 208 actual pages of content here, which is awfully skimpy for a $27.00 hardbound release.   Although Bartiromo was not present at the center of the financial action, she was apparently present at a number of grand parties involving Wall Street wizards who could spend money like there was no tomorrow (but tomorrow wound up coming early).   Which brings us to the key problem with this flimsy account…  When it comes to choosing between the folks on Main Street – good, hardworking Americans and small businessmen and women – and the princes on Wall Street, Bartiromo makes clear that she’s on the side of the multi-millionaires and billionaires.

Early on, Bartiromo explains to the reader that she married into a very wealthy New York City family, with an apartment on Park Avenue, and this sets the stage for her very biased view in this tale.   She claims that the U. S. media developed a “simplistic narrative of working class heroes versus fat-cat villains.”   Only this wasn’t a simplistic narrative, it was reality.   She herself describes men like Stan O’Neal at Merrill Lynch who got paid $150 million for leaving the firm “even though he ruined the company.”   (It turns out that O’Neal was underpaid compared to other Wall Street executives who received far more hundreds of millions once they were sacked.)

Surprisingly and rather shockingly, Bartiromo goes further with this craziness asking us to feel sorry for one Lehman Brothers executive who made $14 million in one year, then was reduced to a measly $1 million in take home pay the next year.   This, Miss Maria finds to be horrible and virtually incomprehensible.   No  matter that the gentleman in question was hardly forced to go on food stamps or eat in food kitchens.   No, the rich must live in the manner to which they’ve become accustomed, according to this account.

Just to show that I’m not taking things out of context, here are the actual words she uses to draw our tearful sympathy:

“Many (Wall Street executives) were experiencing tremendous anger and grief.   In some cases, it was the wives who were most deeply affected.   They went from being at the top of the social register, with galas and benefits filling their calendars, to being on the outside, embarrassed to show their faces.   One insider observed to me, ‘When the wealthy falter, there is deep shame on a level that the average person cannot grasp.   In that world, you’re either in or you’re not.   It’s not the same as losing a job in a middle class neighborhood, where your friends and neighbors are likely to rally around you.   When you lose your job at the top, they cut you dead.’ “

Excuse me, but what nonsense.   This is offensive to “average” hardworking American citizens, like those that buy and read most of the books in this nation.   Who is Maria Bartiromo writing for – Mrs. and Mrs. Donald Trump?

Although Bartiromo’s writing assistant, Catherine Whitney, has her name listed on the book’s cover, this does not mean the book is well-edited.   Instead, the book is littered with odd grammar.   For example, “Merrill seemed more like a winner than a loser.   We had to look at the entities that may still fall in the coming weeks and months…”   Perhaps they meant to write that they had to look at the entities that might fall in the coming weeks and months.

Clearly, this one is not recommended but there are other alternatives to consider.   For an exciting “fly on the wall” telling, try Street Fighters: The Last 72 Hours of Bear Stearns, the Toughest Firm on Wall Street by Kate Kelly.   Then there’s the recommended A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers by Lawrence G. McDonald with Patrick Robinson.   And if you don’t mind an overly long, rambling and maddeningly detailed version of these events there’s On the Brink: Inside the Race to Stop the Collapse of the Global Financial System by Henry W. (Hank) Paulson, Jr.   Any one of these accounts is one hundred times better – and far less patronizing – than Bartiromo’s slight “eyewitness account”.

Joseph Arellano

A review copy was received from the publisher.

When the Music’s Over

A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers by Lawrence G. McDonald with Patrick Robinson (Crown Business Reprint Edition; $16.00; 368 pages)

“A Colossal Failure of Common Sense describes a CEO acting as if his firm was too big to fail…  One might be tempted to think that Lehman’s bankruptcy was too mild a punishment for the firm’s management.”   James Freeman, The Wall Street Journal 

The bankruptcy of Lehman Brothers is now 2 years behind us.   It was the largest bankruptcy in history and the first in a series of banking and financial institutional failures linked to the housing bust.   It marked a low point in the chronology of Wall Street.   Former Lehman vice president of trading, Lawrence McDonald, and a veteran professional writer, Patrick Robinson, have painstakingly detailed the intellect, honesty and caring at the heart of the Lehman trading groups that tried valiantly to warn upper management of the impending doom.

This one hundred and fifty-eight-year-old institution was leveled by a small clique of men at its very top who lacked the restraint and manners that were the key to traditional corporate culture at Lehman.   The arrogance, greed, weak egos and excesses (think of TV’s Dynasty) are similar to the unfortunate behaviors exhibited by members of any and all cliques.

We view the action from McDonald’s perspective starting with his early yearning to work at a major player on the Street.   If you think every aspect of the real estate bubble and bust has been examined and reported on, think again.   This hefty book is written from an insider’s perspective.   Credit is given to whomever it is due at both ends of the spectrum of good and evil.  

The reader can feel the suspense building as the story continues to develop.   This book became a true page-turner prior to its end, even though its conclusion had already been written.   Recommended.

This review was written by Joseph Arellano.   Reprinted courtesy of Sacramento Book Review.