
The entire premise of The Big Short by Michael Lewis (and the view of our financial system) is summed up precisely in one sentence toward the end of the book:
“I think there is something fundamentally scary about our democracy… because I think people have a sense that the system is rigged, and it’s hard to argue that it isn’t.”
If you don’t read the book, an article in Vanity Fair sums up how Michael Burry spotted this subprime market bubble back in 2004 and created a way to bet against it.
I recently had a great conversation with a good friend on our way to go mountain biking one weekend concerning the book, business school and the current state of our economy almost three years after it nearly blew up in 2008. He happens to be a bond trader. While there’s always room for optimism, there’s still a machine out there constantly working away from what’s right. The machine builds complex financial instruments for certain structured opportunities, but they always tend to fuel the operators who steer it in the wrong direction.