Sunday, August 10, 2014

Liar's Poker

Before Michael Lewis was a popular non-fiction writer, he worked on wall street. Liar's Poker is the story of wall street of the 80s and his experience there. The language and the characters involved are all of the salty, unsavory types. These are not the people you would want to meet your family. They were a frat in all the bad ways. Yet somehow they managed to make tons of money. (However, they could just as easily lose a lot or see the great money-making scheme whisked away from them.) Some traders manage to be in the ideal middleman position where they can make money with minimal risk.

Lewis manage to get the job through personal connections. The procedure could be cut-throat, with the littlest thing disqualifying you for the job. His description of the interview process sounded more like a hazing. You had to rise up the ranks through force of will. You just don't want to get banished to Dallas.

Part of the the book then goes on to describe bond trading and mortgage backed securities. Solomon Brothers happened to be at the right place and the right time, ready to lead off the boom in mortgages. By bunching them together, they could get people the investment that they wanted. (Of course, a couple decades later, the whole thing would come crashing to the ground.)

After reading, I'm left thinking that "we are letting these guys manage our financial systems?" scary.

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