"If things aren't being explained so you can understand them, it should be a bad sign."
Michael Lewis: Our Appetite for Apocalypse
Michael Lewis is the non-fiction novelist of our apocalyptic American mindset in 2010. The heroes of The Big Short, as he puts it in conversation “were betting on the end of the world… The only characters you can really trust are the people who are delivering a very, very dark message.”
Michael Lewis, remember, was never really a sportswriter, despite Moneyball, Coach and The Blind Side. Nor was he ever a finance guy, despite the prescience of Liar’s Poker and his sure touch now with the Wall Street collapse of 2007-2008. Michael Lewis’s real business and his genius instinct is for resonant social fables that just happen to play out on ballfields and bond markets.
The Big Short is a high literary feat, complete with a real-life “unreliable narrator,” a particularly despised contrarian bond dealer, Greg Lippmann, who was betting brazenly against his own market. “The guy selling the best ideas is a completely untrustworthy character,” the author remarks. The true center of The Big Short is an atmosphere of anxiety that has developed a taste for the catastrophic. Lewis’s short-selling characters resonate because they’re acting out our common sense of “the probability of extreme change” in financial markets and in real life. It’s an anxiety that envelops Tea Baggers and Greenpeaceniks in the same cloud of anger.
ML: The broader thing about all these characters to me is that their attitudes, their approach to life, their ability to hear the data, was something that was marginalized in the system itself. They didn’t belong, none of them belonged, and they should have belonged. What is it about the system that doesn’t want them as a part of it? And it’s terrifying when all the people who were wrong are in charge, and all the people who are right are on the outside.
CL: It sure is. To me there’s a direct analogy to be drawn with the war in Iraq. The Congress signed off “oh well, he must know something.” Tony Blair embraced it. The media by and large encouraged it. A very, very few people said “are you kidding?” And yet the ones that warned against the war in Iraq got the same prize that your guys got for warning of the meltdown.
ML: Yes. Ostracism.
CL: Exactly, and they’re still ostracized.
ML: It’s funny. There is an analogy. And the analogy is there’s a kind of a blind faith in leadership that is the result in both cases of ordinary people feeling they can’t evaluate the situation because it’s too complicated. The financial system got so complicated, and the complexity became opacity. When Alan Greenspan stands up and says something, no one understands what he’s saying. But they think that’s a good thing, because it’s all so complicated they shouldn’t understand what he’s saying. And the fact is they should. The fact is, if things aren’t being explained in a way you and I can understand them, it should be a bad sign, not a good sign. But the complexity was turned on its head. It was used as a way to mask bad things that were happening.
There’s a joke in it all. The joke is that the financial system, and there are analogies to the political system, but the financial system wanted to do something it really shouldn’t do. It wanted to make lots of loans that it shouldn’t make. They created all this risk that was going to blow up the system. In order to do that they needed to disguise the risk. So to disguise the risk it used all this complexity, which served as a smokescreen. And the joke is that it ended up disguising the risk from itself. That the very people who created the smokescreen were engulfed in it, and they couldn’t parse the system they created.
Michael Lewis with Chris Lydon in Boston, April 7, 2010.
financial journalist and best-selling author of The Big Short, Moneyball, and, most recently, Flash Boys.