Quotes from The Big Short: Inside the Doomsday Machine

Michael Lewis ·  305 pages

Rating: (109.1K votes)


“What are the odds that people will make smart decisions about money if they don't need to make smart decisions--if they can get rich making dumb decisions? The incentives on Wall Street were all wrong; they're still all wrong.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“The CDO was, in effect, a credit laundering service for the residents of Lower Middle Class America. For Wall Street it was a machine that turned lead into gold.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $724,000.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“That was the problem with money: What people did with it had consequences, but they were so remote from the original action that the mind never connected the one with the other.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“Success was individual achievement; failure was a social problem.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine



“When you’re a conservative Republican, you never think people are making money by ripping other people off,” he said. His mind was now fully open to the possibility. “I now realized there was an entire industry, called consumer finance, that basically existed to rip people off.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“A thought crossed his mind: How do you make poor people feel wealthy when wages are stagnant? You give them cheap loans.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“What are the odds that people will make smart decisions about money if they don’t need to make smart decisions—if they can get rich making dumb decisions?”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“A credit default swap was confusing mainly because it wasn’t really a swap at all. It was an insurance policy, typically on a corporate bond, with semiannual premium payments and a fixed term. For instance, you might pay $200,000 a year to buy a ten-year credit default swap on $100 million in General Electric bonds. The most you could lose was $2 million: $200,000 a year for ten years. The most you could make was $100 million, if General Electric defaulted on its debt any time in the next ten years and bondholders recovered nothing. It was a zero-sum bet: If you made $100 million, the guy who had sold you the credit default swap lost $100 million. It was also an asymmetric bet, like laying down money on a number in roulette. The most you could lose were the chips you put on the table; but if your number came up you made thirty, forty, even fifty times your money.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“Charlie and Jamie had always sort of assumed that there was some grown-up in charge of the financial system whom they had never met; now, they saw there was not.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine



“A Home without Equity Is Just a Rental with Debt,”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“Charlie Ledley—curiously uncertain Charlie Ledley—was odd in his belief that the best way to make money on Wall Street was to seek out whatever it was that Wall Street believed was least likely to happen, and bet on its happening.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“Because the lenders sold many—though not all—of the loans they made to other investors, in the form of mortgage bonds, the industry was also fraught with moral hazard. “It was a fast-buck business,” says Jacobs. “Any business where you can sell a product and make money without having to worry how the product performs is going to attract sleazy people.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“Pope Benedict XVI was the first to predict the crisis in the global financial system…Italian Finance Minister Giulio Tremonti said. “The prediction that an undisciplined economy would collapse by its own rules can be found” in an article written by Cardinal Joseph Ratzinger [in 1985], Tremonti said yesterday at Milan’s Cattolica University. —Bloomberg News, November 20, 2008”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“not because he had the slightest interest in God but because he was curious about its internal contradictions.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine



“On its surface, the booming market in side bets on subprime mortgage bonds seemed to be the financial equivalent of fantasy football: a benign, if silly, facsimile of investing. Alas, there was a difference between fantasy football and fantasy finance: When a fantasy football player drafts Peyton Manning to be on his team, he doesn’t create a second Peyton Manning. When Mike Burry bought a credit default swap based on a Long Beach Savings subprime–backed bond, he enabled Goldman Sachs to create another bond identical to the original in every respect but one: There were no actual home loans or home buyers. Only the gains and losses from the side bet on the bonds were real.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“They had stumbled either upon a serious flaw in modern financial markets or into a great gambling run. Characteristically, they were not sure which it was. As Charlie pointed out, “It’s really hard to know when you’re lucky and when you’re smart.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“That was the reason the casino bothered to list the wheel’s most recent spins: to help gamblers to delude themselves.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“Complicated financial stuff was being dreamed up for the sole purpose of lending money to people who could never repay it.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“The “consumer loan” piles that Wall Street firms, led by Goldman Sachs, asked AIG FP to insure went from being 2 percent subprime mortgages to being 95 percent subprime mortgages. In a matter of months, AIG FP, in effect, bought $50 billion in triple-B-rated subprime mortgage bonds by insuring them against default.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine



“I really do believe the final act in play is a crisis in our financial institutions, which are doing such dumb, dumb things,”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“Household was making loans at a faster pace than ever. A big source of its growth had been the second mortgage. The document offered a fifteen-year, fixed-rate loan, but it was bizarrely disguised as a thirty-year loan. It took the stream of payments the homeowner would make to Household over fifteen years, spread it hypothetically over thirty years, and asked: If you were making the same dollar payments over thirty years that you are in fact making over fifteen, what would your “effective rate” of interest be? It was a weird, dishonest sales pitch. The borrower was told he had an “effective interest rate of 7 percent” when he was in fact paying something like 12.5 percent. “It was blatant fraud,” said Eisman. “They were tricking their customers.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“The subprime mortgage machine was up and running again, as if it had never broken down in the first place. If the first act of subprime lending had been freaky, this second act was terrifying. Thirty billion dollars was a big year for subprime lending in the mid-1990s. In 2000 there had been $130 billion in subprime mortgage lending, and 55 billion dollars’ worth of those loans had been repackaged as mortgage bonds. In 2005 there would be $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“With stagnant wages and booming consumption, the cash-strapped American masses had a virtually unlimited demand for loans but an uncertain ability to repay them.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“Writing a check separates a commitment from a conversation. —Warren Buffett”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine



“After that, the men in the room rushed for the exits, apparently to sell their shares in Bear Stearns. By the time Alan Greenspan arrived to speak, there was hardly anyone who cared to hear what he had to say. The audience was gone. By Monday, Bear Stearns was of course gone, too, sold to J.P. Morgan for $2 a share.*”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“As a former gas station attendant, parking lot attendant, medical resident and current Goldman Sachs screwee, I am offended.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“Whenever Wall Street people tried to argue—as they often did—that the subprime lending problem was caused by the mendacity and financial irresponsibility of ordinary Americans, he’d”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“Why, for example, wasn’t AIG required to reserve capital against them? Why, for that matter, were Moody’s and Standard & Poor’s willing to bless 80 percent of a pool of dicey mortgage loans with the same triple-A rating they bestowed on the debts of the U.S. Treasury? Why didn’t someone, anyone, inside Goldman Sachs stand up and say, “This is obscene. The rating agencies, the ultimate pricers of all these subprime mortgage loans, clearly do not understand the risk, and their idiocy is creating a recipe for catastrophe”?”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine


“The less transparent the market and the more complicated the securities, the more money the trading desks at big Wall Street firms can make from the argument. The constant argument over the value of the shares of some major publicly traded company has very little value, as both buyer and seller can see the fair price of the stock on the ticker, and the broker’s commission has been driven down by competition. The argument over the value of credit default swaps on subprime mortgage bonds—a complex security whose value was derived from that of another complex security—could be a gold mine.”
― Michael Lewis, quote from The Big Short: Inside the Doomsday Machine



Video

About the author

Michael Lewis
Born place: in New Orleans, Louisiana, The United States
Born date October 15, 1960
See more on GoodReads

Popular quotes

“Are you telling me you think Ranger's a superhero?'
Think about it. We don't know where he lives. We don't know anything about him.'
Superheroes are make-believe.'
Oh yeah?' Lula said. 'What about God?”
― Janet Evanovich, quote from Three to Get Deadly


“As a rule, you knew it was time to eat when you could hear potatoes exploding in the oven. Happily, all this suited my father. His palate only responded to two tastes - burned and ice cream - so everything suited him so long as it was sufficiently dark and not startlingly flavorful. Theirs truly was a marriage made in heaven, for no one could burn food like my mother or eat it like my Dad.”
― Bill Bryson, quote from The Life and Times of the Thunderbolt Kid


“George didn't say a word. He felt quite trembly. He knew something tremendous had taken place that morning. For a few brief moments he had touched with the very tips of his fingers the edge of a magic world.”
― Roald Dahl, quote from George's Marvellous Medicine


“The more you think about things, the weirder they seem. Take this milk. Why do we drink COW milk?? Who was the guy who first looked at a cow and said, 'I think I'll drink whatever comes out of these things when I squeeze 'em!'?”
― Bill Watterson, quote from The Indispensable Calvin and Hobbes


“Mine has been a life of much shame. I can't even guess myself what it must be to live the life of a human being.”
― Osamu Dazai, quote from No Longer Human


Interesting books

Plainsong
(51.3K)
Plainsong
by Kent Haruf
Kushiel's Mercy
(15K)
Kushiel's Mercy
by Jacqueline Carey
The Crippled God
(18.1K)
The Crippled God
by Steven Erikson
Holy Bible: The New King James Version
(6.9K)
Autobiography of Red
(11.4K)
Autobiography of Red
by Anne Carson
Wish You Well
(18.5K)
Wish You Well
by David Baldacci

About BookQuoters

BookQuoters is a community of passionate readers who enjoy sharing the most meaningful, memorable and interesting quotes from great books. As the world communicates more and more via texts, memes and sound bytes, short but profound quotes from books have become more relevant and important. For some of us a quote becomes a mantra, a goal or a philosophy by which we live. For all of us, quotes are a great way to remember a book and to carry with us the author’s best ideas.

We thoughtfully gather quotes from our favorite books, both classic and current, and choose the ones that are most thought-provoking. Each quote represents a book that is interesting, well written and has potential to enhance the reader’s life. We also accept submissions from our visitors and will select the quotes we feel are most appealing to the BookQuoters community.

Founded in 2023, BookQuoters has quickly become a large and vibrant community of people who share an affinity for books. Books are seen by some as a throwback to a previous world; conversely, gleaning the main ideas of a book via a quote or a quick summary is typical of the Information Age but is a habit disdained by some diehard readers. We feel that we have the best of both worlds at BookQuoters; we read books cover-to-cover but offer you some of the highlights. We hope you’ll join us.