Michael Lewis is the bestselling author of many books, but
the first one I have read is The Big
Short: Inside the Doomsday Machine, which is about the financial crisis of 2008. Lewis’ economics is
terrible, but I still recommend the book.
First the terrible part: Lewis doesn't understand good
economics, by which I mean Austrian. From the book I would guess he doesn't
know much mainstream economics either. If readers really want to understand the
mechanics of how the crises unfolded I would recommend Slapped by the Invisible Hand by Gary Gorton. In a nutshell, it was an old
fashioned bank run in which depositors got scared that their deposits were in danger
and pulled their money out of the bank. Only in this case the depositors were
money market mutual funds, pension funds and insurance companies and the banks
were the large investment banks like Lehman and Bear Stearns. But what even the
Slapped authorGorton doesn't tell readers
is that the run began because of the collapse in the price of housing. It
wasn't lightening out of a blue sky.
