Liar's Poker Lewis Calls The End of Wall Street
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Michael Lewis, famed author of Liar's Poker, penned an great article over at Portfolio.com on the death of Wall Street. Lewis discusses how Wall Street became obsessed with mortgage products, which led to its downfall. He also discusses how Meredith Whitney made a name for herself calling for the demise of financial firms. Lewis also goes into great details about the inner-workings of toxic subprime mortgages/CDOs with Steve Eisman, a hedge fund manger who shorted these markets and was Whitney's mentor.
This is my favorite part from the article"
“We have a simple thesis,” Eisman explained. “There is going to be a calamity, and whenever there is a calamity, Merrill is there.” When it came time to bankrupt Orange County with bad advice, Merrill was there. When the internet went bust, Merrill was there. Way back in the 1980s, when the first bond trader was let off his leash and lost hundreds of millions of dollars, Merrill was there to take the hit. That was Eisman’s logic—the logic of Wall Street’s pecking order. Goldman Sachs was the big kid who ran the games in this neighborhood. Merrill Lynch was the little fat kid assigned the least pleasant roles, just happy to be a part of things. The game, as Eisman saw it, was Crack the Whip. He assumed Merrill Lynch had taken its assigned place at the end of the chain."
Link to Lewis's Article
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