Speaker 1: Pushkin.
Speaker 2: I'm Leady agen Kott, I'm Michael Lewis, and we're here
Speaker 2: with a special kind of bonus episode of The Big
Speaker 2: Short Companion podcast.
Speaker 1: Yes, which you've heard because you were there for it live.
Speaker 1: I was interviewed by Nicole Wallace at Symphony Space and
Speaker 1: you were in the audience. And there were a few
Speaker 1: wrinkles to this interview that made it really fun. One
Speaker 1: it was Nicole Wallace, and she's a fabulous interviewer, and
Speaker 1: I've been on her show on MSNBC and she has
Speaker 1: a devoted and large.
Speaker 3: Following, and there's a reason for it.
Speaker 1: Two was, as we'll hear, an actor came out at
Speaker 1: the beginning of the show and performed one of the
Speaker 1: passages from the book and he was so much better
Speaker 1: at reading my book than I was, and I was mesmerized.
Speaker 1: It was like I was listening to the thing for
Speaker 1: the first time. And the third was that characters from
Speaker 1: The Big Short were actually in the audience, and that
Speaker 1: was a rare treat for me to be able to
Speaker 1: talk about them in front of them.
Speaker 2: Could you see them? They were like kind of in
Speaker 2: the front row. I was kind of trying to watch
Speaker 2: them out of the corner of my eye.
Speaker 1: It was Danny Moses, Vincent Daniel, and Porter Collins. And
Speaker 1: they're so loud. I could not see them because of
Speaker 1: the stage lights, but I could hear them. I could
Speaker 1: hear them laughing, you know, So that was a good sign.
Speaker 1: So that made it kind of fun. And it was
Speaker 1: just fun to like recap this whole thing. And it's
Speaker 1: a great I feel like it's a great way to
Speaker 1: end our little season.
Speaker 2: And there are even stories that you told Nicole Wallace
Speaker 2: that I had never heard before.
Speaker 1: This I find hard to believe.
Speaker 3: But it's nice that there's.
Speaker 1: Still a few coming up.
Speaker 2: Michael Lewis and Nicole Wallace recorded live at Symphony Space
Speaker 2: in New York.
Speaker 4: This is sort of celebrating an anniversary of the Big
Speaker 4: Short and and you've just released a new audio book
Speaker 4: in your Own Boys, in your Own Telling. What is
Speaker 4: it like to relive this story?
Speaker 1: First? You really should give me credit for having the
Speaker 1: balls to come out for two days of media for
Speaker 1: a book that's fifteen years old.
Speaker 5: Well, I'm taking notes. I want to know how it's done.
Speaker 1: I do feel like I do feel this is the
Speaker 1: last thing I'm doing, and I do feel I need
Speaker 1: to come clean to someone about why we're doing this.
Speaker 1: We happy? Can I be this? Can we just do it?
Speaker 5: Here?
Speaker 1: Are we safe space? Yes? Safe space? Safe space?
Speaker 5: You guys in.
Speaker 1: Sas safe space and nobody's going to talk about it.
Speaker 6: No it well this is classified.
Speaker 1: Okay. So what happened was a few years ago the rights,
Speaker 1: the audio rights to Liar's Poker came back to me.
Speaker 1: And the audiobook market is what's changed. It's the biggest
Speaker 1: change in the way books are consumed in my career
Speaker 1: and in the old days, in olden times, even big
Speaker 1: short times, there wasn't a whole lot of effort that
Speaker 1: went into making the audiobooks. And in the case of
Speaker 1: like Liar's Poker, the audiobook was cassettes on you know,
Speaker 1: really you got a box. You got this giant cardboard
Speaker 1: box full of cassettes if you ordered it. So we thought.
Speaker 1: I thought with Pushkin my podcast company, and I'm a
Speaker 1: kind of an itinerant podcast right now, I'm not on
Speaker 1: all the time, but I do this. See I'll do
Speaker 1: seasons from time to time that it would be it
Speaker 1: would be fun to just try to redo the Liar's
Speaker 1: Poker and see if see if anybody would be interested.
Speaker 1: And we did a podcast season alongside of it, and
Speaker 1: the thing just took off, I mean, and so we thought, hmmm,
Speaker 1: like these things are coming back, Big Shorts coming back,
Speaker 1: Moneyball's coming back, the blind Side's coming back, all these
Speaker 1: books that are coming back, and this chance to uh
Speaker 1: make free money. It's really great. But also it's kind
Speaker 1: of fun to revisit the stories. Like I never reread
Speaker 1: my books. I don't think about them. They really just
Speaker 1: kind of they're in the back past. And this one,
Speaker 1: this had Moneyball in particular, we're still living in a
Speaker 1: world that it was sort of just and it seemed relevant.
Speaker 1: So we did recorded the book a couple of months
Speaker 1: ago when we have a new fancy audio book, but
Speaker 1: we have a seven episode podcast with going back and
Speaker 1: looking at the consequences of the financial crisis, talking to
Speaker 1: some of the characters in the book. Some of them
Speaker 1: were here. I think they got in Danny Moses, Vincent,
Speaker 1: Daniel Poor Collins. Did they hear, Yeah, there we go
Speaker 1: and I think that's all. I think that's all that's here,
Speaker 1: and there's an and it was. It was It's just interesting,
Speaker 1: still interesting, still in the air.
Speaker 4: It's riveting. I mean I and I'm so glad that
Speaker 4: you brought it back to the people because your gift
Speaker 4: to the story we're telling every day in the news
Speaker 4: is that it is very easy to shorthand everything. But
Speaker 4: there's nothing that you experience on a more human level
Speaker 4: than the human stories. And so I want to spend
Speaker 4: tonight talking about these humans.
Speaker 1: Do you want me to start now I start talking,
Speaker 1: I kind of don't say.
Speaker 4: Give me one Give me one note on the humans
Speaker 4: and then we'll listen.
Speaker 1: To this elevated the human There was a logic to
Speaker 1: the book. There was there was The book got cast
Speaker 1: in a way no book I have ever written has
Speaker 1: gotten cast, but in the way the book I'm writing
Speaker 1: now is getting cast. And and I will explain that
Speaker 1: logic after we hear the reading.
Speaker 4: So without further ado, this this is I mean, you
Speaker 4: are always a highlight. This is really going to be They're.
Speaker 1: Here for you.
Speaker 4: No, no, no, Now, Zach Renier is going to do
Speaker 4: reading from from the book.
Speaker 6: It had been four days since Lehman Brothers had been
Speaker 6: allowed to fail. But the most powerful effects of the
Speaker 6: collapse we're being felt right now. The stop of Morgan
Speaker 6: Stanley and Goldman Sachs were tanking, and it was clear
Speaker 6: that nothing short of the US government could save them.
Speaker 6: It was the equivalent of the earthquake going off, Danny said,
Speaker 6: And then much later the tsunami arrives. Danny's trading life
Speaker 6: was man versus man, but this felt more like man
Speaker 6: versus nature. The synthetic cdo had become a synthetic natural disaster. Usually,
Speaker 6: you feel you have the ability to control your environment,
Speaker 6: said Danny. You're good because you know what's going on now.
Speaker 6: It didn't matter what I knew. Peel went out the window.
Speaker 6: Front Point had maybe seventy different bets in various stock
Speaker 6: markets around the world. All of them were on financial institutions.
Speaker 6: He scrambled to keep a handle on them all, but couldn't.
Speaker 6: They owned shares in Key Bank and were short the
Speaker 6: shares of Bank of America, both of which were doing
Speaker 6: things they had never done done before. There were no
Speaker 6: bids in the market for anything, said Danny. There was
Speaker 6: no market. Was really only then I realized there was
Speaker 6: a bigger issue than just our portfolio.
Speaker 5: For fundamentals didn't matter.
Speaker 6: Stocks were going to move up and down on pure
Speaker 6: emotion and speculation of what the government would do.
Speaker 5: The most unsettling loose.
Speaker 6: Thought rattling around in his mind was that Morgan Stanley
Speaker 6: was about to go under. Their fund was owned by
Speaker 6: Morgan Stanley. They had almost nothing to do with Morgan
Speaker 6: Stanley and felt little kinship with the place. They did
Speaker 6: not act or feel like Morgan Stanley employees. Heisman often
Speaker 6: said how much he wished he was allowed to short
Speaker 6: Morgan Stanley's stock. They acted and felt like the managers
Speaker 6: of their own fund. If Morgan Stanley failed, however, its
Speaker 6: shared and their fun wound up as an asset in
Speaker 6: a bankruptcy proceeding. I'm thinking we got the world by
Speaker 6: the fucking balls, and the company we work for is
Speaker 6: going bankrupt. Then Danny sends something seriously wrong with himself.
Speaker 6: Just before eleven in the morning, wavy black lines appeared
Speaker 6: in the space between his eyes and his computer screen.
Speaker 5: The screen appeared to be fading in and out.
Speaker 6: I felt this shooting pain in my head, he said,
Speaker 6: I don't get headaches. I thought I was having an aneurysm.
Speaker 6: Now he became aware of his heart. He looked down
Speaker 6: and he could actually see it banging against his chest.
Speaker 6: I spent my morning trying to control all this energy
Speaker 6: and all this information, he said, and I lost control.
Speaker 6: He rose up from his desk and looked for someone
Speaker 6: eyes been normally sat across from him, but Ivesan was
Speaker 6: out at some conference trying to raise money, which showed
Speaker 6: you how unprepared they all were at the arrival of
Speaker 6: the moment for which then they thought themselves perfectly prepared.
Speaker 6: Danny turned to the colleague beside him, Porter, I think
Speaker 6: I'm having a heart attack, he said. Porter Collins laughed
Speaker 6: and said, no, you're not. An Olympic rowing career had
Speaker 6: left Porter Collins a bit inerd to the pain of
Speaker 6: others as he assumed that they didn't know what pain was. No,
Speaker 6: Danny said, I need to go to the hospital. His
Speaker 6: face had gone pale, but he was still able to
Speaker 6: stand on his own two feet.
Speaker 5: How bad could it be?
Speaker 6: Danny was always a little jumpy, That's why he's good
Speaker 6: at his job, said Porter. I kept saying, you're not
Speaker 6: having a heart attack, and then he stopped talking and
Speaker 6: he said, all right, maybe you are.
Speaker 5: This actually wasn't all that helpful.
Speaker 6: Unsteadily, Danny turned to Vinnie, who had been watching everything
Speaker 6: from the far end of the long trading desks and
Speaker 6: was thinking about calling an ambulance. I got to get
Speaker 6: out of here now, he said. By the time Heisman
Speaker 6: got the call from Danny Moses saying that he might
Speaker 6: be having a heart attack, and that he and Vinnie
Speaker 6: and Porter were sitting on the steps of Saint Patrick's Cathedral,
Speaker 6: he was in the midst of a slow, almost menopausal change.
Speaker 6: He had been unprepared for his first hot flash in
Speaker 6: the late fall of two thousand and seven. By then,
Speaker 6: it was clear to many that he had been right
Speaker 6: and they had been wrong, and that he had gotten
Speaker 6: rich to boot. He gone to a conference put on
Speaker 6: by Merrill Lynch right after they had fired their CEO,
Speaker 6: Stan O'Neill and disclosed twenty billion dollars or so of
Speaker 6: their fifty two billion in subprime related losses. There he
Speaker 6: had settled up to Merrill's chief financial officer, Jeff Edwards,
Speaker 6: the same Jeff Edwards Heisman had taunted some months earlier
Speaker 6: about Merrill Lynch's risk models. You remember what I said
Speaker 6: about those risk models of yours, Eisman now said, I
Speaker 6: guess I was right.
Speaker 5: Huh.
Speaker 6: Instantly, and amazingly, he regretted having said it. I felt
Speaker 6: bad about it, said Eisman. He was obnoxious. He was
Speaker 6: a lovely guy. He was just wrong. I was no
Speaker 6: longer the underdog, and I had.
Speaker 5: To conduct myself in a different way.
Speaker 6: Valerie Fagan watched in near bewilderment as her husband acquired
Speaker 6: haltingly in fits and starts, a trait resembling tact. There
Speaker 6: was a void after everything happened, she said.
Speaker 5: Once he was.
Speaker 6: Proved right, all this anxiety and anger and energy went away,
Speaker 6: and that left this big void. He wanted on an
Speaker 6: ego thing for a while. He was really kind of
Speaker 6: full of himself. Eisman had been so vocal about the
Speaker 6: inevitable doom that all sorts of unlikely people wanted to
Speaker 6: hear what he now had to say. After the conference
Speaker 6: in Las Vegas, he had come down with a parasite.
Speaker 6: He told the doctor who treated him that the financial
Speaker 6: world as we knew it was about to end. A
Speaker 6: year later, he went back to the same doctor for
Speaker 6: a colonoscopy. Stretched out on the table, here's the doctor say,
Speaker 6: here's the guy who predicted the crisis.
Speaker 5: Come in and listen to this.
Speaker 6: And in the middle of Iman's colonoscopy, a room full
Speaker 6: of doctors and nurses.
Speaker 5: We told the story of heisman genius.
Speaker 6: The story of Iceman's genius quickly grew old to his wife.
Speaker 6: Long ago, she had established a sort of Iceman's social
Speaker 6: emergency task force with her husband's therapists. We beat him
Speaker 6: up and said, you really just have to knock the
Speaker 6: shit off. And he got it, and he started to
Speaker 6: be nice, and he liked being nice.
Speaker 5: It was a new.
Speaker 1: Experience for him.
Speaker 5: All around.
Speaker 6: She and others found circumstantial evidence of a changed man
Speaker 6: at the Christmas party at the building se door, for example.
Speaker 6: She wasn't planning to even let Eisman know about it,
Speaker 6: as she never knew what he might do or say.
Speaker 6: I was just trying to kind of sneak out of
Speaker 6: our apartment, she said, and he stops me and said,
Speaker 6: how will it look if I don't go. The sincerity
Speaker 6: of his concern shocked her into giving him a chance.
Speaker 6: You can go, but you have to behave, she said,
Speaker 6: to which Eisman replied, well, I know how to behave now,
Speaker 6: And so she took him to the Christmas party and
Speaker 6: he was as.
Speaker 1: Sweet as he could be.
Speaker 6: He's become a pleasure, said Valerie.
Speaker 1: Go figure.
Speaker 6: That afternoon of September eighteenth, two thousand and eight. The
Speaker 6: new and possibly improving eyes been ambled toward his partners
Speaker 6: on the steps of Saint Patrick's Cathedral. Getting to places
Speaker 6: on foot always took him too long. Steve such a
Speaker 6: fucking slow walker, said Danny. He walks like an elephant
Speaker 6: would walk, if an elephant could only take human size steps.
Speaker 5: The weather was.
Speaker 6: Gorgeous, one of those rare days where the blue sky
Speaker 6: reaches down through the forest of tall buildings and warms
Speaker 6: the soul. We just sat there, says Danny, watching the
Speaker 6: people pass. They sat together on the cathedral steps for
Speaker 6: an hour or so. As we sat there, we were
Speaker 6: weirdly calm, said Danny. We felt insulated from the whole
Speaker 6: market reality. It was an out of body experience. We
Speaker 6: just sat and watched the people pass and talked about
Speaker 6: what might happen next. How many of these people were
Speaker 6: going to lose their jobs. Who was going to rent
Speaker 6: these buildings after all the Wall Street firms had collapsed.
Speaker 6: Peter Collins thought that, well, it was like the world stopped.
Speaker 6: We were looking at all these people and saying, these
Speaker 6: people are either ruined or about to be ruined, and
Speaker 6: apart from that, there wasn't a whole lot of hangaring
Speaker 6: inside Front Point. This is what they had been waiting for,
Speaker 6: total collapse. The investment banking industry is fucked, Heisman had
Speaker 6: said six weeks earlier. These guys are only beginning to
Speaker 6: understand how fucked they are.
Speaker 5: It's like being a scholastic prior to Newton.
Speaker 6: Newton comes along and one morning you wake up, holy shit,
Speaker 6: I'm wrong. Layman Brothers had vanished, Merrill had surrendered, and Goldman,
Speaker 6: Sachs and Morgan Stanley were just a week away from.
Speaker 1: Ceasing to be investment banks.
Speaker 6: Investment bankers were not just fucked, they were extinct. That
Speaker 6: Wall Street has gone down because of this is justice,
Speaker 6: Heisman said. The only one of them who wrestled a
Speaker 6: bit with their role as the guys who made a
Speaker 6: fortune betty against their own society was Vincent Daniel Well
Speaker 6: Vinnie's being from Queen's needs to see the dark side
Speaker 6: of everything, Heisman said, to which Vinnie replied, well, the
Speaker 6: way we thought about it, which we didn't like, was
Speaker 6: by shortening this market, we're creating the liquidity to keep
Speaker 6: the market going. It was like feeding the monster, Heisman said,
Speaker 6: We fed the monster until it blew up. The monster
Speaker 6: was exploding, yet on the streets of Manhattan, there was
Speaker 6: no sign anything important.
Speaker 1: It just happened.
Speaker 6: The force that would affect all their lives was hidden
Speaker 6: from their view. That was the problem with money. What
Speaker 6: people did with it had consequences, but they were so
Speaker 6: remote from the original action that the mind never connected
Speaker 6: the one with the other. The teaser rate loans you
Speaker 6: make to people who will never be able to repay
Speaker 6: them will go bad. Not immediately, but in two years,
Speaker 6: when their interest rates rise. The various bonds you make
Speaker 6: from those loans will go bad.
Speaker 5: Not as the loans go bad, but.
Speaker 6: Months later, after a lot of teds, foreclosures and bankruptcies
Speaker 6: and for sales. The various CDOs you make from the
Speaker 6: bonds will not go bad right then, but after some
Speaker 6: trustees sort out whether there will ever be enough cash
Speaker 6: to pay them off, whereupon the end owner of the
Speaker 6: cdo receives a little note, Dear sir, we regret to
Speaker 6: inform you that your bond no longer exists. But the
Speaker 6: biggest lag of all was right here in the streets.
Speaker 6: How long would it take before the people walking back
Speaker 6: and forth in front of Saint Patrick's Cathedral, figure out
Speaker 6: what had just happened to them?
Speaker 5: Who thank you for.
Speaker 2: That?
Speaker 4: Gren proving that the book is always better than the movie.
Speaker 1: Oh no, I made such a mistake reading this book myself.
Speaker 4: That was incredible.
Speaker 1: I should have hired him. Incredible. That was incredible.
Speaker 4: That was, of course Zachrenier from The Good Wife, The
Speaker 4: Good Fight, Ray Donovan, Fame and Tony nominated for thirty
Speaker 4: three variations. While we're round, thank you.
Speaker 7: How did the Volkswagen Beatle go from being Hitler's dream
Speaker 7: car to a hippie icon? How did a disgruntled center
Speaker 7: fielder change the business of sports? I'm Jacob Goldstein and
Speaker 7: on Business History, my co host Robert Smith and I
Speaker 7: dig into the people and companies who created the modern world.
Speaker 7: Business history is full of innovations and failures and insights
Speaker 7: into how business works today. At the end of today's
Speaker 7: episode of Against the Rules, we're going to play a
Speaker 7: clip from our episode about Jim Simon's decades ago. Simon's
Speaker 7: basically invented modern algorithmic trading, and after a few early hiccups,
Speaker 7: including buying up all the titles in Maine, Simon's built
Speaker 7: a machine that generated incredible returns for decades. The show
Speaker 7: is called Business History and the previous coming up at
Speaker 7: the end of today's episode of Against the Rules.
Speaker 4: I just want to start with the human stories are
Speaker 4: sometimes hardest to tell because they involve such meticulous reporting.
Speaker 4: You can't just you can't get it wrong. They're real people,
Speaker 4: and it strikes me that the Big Short is a
Speaker 4: story about what happens when the reporting doesn't happen, when
Speaker 4: people don't pursue the facts and they look the other way.
Speaker 4: And so I want to know what it is in
Speaker 4: you that inspires you to report out stories like this.
Speaker 1: I'll try to end with that. And I want to
Speaker 1: end the whole night by telling my own colonoscopy story.
Speaker 4: I mean, that's t we call that a d I've.
Speaker 1: Got it, So you go.
Speaker 4: I'll bring you back to my question very end.
Speaker 1: You do, okay, because I MS kolonoscopy story was pretty great.
Speaker 1: I have one. So so the logic of the book,
Speaker 1: how the it was so it was an incredibly complicated story,
Speaker 1: right It's a hairball of a story.
Speaker 3: It's like a story in Washington.
Speaker 1: Right now that it's very hard to tell. It in
Speaker 1: from eighty thousand feet in a way that's interesting. It's
Speaker 1: too it's just too complicated. And however, there was a
Speaker 1: simple there's a beautiful simplicity to the story, and the
Speaker 1: beautiful and this is the penny dropped for me pretty
Speaker 1: early on that the simplicity was you could think of
Speaker 1: the financial world as a simple bet, a giant bet,
Speaker 1: and the financial will had organize itself around the bet.
Speaker 1: And on one side of the bet was virtually all
Speaker 1: the big firms on Wall Street and the international banks
Speaker 1: and so on, and it was a bet on the
Speaker 1: subprime mortgage market, and on the on the on the
Speaker 1: other side of the bed, where all these people.
Speaker 3: Know what I'd ever heard of.
Speaker 1: And and the question was, how had the people on
Speaker 1: the wrong side of the bet, the center of the
Speaker 1: financial system, become the dumb money? How did they end
Speaker 1: up on the dumb side of the bet? So I
Speaker 1: go out to answer that question.
Speaker 4: When you figure out that structural frame.
Speaker 1: I figured that's the first thing I figure out. I
Speaker 1: figure out that, Oh I could tell this story. I
Speaker 1: can make it simple for a reader by just it's
Speaker 1: just a bet. It's a single and you're are on
Speaker 1: one side or the other. And then so what I
Speaker 1: do then, is I go out and get a list
Speaker 1: of everyone who was on the right side of the bet.
Speaker 1: Now there were probably thousands, but people who were really
Speaker 1: on the right side of the bed, who kind of
Speaker 1: laid it all on the line, and they were maybe
Speaker 1: twenty five twenty and I went and met I think
Speaker 1: all of them. Not all of them would talk to
Speaker 1: me on the record, but I got to know all
Speaker 1: of them, and all of them agreed to kind of
Speaker 1: inform my understanding. But that was that because the beginning
Speaker 1: what was essentially a casting search. Because what happened is
Speaker 1: I talked to them. I realized that there was another
Speaker 1: way to think about this. There were different ways to
Speaker 1: get to the right answer, to get to the right
Speaker 1: side of the bet. They weren't all doing the same thing,
Speaker 1: but they were categories. They were kind of three ways
Speaker 1: that people got to the right side the way these
Speaker 1: guys did, the guys that you just heard about it started.
Speaker 1: They had just a deep history in the subprime argue.
Speaker 1: It went back to the nineties. Eisman and Vinnie both
Speaker 1: knew that it was a predatory market that was squirreling,
Speaker 1: and they smelled trouble because they had had this history
Speaker 1: but they were kind of I realized that broadly three
Speaker 1: ways people had got to the right answer. And then
Speaker 1: they all those twenty characters who were on.
Speaker 3: The right side in a big way.
Speaker 1: I could classify them into those buckets, and then thought
Speaker 1: I got to know them well enough to figure out
Speaker 1: who would be essentially the most fun and the most
Speaker 1: interesting to the reader and the best teacher with the
Speaker 1: least overlap in kind of how the characters sounded almost
Speaker 1: like a singing group, so that I picked the three
Speaker 1: characters that way, and then that's when I really get
Speaker 1: to know them. So that's when I'm in their lives
Speaker 1: a lot. And these guys would tell you I'm in
Speaker 1: their office. So I was in their office all the time.
Speaker 1: I walked around the neighborhoods they grew up in. I
Speaker 1: got to know in some cases their families, and you know,
Speaker 1: it was it was immersive that way, and it has
Speaker 1: to be immersive that way, because in the beginning when
Speaker 1: I walk in, they're all self conscious. They're all as
Speaker 1: you would be, like he's coming to write about us,
Speaker 1: and I need to be around so much that it
Speaker 1: gets they get weary of being self conscious that they
Speaker 1: just and they just drop it and I could just
Speaker 1: see who they are. They get to the point where
Speaker 1: they surrender, I give up, You're going to know who
Speaker 1: I am. Here I am. And these guys are actually
Speaker 1: pretty quick to that, as they were less afraid of
Speaker 1: themselves than some of the other characters. But so that
Speaker 1: so that's the That was the logic.
Speaker 3: To the book.
Speaker 1: And it was once I figured out the logic to
Speaker 1: the book, it was so easy to write it, like
Speaker 1: you were dealt the best handed bridge ever, and how
Speaker 1: just how you're going to play the cards and uh,
Speaker 1: and it was just so much fun. It wrote itself,
Speaker 1: and it was a very easy book to write.
Speaker 4: It's interesting to look at it now though you couldn't,
Speaker 4: not that you forget, but the time in which you're
Speaker 4: reporting it out and telling their stories, the country is
Speaker 4: still very much traumatized. And even the even the rescue
Speaker 4: has his political reverberations. I mean, just take us back
Speaker 4: in time a little bit too well.
Speaker 1: Would you just heard?
Speaker 3: Was the end of the book?
Speaker 1: So I wrote it. It had not. It had not.
Speaker 1: The rubble had not been sifted, the pieces had not
Speaker 1: been put.
Speaker 3: To get back together.
Speaker 1: I wrote it before we knew exactly how all this
Speaker 1: was going to shake out. I certainly wrote it before
Speaker 1: we knew that it was going to generate the political
Speaker 1: anger that I mean, endless political anger. I mean one
Speaker 1: of the one of the consequences of that event is Trump.
Speaker 1: Of course, you can draw a line from that to Trump.
Speaker 1: Sure mistrust of the one it is focused on the
Speaker 1: Wall Street people, and the other side is focused focuses
Speaker 1: at anger on the government having done this, having bailed
Speaker 1: bailed out the banks, that what the government did was
Speaker 1: far more defensible. I mean like they they're playing a
Speaker 1: very difficult hand and what they stopped was a depression
Speaker 1: and the federal the institutions worked. It's a bit like
Speaker 1: it's a bit like our inability to understand what happened
Speaker 1: with COVID. That is, it is incredible that we were
Speaker 1: our paint was saved by.
Speaker 3: The mrn A vaccines.
Speaker 1: That was one of the most a miracle of modern science.
Speaker 1: We are so much better off because of it, and
Speaker 1: now we're not allowed to get a vaccine.
Speaker 8: Well, I meantulated, and what I would say is with
Speaker 8: look at what you should have learned from the financial
Speaker 8: crisis is thank god we have an independent federal Reserve
Speaker 8: and a treasury that people trust, trust enough.
Speaker 1: That they can walk into a room and calm everything down,
Speaker 1: be that that we can take the risk and every
Speaker 1: everybody believes it. We're moving towards a world where we
Speaker 1: don't have that, where we have a federal reserve, this
Speaker 1: hostage to a president, and and we have finances that
Speaker 1: have spun out of control, and nobody trusts trust us.
Speaker 1: So we've squandered the thing. We've attacked the thing that
Speaker 1: saved us. And what I wonder about I don't wonder
Speaker 1: like when the next financial crisis is going to happen,
Speaker 1: because God knows. You know, anybody who tells you they
Speaker 1: know when it's going to happen, don't listen to them
Speaker 1: about anything, because you can't predict these and they're unpredictable.
Speaker 1: But you just it's like and you don't even and
Speaker 1: you know. All you know is that when it comes,
Speaker 1: you're gonna be surprised by how it happened. It's probably
Speaker 1: not going to be AI, it's probably not gonna be
Speaker 1: what people are talking about, be something else, something that
Speaker 1: people know I'm not paying attention to, but whatever as
Speaker 1: a trigger. But when it comes, we are in a
Speaker 1: far weaker position to deal with it. That's the big thing,
Speaker 1: and it's because we didn't actually internalize the lesson of it.
Speaker 4: You are going to land on the answer to the
Speaker 4: humans as your Oh they're not vehicles, they are the story.
Speaker 1: Sorry, here's so I loved about this story. It's true.
Speaker 1: We don't to write a book unless I love the
Speaker 1: story and the people because loving the characters you can
Speaker 1: I can understand in all the books that you can
Speaker 1: disapprove of the characters, but you But what I what
Speaker 1: I don't understand is when you can't like them as charcter, like, wow,
Speaker 1: these are interesting people, and I mean you could I
Speaker 1: left these guys. I left them exposed because I left
Speaker 1: I left it for the reader to decide how you
Speaker 1: feel about someone getting rich betting on the collapse of
Speaker 1: the society. Didn't actually bother me all that much, but
Speaker 1: it bothered a lot of other people. And I let that.
Speaker 1: I didn't cover for them. I didn't make a defense
Speaker 1: or or and I didn't make an assault. I left it.
Speaker 1: The best story is leave a hole for a reader
Speaker 1: to walk into and exercise their own discretion about what
Speaker 1: it means. And that was one of the.
Speaker 3: Holes I left for the reader in this.
Speaker 1: But the people, it isn't just gratuitous drawing of character.
Speaker 1: They get to the right answer because of who they are.
Speaker 1: That so you can't understand how they get to the
Speaker 1: right answer unless you understand who they are. So their
Speaker 1: character is organic to the story. It isn't just decoration,
Speaker 1: It isn't just entertainment. The characters become important and and
Speaker 1: so that's why you need to know them. That's why
Speaker 1: I need to know them. I need to know why
Speaker 1: they were able to do what they did. And that
Speaker 1: makes it that's that's all of a sudden, when you're
Speaker 1: there with the reader, you're you're opening up that world,
Speaker 1: you're making it accessible. I learned this with I learned
Speaker 1: this with Liar's Poker, that if you can attach a
Speaker 1: reader to a character, you can take them anywhere. They
Speaker 1: will forgive you anything. You can take them even to
Speaker 1: an explanation of a collateralized dead obligation, which no reader,
Speaker 1: no reader, if that's worse than a colonoscopy, no reader,
Speaker 1: no reader wants to be explained a collateralized They just don't.
Speaker 4: Well, what's amazing is they take that to the movie
Speaker 4: version as well. You know, they they take.
Speaker 1: This too, so I save Adam McKay. So the first
Speaker 1: episode of this podcast season that we've just dropping was
Speaker 1: Adam McKay, who the filmmaker, the co writer and director.
Speaker 3: Of the movie. He's a genius, he is.
Speaker 1: A special, special talent. So I thought, I thought that
Speaker 1: what you just heard, I didn't know what passages they
Speaker 1: were gonna pick. It was interesting for me to hear that,
Speaker 1: but I didn't And they didn't know that Danny and
Speaker 1: the and Porter were gonna be here.
Speaker 3: So it's funny.
Speaker 1: But I thought that was the end of the movie.
Speaker 1: I thought it was the end of the book. Those
Speaker 1: guys standing on the steps of us, sitting on the
Speaker 1: steps of Saint Patrick's cathedral, so seeing that people were good,
Speaker 1: they didn't know what happened to them McKay. And it
Speaker 1: is a very it's it's a cinematic moment, McKay. The
Speaker 1: end of the movie for Adam McKay was an editorial.
Speaker 1: It was like him telling the audience.
Speaker 4: So it's him telling the audience what you just said
Speaker 4: about the political reverberations. It's him on the phone saying
Speaker 4: it was all it was all set up. They were
Speaker 4: always gonna bail them out.
Speaker 1: They're alway gonna bail them out, and who were gonna
Speaker 1: do We're gonna blame the immigrants. We're gonna blame Yes,
Speaker 1: that it was incredibly prescient. That he was right in
Speaker 1: the movie. So the movie is five years after the book,
Speaker 1: so we've seen some things happen, right. That's only That's
Speaker 1: only the part of the reason why the movie is
Speaker 1: angrier than the book. The movie is angrier than the
Speaker 1: book also because Adam McKay's angrier just naturally more capable
Speaker 1: of anger than I am. I just look at the
Speaker 1: world as a comedy. I just basically, which is funny,
Speaker 1: because I'm not that funny, you know it's but I'm
Speaker 1: watching it, and he is funny. He looks at the
Speaker 1: world in a darker way, and he is. He's just
Speaker 1: he's just more capable of the emotion. And I detach.
Speaker 1: I I it was the human folly that interested in me.
Speaker 1: I didn't get all worked up. I thought this is
Speaker 1: really interesting, but I'm not. I'm not going to like
Speaker 1: inflict the reader my anger or my even when I
Speaker 1: really think about it, upon the reader. I'm just gonna
Speaker 1: tell a story.
Speaker 4: What do you really think about it.
Speaker 1: When I really think about.
Speaker 3: It, this is a long conversation.
Speaker 1: So I kind of I feel like I need a
Speaker 1: couch right now because to get what I really need.
Speaker 1: So I am really bothered by the by the way
Speaker 1: our society spun up a financial sector that is only
Speaker 1: partly useful, and it has got all this status and
Speaker 1: money and that I can understand ordinary people looking at
Speaker 1: it and thinking why, like, what are those what are
Speaker 1: those people doing that? Why don't I get some of that.
Speaker 1: I feel like a lot of our politics comes out
Speaker 1: of what happened on Wall Street. And and it isn't
Speaker 1: just a crist crisis. It is the unfairness. And it
Speaker 1: bothers the hell out of me that half the class
Speaker 1: at Harvard, Princeton and Yale and so on think that
Speaker 1: they should go to work in finance. Like it's just half.
Speaker 6: Do you think it's more than that?
Speaker 1: It's kind of usually about it. Probably three quarters think
Speaker 1: they should, but half get jobs. I don't know it's
Speaker 1: that kind of thing, but it's uh, and are distracted
Speaker 1: from other purposes. It isn't that I think working on
Speaker 1: Wall Street is evil, That's not it. There are people
Speaker 1: who my characters, they belong on Wall Street. If they're
Speaker 1: really good at it, they should be there. The making garage,
Speaker 1: in my book, should all be in finance. Uh, And
Speaker 1: they love it. It's a it's a kind of calling
Speaker 1: for them. It's the it's the casual young person who's
Speaker 1: not found a direction in life, but it might have
Speaker 1: some great other purpose, who uses an excuse not to
Speaker 1: not to ask the hard question WHI should I do
Speaker 1: with my life? That bothers the hell out of me?
Speaker 1: And so I think we have a kind of a
Speaker 1: cancer in our midst and and so it does bother
Speaker 1: me in but in a complicated way. My response to
Speaker 1: being bothered by it is not to scream to people
Speaker 1: or tell them where they did think. My response is
Speaker 1: to find fun stories to tell. I mean, the amazing
Speaker 1: thing to me was this story that was available to me.
Speaker 1: Liar's Poker made me non grata on Wall Street. I
Speaker 1: couldn't like walk into office buildings on Wall Street. People
Speaker 1: were really angry when Liar's Poker came out. I was toxic.
Speaker 1: And so when I first see these banks starting to
Speaker 1: do dumb things, and I started to ask the question
Speaker 1: which I mentioned earlier, like how did they become the
Speaker 1: dumb money, because that wasn't the bank I left. The
Speaker 1: bank guy left. If they were making a secret bet
Speaker 1: and asking you to take the other side of the bet,
Speaker 1: you are to run as fast as possible, the other
Speaker 1: direction that they and my job was actually sell those bets.
Speaker 1: So I knew, like the people who I was selling to,
Speaker 1: it was not going to work out well. And so
Speaker 1: something had happened between the time I left in this
Speaker 1: and it was I was intensely curious about that, and
Speaker 1: I thought, what a pity that I won't be able
Speaker 1: to go find out, because no one on Wall Street
Speaker 1: will ever talk to me again. But I did think
Speaker 1: we'll give it a shot, and I started by calling.
Speaker 1: You know, I knew people who knew people who knew
Speaker 1: people traders Morgan, Stanley, Merrill, Lynch City Bank, Goldman and
Speaker 1: like who were who were in the who were either
Speaker 1: had done the horrible trades or were very near them.
Speaker 1: And to mysh astonishment, the response I get on the
Speaker 1: other line is I'll go have a beer with you.
Speaker 1: And it's off. It's off the record, and in the
Speaker 1: sense that you can know what I tell you, but
Speaker 1: don't ever say we ever met. And and this happened
Speaker 1: to like half a dozen times. I thought, oh my god,
Speaker 1: someone's going to go have a beer with me. I
Speaker 1: was brought. I was kind of tickled, and I swear
Speaker 1: to you that each of these people were like six
Speaker 1: of them who had been responsible for making these bets
Speaker 1: said to me, the the reason I'm having this beer
Speaker 1: with you is you're the reason I'm in the business.
Speaker 1: I read Liar's Poker and I wanted to be It
Speaker 1: made me want to be a trader. And about the
Speaker 1: third time, I thought, Jesus Christ, I created this crisis.
Speaker 1: That that that that I wrote this book. I wrote
Speaker 1: this book and all these people, I thinking that it
Speaker 1: was going to say, like, show people what Wall Street
Speaker 1: was so they could go, you know, do other things,
Speaker 1: and instead attracted all the wrong people under the trading floor.
Speaker 1: And this is the result. But it also told me that,
Speaker 1: oh my god, because of Liar's Poker, now enough time
Speaker 1: has passed, I have access to the story like I
Speaker 1: can get to this. So that's that was the That
Speaker 1: was the very beginning of it for me.
Speaker 4: Is part of it that at their core people want
Speaker 4: to be heard like people talk to you, because at
Speaker 4: their core, people want someone to listen to.
Speaker 1: Their Why why do people talk to you?
Speaker 3: I could?
Speaker 1: I mean, look, you are a great interviewer. I was
Speaker 1: on your show and you were you were the streets
Speaker 1: above most people on TV. You're a great interviewer. Why
Speaker 1: why are you a great interviewer? I had a theory.
Speaker 1: I walked I walked off, and I had I had,
Speaker 1: and you have an audience that loves you. So so
Speaker 1: I walked on. I thought, oh my god, she listens.
Speaker 1: She's actually listening to what I'm saying stead of thinking
Speaker 1: of the next question. She seems to have read the book,
Speaker 1: which is freakish on television, like like it doesn't happen,
Speaker 1: And so you're engaged. You're actually you're there for a reason.
Speaker 1: I don't know. I didn't ask you why you were there,
Speaker 1: but there was some reason you were there, and I
Speaker 1: felt it. The people I write about feel the same thing.
Speaker 1: There's a real I'm not my time is valuable. I'm
Speaker 1: here for a reason. I'm not here just I'm not
Speaker 1: here to stitch you up. I'm not here to do
Speaker 1: something trivial. I want to write a great book, and
Speaker 1: I won't do it if it's not a great book.
Speaker 1: And I'm going to really try to understand you and
Speaker 1: your world, and that after a while becomes intoxicating. It's
Speaker 1: really because people don't get you know, people don't get
Speaker 1: asked questions about themselves. They go home to their spouses
Speaker 1: and their spouses that don't want to hear about it right,
Speaker 1: like really, And it's so I find the most the
Speaker 1: strangest moment, the most unnatural moment in my relationship with
Speaker 1: the people I write about when I move into their
Speaker 1: lives is not the I'm moving into your life and
Speaker 1: tell me everything, because that happens very gradually, and we
Speaker 1: build a relationship and they come to sort of understand
Speaker 1: what I'm trying to do, and they let me just
Speaker 1: be a fly on the wall.
Speaker 2: Uh.
Speaker 1: It's when I'm finished and I leave and it's like, hey,
Speaker 1: where are you. You're not coming in today, You're not
Speaker 1: coming in today, and it's like the book's done. It's like, oh, oh,
Speaker 1: that's right, you're writing a book, you know. It's that
Speaker 1: kind of thing. They kind of forget that. It just
Speaker 1: becomes a relationship for a while and then I move
Speaker 1: on and then there's this hard moment where sorry, I
Speaker 1: can't fly to New York to see you. You know,
Speaker 1: I got to do something else. So so I'm not
Speaker 1: going to talk about the next book. But then the
Speaker 1: next book is about the collision between the Trump administration
Speaker 1: and the civil Service. And it's a real book, kind
Speaker 1: of like the fifth risk in the Who Is Government?
Speaker 1: It's a it's a it's a it's a big short
Speaker 1: like enterprise.
Speaker 4: So you owe us.
Speaker 1: Yeah, I think we kind of ran through time. I
Speaker 1: was just looking at that I do do I do?
Speaker 1: Go on? Uh So, so I got a calloscopy and
Speaker 1: you know, when you're in that, they give you a
Speaker 1: drug that you're there and you're not there, and thank god,
Speaker 1: you're kind of awaken. You're awake and you're not awake.
Speaker 1: And afterwards it was in Oakland. And afterwards the nurse
Speaker 1: comes in and I said, like, she said, you can
Speaker 1: kind of go, and I said, I'd love to say
Speaker 1: like goodbye to the doctor. And she said, I don't
Speaker 1: think he wants to. He doesn't want to talk to you,
Speaker 1: and and and I said, like why he says he's
Speaker 1: kind of he's up. She said, he's like upset, like
Speaker 1: what you said. And I said, I don't remember what
Speaker 1: I said, like you know, and she said, what did
Speaker 1: I say? She said, she said, while you were while
Speaker 1: you were in the procedure, you look up at him
Speaker 1: and said, when you were a little boy, did you
Speaker 1: dream that this was what you would be doing in
Speaker 1: real life? Or did you want to or did you
Speaker 1: want to be an astronaut? And I had to go
Speaker 1: apologize to him.
Speaker 4: I mean, I, do you have a new gust eventrologist?
Speaker 1: Well, this is true. I've now had too. If I had
Speaker 1: a second one very recently and I had to arrange.
Speaker 4: Different to go to a different place, I'm not surprised.
Speaker 4: I'm not surprised.
Speaker 5: All right, this was fun, This is amazing.
Speaker 4: Keep writing forever. And I just want to wave to
Speaker 4: your real humans because I feel like, thanks for coming,
Speaker 4: thank you, thank you for letting him tell Tell the
Speaker 4: girl Thanky, thanks you for thanks thanks giving me, Thank
Speaker 4: you guys for coming.
Speaker 1: I want to thank Nicole Wallace for interviewing me in
Speaker 1: Symphony Space, for hosting us, and you ought to go
Speaker 1: check out Nicole's new podcast. It's called The Best People
Speaker 1: and It's Great. Against the Rules is hosted by me
Speaker 1: Michael Lewis and produced by Lydia jen Kott and Catherine Gerardou.
Speaker 1: Our editor is Julia Barton. Our theme was composed by
Speaker 1: Nick Prittel, and our engineer is Hans Dale. She special
Speaker 1: thanks to Nicole Optenbosch, Jasmine Fustino, Pamela Lawrence, and the
Speaker 1: rest of the Pushkin Audio Books team. To find more
Speaker 1: Pushkin podcasts, listen on the iHeartRadio app, Apple Podcasts or
Speaker 1: wherever you listen to podcasts, And if you like to
Speaker 1: listen ad free and learn about other exclusive offerings, don't
Speaker 1: forget to sign up for a Pushkin Plus subscript at
Speaker 1: pushkin dot fm, Slash Plus or on our new Apple
Speaker 1: show page. And you can get the Big Short audiobook
Speaker 1: now at pushkin dot fm, slash Audiobooks, or wherever audiobooks
Speaker 1: are sold.
Speaker 7: It's Jacob Goldstein. I'm the co host of a new
Speaker 7: show called Business History, and we're bringing you a clip
Speaker 7: right now from an episode we did about a mathematician
Speaker 7: named Jim Simon's. Simons wanted to take human emotions out
Speaker 7: of investing, and after a few early hiccups, including buying
Speaker 7: up all the potatoes in Maine, he created one of
Speaker 7: the greatest money machines in history. I really hope you
Speaker 7: like the clip. And if you want to hear more,
Speaker 7: please check out the show. It's called Business History and
Speaker 7: it's available wherever you're listening.
Speaker 9: Right now, they were doing what we would call today
Speaker 9: machine learning.
Speaker 10: A machine learning is like, essentially, you build a system
Speaker 10: in a computer. You feeded a bunch of data, and
Speaker 10: the system sort of builds a map of the relationships
Speaker 10: in that data, and then with new data it can
Speaker 10: kind of interpolate or extrapolate and make guesses about what
Speaker 10: should come next.
Speaker 1: And of course today we have.
Speaker 10: An exciting, maybe misleading, confounding term for machine learning.
Speaker 1: We call it AI.
Speaker 9: Exactly right, right, this is still very basic machine learning,
Speaker 9: and the computer at the time keeps making mistakes that
Speaker 9: they didn't really understand. So, for instance, once the computer
Speaker 9: developed a taste for potatoes, main potatoes, the system kept
Speaker 9: buying main potato futures in the state of Maine, potato.
Speaker 1: Potatoes, big harvest year, next year or whatever.
Speaker 9: Yes, okay, until two thirds of the company's money was
Speaker 9: in potatoes. They were all in potatoes. And they got
Speaker 9: a call from the regulators, the.
Speaker 10: CFTB a CFPP Commodity Futures Trading Commission.
Speaker 9: Right, yeah, saying whoa who are you guys, Like, what
Speaker 9: are you doing over there? You have almost corner the
Speaker 9: market on potatoes. You have to sell And they ended
Speaker 9: up losing money on the trade because blown out on potatoes,
Speaker 9: they had stopped the computer. Whatever the computer's plan was,
Speaker 9: but you know, this was just one small weird thing.
Speaker 9: Simon and Baum were really kind of nervous about this
Speaker 9: whole thing. They had taken investors money, they didn't really
Speaker 9: know if their system worked. And as the story gets told,
Speaker 9: they start to like second guess the computer and themselves,
Speaker 9: and they start to think, well, I have this intuition
Speaker 9: that gold's gonna go up because of the geopolitical situation,
Speaker 9: and they'd make some money on that, and then they'd
Speaker 9: lose some money on that, and so by doubting their
Speaker 9: own system, it just wasn't really working. And at that
Speaker 9: point they're just Wall Street investors, right when the big
Speaker 9: computer trying to buy more potatoes and the man won't
Speaker 9: let them buy potatoes