My mother is in the process of down-sizing. She's selling the house that she and my father moved into a few months before my first birthday. She's going to move into a condo not too far away, still in the same town.
Being a people of books, the house is loaded with them: first editions signed by the author, collections, and a dizzying range of topics.
One of the treasures I found while helping her to pack was "Liar's Poker" by Michael Lewis. I've written about another of his books, "The Big Short". I was surprised to find that my mother had a copy via my younger brother. I asked her if I could take it home with me. She was glad to comply.
I've been reading it this weekend while I convalesced from a minor illness. (My immune system started fighting off a cold in earnest on Thursday night.) I'm squeezing it in alongside technical reading.
It's as engaging as the later work. It's especially remarkable to read now because it's set in the 80s, when the roots of our current financial mess first took hold.
Michael Lewis was hired as an art major out of Princeton by Salomon Brothers, the venerable Wall Street firm that was founded in 1919, acquired by Travelers and Citigroup in 1998, and disappeared from the public eye after a series of scandals in 2003.
He went through their training program and worked in the mortgage bond department. Salomon pioneered the idea of packaging mortgages as bonds. Everything that has happened in the thirty years since that is described in "The Big Short" had its genesis in his department.
I'm only halfway through the book. It's entertaining but sobering. I'm sure that no one understood the significance of the change to the tax code that was passed in 1981 would have the effect that it did. It was one step on a road that included the Community Reinvestment Act of 1977, the establishment of Fannie Mae and Freddy Mac, the gutting of Glass-Steagall, and the invention of the collateralized debt obligations and credit default swaps.
Small outcomes, big effects.
I'll have to finish the book to find out if Michael Lewis was in the right place at the right time, wallowing in millions that financed his subsequent writing career. That we should all be so fortunate.