The Big Short Quotes

“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, 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, The Big Short: Inside the Doomsday Machine

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

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

“If you wanted to predict how people would behave, Munger said, you only had to look at their incentives. FedEx couldn’t get its night shift to finish on time; they tried everything to speed it up but nothing worked—until they stopped paying night shift workers by the hour and started to pay them by the shift. Xerox created a new, better machine only to have it sell less well than the inferior older ones—until they figured out the salesmen got a bigger commission for selling the older one. “Well, you can say, ‘Everybody knows that,’ ” said Munger. “I think I’ve been in the top five percent of my age cohort all my life in understanding the power of incentives, and all my life I’ve underestimated it. And never a year passes but I get some surprise that pushes my limit a little”
― Michael Lewis, The Big Short: Inside the Doomsday Machine

“The upper classes of this country raped this country. You fucked people. You built a castle to rip people off. Not once in all these years have I come across a person inside a big Wall Street firm who was having a crisis of conscience. Nobody”
― Michael Lewis, The Big Short

“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, The Big Short: Inside the Doomsday Machine

“The line between gambling and investing is artificial and thin. The soundest investment has the defining trait of a bet (you losing all of your money in hopes of making a bit more), and the wildest speculation has the salient characteristic of an investment (you might get your money back with interest). Maybe the best definition of “investing” is “gambling with the odds in your favor.”
― Michael Lewis, The Big Short: Inside the Doomsday Machine

“Wall Street investment banks are like Las Vegas casinos: They set the odds. The customer who plays zero-sum games against them may win from time to time but never systematically, and never so spectacularly that he bankrupts the casino.”
― Michael Lewis, 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, 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, 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, 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, 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, The Big Short: Inside the Doomsday Machine

“The source of his unhappiness was, as usual, other people.”
― Michael Lewis, The Big Short: Inside the Doomsday Machine

“When banking stops, credit stops, and when credit stops, trade stops, and when trade stops—well, the city of Chicago had only eight days of chlorine on hand for its water supply. Hospitals ran out of medicine. The entire modern world was premised on the ability to buy now and pay later.”
― Michael Lewis, 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, 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, The Big Short: Inside the Doomsday Machine

“He gave a talk in which he argued that the way they measured risk was completely idiotic. They measured risk by volatility: how much a stock or bond happened to have jumped around in the past few years. Real risk was not volatility; real risk was stupid investment decisions.”
― Michael Lewis, The Big Short: Inside the Doomsday Machine

“They hired a PhD student from the statistics department at the University of California at Berkeley to help them, but he quit after they asked him to study the market for pork belly futures. “It turned out that he was a vegetarian,” said Jamie. “He had a problem with capitalism in general, but the pork bellies pushed him over the edge.”
― Michael Lewis, 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,”
― Michael Lewis, The Big Short

“The market might have learned a simple lesson: Don’t make loans to people who can’t repay them. Instead it learned a complicated one: You can keep on making these loans, just don’t keep them on your books. Make the loans, then sell them off to the fixed income departments of big Wall Street investment banks, which will in turn package them into bonds and sell them to investors.”
― Michael Lewis, The Big Short

“How do you explain to an innocent citizen of the free world the importance of a credit default swap on a double-A tranche of a subprime-backed collateralized debt obligation?”
― Michael Lewis, The Big Short: Inside the Doomsday Machine

“When the Goldman Sachs saleswoman called Mike Burry and told him that her firm would be happy to sell him credit default swaps in $100 million chunks, Burry guessed, rightly, that Goldman wasn’t ultimately on the other side of his bets. Goldman would never be so stupid as to make huge naked bets that millions of insolvent Americans would repay their home loans. He didn’t know who, or why, or how much, but he knew that some giant corporate entity with a triple-A rating was out there selling credit default swaps on subprime mortgage bonds. Only a triple-A-rated corporation could assume such risk, no money down, and no questions asked. Burry was right about this, too, but it would be three years before he knew it. The party on the other side of his bet against subprime mortgage bonds was the triple-A-rated insurance company AIG—American International Group, Inc.”
― Michael Lewis, 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, 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, The Big Short