New at Reason: Coming Up Short

I have a new article at, reviewing Michael Lewis’ recent Wall Street meltdown book, The Big Short:

Released two years after the historic failure of investment bank Bear Stearns, The Big Short: Inside the Doomsday Machine, the new book by financial journalist extraordinaire Michael Lewis, doesn’t have a lot of new information to offer us. We already know well-educated idiots had too much control on Wall Street. We already know the ratings agencies offered less accurate analyses of the market than the best guesses of a fifth grade math class. And we already know the banks gamed the system by taking advantage of poorly conceived accounting rules. Still, Lewis’ masterful tale of the known is a must read for all trying to understand why the economy fell apart.

Anyone frightened away by the mere mention of a credit default swap will certainly appreciate Lewis’ ability to translate the confusing jumble of pundit-developed theories on the crisis into a readable story for the economically illiterate. And when the reader is done, there will be no doubt as to the folly that captivated Wall Street firms, the ratings agencies, and investors.

However, this lucidity winds up as a debilitating weakness if readers see The Big Short as a comprehensive guide to the crisis. Lewis’ book should not be read in a vacuum, since it illuminates only a few pieces of a much bigger puzzle.

Click here to read the whole piece as I break down what Lewis gets right, and where his analysis goes wrong.