Michael Lewis - The Big Short: Inside the Doomsday Machine (2010)

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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 lesson of Buffett was: To succeed in a spectacular fashion you had to be spectacularly unusual.

Michael Lewis
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
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
Each firm held its rope; one by one, they realized that no matter how strongly they pulled, the balloon would eventually lift them off their feet.

Michael Lewis
Incredibly, at this critical juncture in financial history, after which so much changed so quickly, the only constraint in the subprime mortgage market was a shortage of people willing to bet against it.

Michael Lewis
Even as late as the summer of 2006, as home prices began to fall, it took a certain kind of person to see the ugly facts and react to them-to discern, in the profile of the beautiful young lady, the face of an old witch.

Michael Lewis
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.

Michael Lewis
The fuses had been lit and could not be extinguished. All that remained was to observe the speed of the spark, and the size of the explosions.

Michael Lewis
A thought crossed his mind: How do you make poor people feel wealthy when wages are stagnant? You give them cheap loans.

Michael Lewis
Here was a strange but true fact: The closer you were to the market, the harder it was to perceive its folly.

Michael Lewis
I confess some part of me thought, If only I'd stuck around, this is the sort of catastrophe I might have created.

Michael Lewis
I'd stumbled into a job at Salomon Brothers in 1985, and stumbled out, richer, in 1988, and even though I wrote a book about the experience, the whole thing still strikes me me as totally preposterous-which is one reason the money was so easy to walk away from.

Michael Lewis
Looking into it a bit, Jamie found that the model used by Wall Street to price LEAPs, the Black-Scholes option pricing model, made some strange assumptions.

Michael Lewis