Book—The Big Short

Subprime mortage bonds, credit default swaps—these were the dirty words of the last Wall Street crisis. A crisis that turned into a global financial conflagration that swallowed huge and venerable investment banks (Bear Stearns and Lehman Brothers) and insurance companies (AIG), and even bankrupted countries. The IMF have estimated that financial institutions around the globe will eventually have to write off $1.5 trillion of their holdings of subprime MBSs.

Some people though, made tons of money betting that the system will turn on its head, and crash and burn during heady times when subprime mortage bonds were worth trillions of dollars in 2005 in the US. The Big Short: Inside the Doomsday Machine is a book about some of these people, and how the Wall Street banks’ house of financial cards come crashing down.

Great read.

[Update]
If Dr.Michael Burry, one of the big winners covered well in the above book, made a personal profit of $100 million and a profit for his remaining investors of more than $700 million out of the subprime mortage fiasco, another guy, John Paulson was stratospheric; this hedge fund manager made 5 billion $. Read about him in The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History.

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