The Big Short; Inside the Doomsday Machine, by Michael Lewis, published by Allen Lane

I confess to choosing this book - despite its unattractive title - because of the excellence of Lewis’s previous offerings, notably his brilliant first book ‘Liar’s Poker’ and more recently ‘The Blindside’ (Excellent film too). It turned out to be far less readable than his other books but, in many ways, much more illuminating.

This is not just another book about the financial crisis; it is one that shows a different dimension. It covers the few people who really did see the crisis coming (rather than claiming so afterwards) and who made fortunes by selling short, by betting against the market.

Fascinating though the stories of these individuals are, the book suffers from the fact that the detail of what they did is highly complex, even when explained in the mainly simple terms that Lewis uses. And though I probably understand more about these things than the average reader, I found myself skipping large chunks of detail to get back to the story. Fortunately this did not adversely impact my enjoyment and my broad understanding.

The few individuals who saw what was coming had to be strong characters to withstand the pressures from the many parties who did not want to know the truth - CEOs, credit rating agencies, regulators, even journalists. It is interesting that these strong characters were all different varieties of oddball who liked to go against the crowd and defy conventional wisdom.

This was a book that provided me with a lot of insights and answered a lot of questions, as follows:

• The origin of the crisis was long ago, when the principals of the major investment banks moved from partnerships to public companies and were no longer gambling with their own money
•  The two companies who were probably most at fault - Lehman Brothers for making the biggest bets on the US housing market and AIG for acting as long stop insurer - were run by autocratic CEOs who did not tolerate dissent
• The credit rating agencies who provided misleading debt ratings were mainly focussed on growth and employed low level people, thus making them easily influenced
• The basic problem was the assumption that US house prices could not all fall together and when this happened, what was left was effectively a ‘Ponzi Scheme’

If these insights interest you and you would like to know more, this book is for you, provided you are prepared to skip the detail. I was however surprised not to find an index at the back, which would have been appropriate for a serious book of this kind.