The Big Short: Inside The Doomsday Machine Quotes
"The willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grown-ups remains a mystery to me to this day."
"Wall Street's essential function was to allocate capital: to decide who should get it and who should not."
"Believe me when I tell you that I hadn't the first clue."
"Sooner or later, someone was going to identify me, along with a lot of people more or less like me, as a fraud."
"Unless some insider got all of this down on paper, no future human would believe that it had happened."
"I thought that I was writing a period piece about the 1980s in America, when a great nation lost its financial mind."
"I hoped that some bright kid at Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Goldman Sachs, and set out to sea."
"The rebellion by American youth against the money culture never happened."
"There was no scandal or reversal, I assumed, sufficiently great to sink the system."
"If mere scandal could have destroyed the big Wall Street investment banks, they would have vanished long ago."
"These people whose job it was to allocate capital apparently didn't even know how to manage their own."
"The big fear of the 1980s mortgage bond investor was that he would be repaid too quickly, not that he would fail to be repaid at all."
"If you're going to be a great investor, you have to fit the style to who you are."
"The most you could lose was $2 million: $200,000 a year for ten years. The most you could make was $100 million."
"To make money on Avant!'s stock, however, he'd probably have to stomach short-term losses, as investors puked up shares in horrified response to negative publicity."
"Investing well was all about being paid the right price for risk."
"You just have to watch for the level at which even nearly unlimited or unprecedented credit can no longer drive the [housing] market higher."
"One day he got me on the phone and was pissed off about a trade that had lost money. He said, When you lose money it's my fucking money. Say it."
"I'm not making a bet against a bond, I'm making a bet against a system."
"That was the beauty of credit default swaps: They enabled him to make a fortune if just a tiny fraction of these dubious pools of mortgages went bad."
"Once you became an idea's defender you had a harder time changing your mind about it."
"I don't have any particular allegiance to Deutsche Bank...I just work there."
"They were stuffing the channel, getting as much shit out so that it could be rated by the old model."
"The juiciest shorts--the bonds ultimately backed by the mortgages most likely to default--had several characteristics."
"The underlying loans were heavily concentrated in what Wall Street people were now calling the sand states."
"House prices in the sand states had risen fastest during the boom and so would likely crash fastest in a bust."
"The pools would have a higher than average number of low-doc or no-doc loans--that is, loans more likely to be fraudulent."
"The more they examined the individual bonds, the more they came to see patterns in the loans that could be exploited for profit."
"The sudden ability of his baby nurse to obtain loans was no accident."
"The big Wall Street firms had the same goal as any manufacturing business."
"The price of the end product was driven by the ratings assigned to it by the models used by Moody's and S&P."
"FICO scores didn't account for a borrower's income, for instance."
"To meet the rating agencies' standards, the average FICO score of the borrowers in the pool needed to be around 615."
"The consistent reaction whenever we met someone was, like, 'Wait, where did you guys come from?' They were just baffled."
"Above the roulette tables, screens listed the results of the most recent twenty spins of the wheel."
"Usually, when you do a trade, you can find some smart people on the other side of it."
"Nobody we talked to had any credible reason to think this wasn't going to become a big problem."
"It was meant to be a panel discussion, but of course the men on the panel had little interest in talking to each other."
"The entire food chain of intermediaries in the subprime mortgage market was duping itself with the same trick."
"I wouldn't know how to calculate odds if my life depended on it."
"It's just not going to be a fun experiment... You think this is ugly. You haven't seen anything yet."
"We're in the midst of one of the greatest social experiments this country has ever seen."
"Prices fell, but they always came back. You could either like asset-backed bonds or you could love asset-backed bonds, but there was no point in hating them, because there was no tool for betting against them."
"By design they were arcane, opaque, illiquid, and thus conveniently difficult for anyone but Morgan Stanley to price."
"The idea appealed especially to German institutional investors, who either failed to read the fine print or took the ratings at face value."
"Collecting nickels and dimes from the trades of unthinking investors felt beneath the dignity of a big-time Wall Street bond trader."
"He could make billions by using the firm's capital to bet against them."
"The only problem, from the point of view of Howie Hubler's traders, was finding a Morgan Stanley customer stupid enough to take the other side of the bet."
"The risk department had trouble relaxing, however. To them it seemed as if Hubler and his traders didn't fully understand their own gamble."
"The problem was that the premiums on the supposedly far less risky triple-A-rated CDOs were only one-tenth of the premiums on the triple-Bs."
"The correlation among triple-B-rated subprime bonds was not 30 percent; it was 100 percent. When one collapsed, they all collapsed, because they were all driven by the same broader economic forces."
"The only thing that anyone knew was that any Wall Street firm deep in the subprime market was probably on the hook for a lot more of them than they had confessed."
"The social disruption caused by the collapse of the savings and loan industry and the rise of hostile takeovers and leveraged buyouts had given way to a brief period of recriminations."
"The public lynching of Michael Milken, and then of Salomon Brothers CEO Gutfreund, were excuses for not dealing with the disturbing forces underpinning their rise."
"The surface rippled, but down below, in the depths, the bonus pool remained undisturbed."
"The crisis of 2008 had its roots not just in the subprime loans made in 2005 but in ideas that had hatched in 1985."
"He claimed not to be smart enough to understand any of it, and I assumed that was how a Wall Street CEO showed he was the boss, by rising above the details."
"The line between gambling and investing is artificial and thin."
"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 problem wasn't that Lehman Brothers had been allowed to fail. The problem was that Lehman Brothers had been allowed to succeed."
"At some point I could not help but ask John Gutfreund about his biggest and most fateful act."
"It's laissez-faire until you get in deep shit."