Michael Lewis Quotes

After the war Avi, by then twenty-two years old, finally decided what he would study: psychology. Had you asked him just then why he picked psychology, "I would say I want to understand the human soul. Not the mind. The soul.

Inside every alienated hacker who thinks he stands for the "good things that ultimately don't matter to most businesses" there is a tycoon struggling to get out.

But there's a difference between an old-fashioned financial panic and what had happened on Wall Street in 2008. In an old-fashioned panic, perception creates its own reality: Someone shouts "Fire!" in a crowded theater and the audience crushes each other to death in its rush for the exits. On Wall Street in 2008 the reality finally overwhelmed perceptions: A crowded theater burned down with a lot of people still in their seats. Every major firm on Wall Street was either bankrupt or fatally intertwined with a bankrupt system. The problem wasn't that Lehman Brothers had been allowed to fail. The problem was that Lehman Brothers had been allowed to succeed. This

East Germans are the Greeks of Germany," I say. "Be careful," she says.

An Olympic rowing career had left Porter Collins a bit inured to the pain of others, as he assumed they usually didn't know what pain was. No,

The training program wasn't a survival course, but sometimes a person came through who put the horrors of 41 into perspective.

One absolutely cannot tell, by watching, the difference between a .300 hitter and a .275 hitter. The difference is one hit every two weeks.

Why do you always answer a question with another question?" "Clarity," he said.

The same system that once gave us subprime mortgage collateralized debt obligations no investor could possibly truly understand now gave us stock market trades that occurred at fractions of a penny at unsafe speeds using order types that no investor could possibly truly understand.

Clark knew that the time would come to put a smiley corporate face on his ferocious ambition.

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

Long Beach Savings was the first existing bank to adopt what was called the "originate and sell" model. This proved such a hit - Wall Street would buy your loans, even if you would not! - that a new company, called B&C mortgage, was founded to do nothing but originate and sell.

Managers tend to pick a strategy that is the least likely to fail, rather then to pick a strategy that is most efficient," Said Palmer. " The pain of looking bad is worse than the gain of making the best move.

Back in 1995, Munger had given a talk at Harvard Business School called "The Psychology of Human Misjudgment." If you wanted to predict how people would behave, Munger said, you only had to look at their incentives. FedEx couldn't get its night shift to finish on time; they tried everything to speed it up but nothing worked - until they stopped paying night shift workers by the hour and started to pay them by the shift. Xerox created a new, better machine only to have it sell less well than the inferior older ones - until they figured out the salesmen got a bigger commission for selling the older one. "Well, you can say, 'Everybody knows that,'" said Munger. "I think I've been in the top five percent of my age cohort all my life in understanding the power of incentives, and all my life I've underestimated it. And never a year passes but I get some surprise that pushes my limit a little farther." Munger's

No matter how successful you are, change is always good. There can never be a status quo. When you have no money you can't afford long-term solutions, only short-term ones. You have to always be upgrading. Otherwise you're fucked.

Left alone in a dark room with a pile of money, the Irish decided what they really wanted to do with it was buy Ireland. From each other. An Irish economist named Morgan Kelly, whose estimates of Irish bank losses have been the most prescient, has made a back-of-the-envelope calculation that puts the property-related losses of all Irish banks at roughly 106 billion euros. (Think $10.6 trillion.) At the rate money flows into the Irish treasury, Irish bank losses alone would absorb every penny of Irish taxes for the next four years.

Did I think I was doing God's work?" he said later. "No. But I did think market efficiency was something important for the economy.

You can tell a lot about a country by observing how much better they treat themselves than foreigners at the point of entry.

Microsoft had made it clear that the only way to preserve your station in Valley life was to create a monopoly. If you created a monopoly, you were at least partially exempt from the ordinary rapid cycle of creation and destruction.

Clark liked to say that human beings, when they took risks, fell into one of two types, pigs or chickens. "The difference between these two kinds of people," he'd say, "is the difference between the pig and the chicken in the ham-and-eggs breakfast. The chicken is interested, the pig is committed. If you are going to do anything worth doing, you need a lot of pigs." The

Eisman was now explaining why the world was going to blow up, but his partners were only half-listening ... because the financial world was blowing up.

If you're in a business where you can do only one thing and it doesn't work out, it's hard for your bosses to be mad at you.

Only a psychological freak could approach a 100-mph fastball aimed not all that far from his head with total confidence. "Lenny

I was in a state of perpetual disbelief. I would have thought that someone would have recognized what was coming before June 2007. If it really took that June remit data to cause a sudden realization, well, it makes me wonder what a 'Wall Street analyst' really does all day." By

The sensors measured everything that Clark could think to measure, including the pressure on the engine. They passed these measurements up to the programmable logic controllers. The

why the rating agencies weren't more critical of bonds underpinned by floating-rate subprime mortgages. Subprime borrowers tended to be one broken refrigerator away from default. Few, if any, should be running the risk of their interest payment spiking up. As most of these loans were structured, however, the homeowner would pay a fixed teaser rate of, say, 8 percent for the first two years, and then, at the start of the third year, the interest rate would skyrocket to, say, 12 percent, and thereafter it would float at permanently high levels.

I think it's going to set the world on fire," said Gates. "It didn't do anything. There are fifteen comments at the bottom of the piece on the Web, and all of them are Russian mail order brides.

Commitment, by its nature, frees us from ourselves and, while it stands us in opposition to some, it joins us with others similarly committed. Commitment moves us from the mirror trap of the self absorbed with the self to the freedom of a community of shared values.

The character at the center of Whyte's wonderful psychodrama was 'the well-rounded man.' The well-rounded man was the ideal 1950s type. Whyte wrote his book in part as an argument against the well-rounded man. He believed that when society exalted the well-rounded it punished the truly talented: the scientists, the artists, the musicians, the engineers, the people who came at life from surprising new directions.

The frantic stupidity of Wall Street's stock order routers and algorithms was simply an extension into the computer of the willful ignorance of its salespeople.

that Wall Street was propping up the price of these CDOs so that they might either dump losses on unsuspecting customers or make a last few billion dollars from a corrupt market.

What Gutfreund said has become a legend at Salomon Brothers and a visceral part of its corporate identity. He said: One hand, one million dollars, no tears.

Capitalism's machinery favored these capitalists as it had never favored anyone else in its history.

They stopped testing me. And if you're not going to test me, I'm gonna smoke!

Who do you work for? That question haunted salesmen. Whenever a trader screwed a customer and the salesman became upset, the trader would ask the salesman, "Who do you work for anyway?" The message was clear: You work for Salomon Brothers. You work for me. I pay your bonus at the end of the year. So just shut up, you geek.

Wall Street bond trading desks, staffed by people making seven figures a year, set out o coax from the brain-dead guys making high five figures the highest possible ratings for the worst possible loans. They performed the task with Ivy League thoroughness and efficiency.

Under the stress of the event, we felt, each man's true nature was revealed. The impression we had of each candidate's character was as direct and compelling as the color of the sky." He had had no trouble identifying which men would make good officers and which would not. "We were quite willing to declare, 'This one will never make it,' 'That fellow is rather mediocre,' or 'He will be a star.'" The problem came when he'd tested his predictions against the outcomes - how the various candidates had actually performed in officer training. His predictions were worthless. And yet, because it was the army and he had a job to do, he kept on making them; and because he was Danny, he noted that he still felt confident about them.

In early 2013, one of the largest high-frequency traders, Virtu Financial, publicly boasted that in five and a half years of trading it had experienced just one day when it hadn't made money, and that the loss was caused by "human error." In 2008, Dave Cummings, the CEO of a high-frequency trading firm called Tradebot, told university students that his firm had gone four years without a single day of trading losses. This sort of performance is possible only if you have a huge informational advantage.

It is ludicrous to believe that asset bubbles can only be recognized in hindsight," he wrote. "There are specific identifiers that are entirely recognizable during the bubble's inflation. One hallmark of mania is the rapid rise in the incidence and complexity of fraud ... . The FBI reports mortgage-related fraud is up fivefold since 2000." Bad behavior was no longer on the fringes of an otherwise sound economy; it was its central feature.

All these exquisitely schooled, sophisticated people, each and every one of whom feels special, are presented with two mainly horrible ways to earn a living: trawler fishing and aluminum smelting.

Alcoa, the biggest aluminum company in the country, encountered two problems peculiar to Iceland when, in 2004, it set about erecting its giant smelting plant. The first was the so-called hidden people - or, to put it more plainly, elves - in whom some large number of Icelanders, steeped long and thoroughly in their rich folkloric culture, sincerely believe. Before Alcoa could build its smelter it had to defer to a government expert to scour the enclosed plant site and certify that no elves were on or under it. It was a delicate corporate situation, an Alcoa spokesman told me, because they had to pay hard cash to declare the site elf-free, but, as he put it, we couldn't as a company be in a position of acknowledging the existence of hidden people.

The model used by Wall Street to price trillions of dollar's worth of derivatives thought of the financial world as an orderly, continuous process. But the world was not continuous; it changed discontinuously, and often by accident.

You want loyalty, hire a cocker spaniel.

Why did investment banking pay so many people with so little experience so much money? Answer: When attached to a telephone, they could produce even more money. How could they produce money without experience? Answer: Producing in an investment bank was less a matter of skill and more a matter of intangibles - flair, persistence, and luck.

It is the nature of being the general manager of a baseball team that you have to remain on familiar terms with people you are continually trying to screw.

Baseball is this intense subculture that actually doesn't speak very much for the larger culture.

My client loved risk. Risk, I had learned, was a commodity in itself. Risk could be canned and sold like tomatoes.

What was the secret to dealing with the assholes? "Lift weights or learn karate," said O'Grady.

We kept saying, 'These banks are out of business.' But the government kept saving the banks," he said. "And right in the midst of this Iceland went broke.

Donnie Green himself had been a trader at Salomon Brothers in the dark ages, when traders had more hair on their chests than on their heads.

When someone says something, don't ask yourself if it is true. Ask what it might be true of." That

In early October 2008, after the U.S. government had stepped in to say it would, in effect, absorb all the losses in the financial system and prevent any big Wall Street firm from failing, Burry had started to buy stocks with enthusiasm, for the first time in years.

Shining a light creates shadows,

There was a vividly clear class distinction between tech guys and finance guys. The finance guys saw the tech guys as faceless help and were unable to think of them as anything else.

Senior managers at the Royal Bank of Canada were now arguing that the bank should create a Canadian dark pool, route their Canadian customers' stock market orders into it, and then sell to high-frequency traders the right to operate inside the dark pool. Brad thought that it made a lot more sense for RBC simply to expose the new game for what it was, and perhaps establish themselves as the only broker on Wall Street not conspiring to screw investors. "The only card left to play was honesty," as Rob Park put it.

Only someone who has Asperger's would read a subprime mortgage bond prospectus,

The technologist's tendency to commit all his resources to new technology,

They hired a PhD student from the statistics department at the University of California at Berkeley to help them, but he quit after they asked him to study the market for pork belly futures. "It turned out that he was a vegetarian," said Jamie. "He had a problem with capitalism in general, but the pork bellies pushed him over the edge.

In something like an instant the man had changed his life. He reinvented his relationship to the world around him in a way that is considered normal only in California.

Holding one's self responsible is a critical feature in stigma and in the generation of shame since violation of standards, rules, and goals are insufficient in its elicitation unless responsibility can be placed on the self. Stigma may differ from other elicitors of shame and guilt, in part because it is a social appearance factor. The degree to which the stigma is socially apparent is the degree to which one must negotiate the issue of blame, not only for one's self but between one's self and the other who is witness to the stigma. Stigmatization is a much more powerful elicitor of shame and guilt in that it requires a negotiation not only between one's self and one's attributions, but between one's self and the attributions of others.

Stigmas speak to the idea of difference and how difference shames us and those we know.

If everyone on Wall Street abided by the rule's spirit, the rule would have established a new fairness in the U.S. stock market.

Ronan, for his part, couldn't quite believe how ordinary the people on Wall Street were. "It's a whole industry of bullshit," he said.

One of the reasons Wall Street had cooked up this new industry called structured finance was that its old-fashioned business was every day less profitable. The profits in stockbroking, along with those in the more conventional sorts of bond broking, had been squashed by Internet competition.

It's the idea that is a tiny push away from general acceptance and, when it gets that push, will change the world. The

Corporate finance, which services the corporations and governments that borrow money, and that are known as "clients," is, by comparison, a refined and unworldly place. Because they don't risk money, corporate financiers are considered wimps by traders.

Back in 1921 Veblen had predicted that engineers would one day rule the U.S. economy. He argued that since the economy was premised on technology and the engineers were the only ones who actually understood how the technology worked, they would inevitably use their superior knowledge to seize power from the financiers and captains of industry who wound up on top at the end of the first round of the Industrial Revolution.

If you had to point to one thing that made it less likely that the Red Sox would win the World Series, I would say it was those people that go to Fenway Park to watch the games. And then the media around it.

RBC invited Brad along with a bunch of other nonwhite people to a meeting to discuss the issue. Going around the table, people took turns responding to a request to "talk about your experience of being a minority at RBC." When Brad's turn came he said, "To be honest, the only time I've ever felt like a minority is this exact moment. If you really want to encourage diversity you shouldn't make people feel like a minority.

Household was making loans at a faster pace than ever. A big source of its growth had been the second mortgage. The document offered a fifteen-year, fixed-rate loan, but it was bizarrely disguised as a thirty-year loan. It took the stream of payments the homeowner would make to Household over fifteen years, spread it hypothetically over thirty years, and asked: If you were making the same dollar payments over thirty years that you are in fact making over fifteen, what would your "effective rate" of interest be? It was a weird, dishonest sales pitch. The borrower was told he had an "effective interest rate of 7 percent" when he was in fact paying something like 12.5 percent. "It was blatant fraud," said Eisman. "They were tricking their customers.

The subprime mortgage machine was up and running again, as if it had never broken down in the first place. If the first act of subprime lending had been freaky, this second act was terrifying. Thirty billion dollars was a big year for subprime lending in the mid-1990s. In 2000 there had been $130 billion in subprime mortgage lending, and 55 billion dollars' worth of those loans had been repackaged as mortgage bonds. In 2005 there would be $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds.

But everyone wanted to be a Big Swinging Dick, even the women. Big Swinging Dickettes.

The pleasure of rooting for Goliath is that you can expect to win. The pleasure of rooting for David is that, while you don't know what to expect, you stand at least a chance of being inspired.

The market might have learned a simple lesson: Don't make loans to people who can't repay them. Instead it learned a complicated one: You can keep on making these loans, just don't keep them on your books. Make the loans, then sell them off to the fixed income departments of big Wall Street investment banks, which will in turn package them into bonds and sell them to investors.

How about you keep the tens of millions you nearly prevented me from earning for you last year and we call it even?

Danny's trading life was man versus man, but this felt more like man versus nature: The synthetic CDO had become a synthetic natural disaster.

The most appealing companies became those in a state of pure possibility.

The smaller the sample size, the more likely that it is unrepresentative of the wider population..."people can be taught the correct rule, perhaps even with little difficulty. The point remains that people do not follow the correct rule, when left to their own devices.

Things are grouped together for a reason, but, once they are grouped, their grouping causes them to seem more like each other than they otherwise would. That is, the mere act of classification reinforces stereotypes. If you want to weaken some stereotype, eliminate the classification. Amos's

Who takes out a home loan and doesn't make the first payment?" asked Danny Moses, putting the matter one way. "Who the fuck lends money to people who can't make the first payment?" asked Eisman, putting it another. When

I set out to write this book only because I thought it would be better to tell the story than to go on living the story.

The way the creative process works is that .you first say something, and later, sometimes years later, you understand what you said.

Steal from those beneath you; attack those above you.

The Irish turned in on themselves and bid up their own land prices in the most extraordinary ways. The Irish people stepped in and guaranteed the banks, and committed to repay sums they can't afford to repay, and essentially committed themselves to generations of suffering.

After Gell-Man was done, Amos said, "You know, Murray, there is no one in the world who is as smart as you think you are.

There's a certain status to suffering in Ireland, that the person who - if you're sitting around a table, the person with the greatest status is the person who had the most horrible thing happen to them most recently.

As yet, there is no final reckoning of the wealth the Valley has created. Hundreds of billions of dollars, certainly; perhaps even trillions. In any case, 'The greatest legal creation of wealth in the history of the planet,' as one local capitalist puts it. The

His experience with Household Finance had disabused him of any hope that the government would intercede to prevent rich corporations from doing bad things to poor people.

It was not that he lacked values, but he had a keen sense that at times the ends justified the means, and an equally keen sense of his own interests. There

A big bonus was about as well concealed on the Salomon Brothers trading floor as the results of a hot date in a high school boys' locker room.

automated voices and the bells from the row of testing machines in the back. The walls were white cinder block, the floors speckled linoleum. At the front desk were four large black ladies. Leigh Anne handed all the documents over to one of them, who took one look at them and said in a slow drawl, "Uh-uh. This school

Thus the only Goldman Sachs employee arrested by the FBI in the aftermath of a financial crisis Goldman had done so much to fuel was the employee Goldman asked the FBI to arrest.

For though there was no chance of persuading a pension fund manager looking to make a longer-term loan to buy a Freddie Mac bond that could evaporate tomorrow, one could easily sell him the third tranche of a CMO.

The first day after the merger, Brad got a call from a worried female employee, who whispered, "There is a guy in here with suspenders walking around with a baseball bat in his hands, taking swings." That turned out to be Carlin's CEO, Jeremy Frommer, who, whatever else he was, was not RBC nice. One of Frommer's signature poses was feet up on his desk, baseball bat swinging wildly over his head while some poor shoeshine guy tried to polish his shoes.

Now, obviously, Meredith Whitney didn't sink Wall Street. She'd just expressed most clearly and most loudly a view that turned out to be far more seditious to the social order than, say, the many campaigns by various New York attorneys general against Wall Street corruption. If mere scandal could have destroyed the big Wall Street investment banks, they would have vanished long ago. This woman wasn't saying that Wall Street bankers were corrupt. She was saying that they were stupid. These people whose job it was to allocate capital apparently didn't even know how to manage their own.

The first thing you learn on the trading floor is that when large numbers of people are after the same commodity, be it a stock, a bond, or a job, the commodity quickly becomes overvalued.

They would learn to evaluate a decision not by its outcomes--whether it turned out to be right or wrong--but by the process that led to it. The job of the decision maker wasn't to be right but to figure out the odds in any decision and play them well.

The trick was not simply to write the code that turned information into pictures but to find the best pictures to draw - shapes and colors that led the mind to meaning.

Time and space are absolute. Diseases are evil spirits that inhabit the body. Parallel lines never meet. The earth is the center of the universe. Children are miniature adults. At one time in history each of these beliefs was generally held to be true. Each, however, gave way to different ideas and even different world views.

How Wall Street investment banks somehow had conned the rating agencies into blessing piles of crappy loans; how this had enabled the lending of trillions of dollars to ordinary Americans; how the ordinary Americans had happily complied and told the lies they needed to tell to obtain the loans; how the machinery that turned the loans into supposedly riskless securities was so complicated that investors had ceased to evaluate risks; how the problem had grown so big that the end was bound to be cataclysmic and have big social and political consequences.