Summary Of Michael Lewis 'The Big Short'

Michael Lewis’ novel The Big Short examines the build-up of the housing market and the credit bubble during the late 1990’s and early 2000’s which ultimately led up to the financial crisis and the collapse of the housing market from 2007 to 2010. This novel holds an almost dickenesque quality to it with many key players some of whom are heroes and some of whom are villains, all of which play a crucial part within a portion of our history that many people saw as a ‘Doomsday’ of sorts. In order to understand the novel and the issues presented within in more depth I intend to present the issues that the novel addressed and then to examine those issues through the lenses of three historically famous economists; Karl Marx, John Maynard Keynes,

Keynesian economists often argue against the private sector, and that decisions made by and within the private sector can lead to inefficient macroeconomic outcomes which in turn require a public response. If Keynes was to analyse Lewis’ novel he would say that this is a perfect representation of how the private sector can on occasion fail leading to macroeconomic crises’. In this case Keynes would argue that the private sector and the macho members of Wall Street were the sole contributors to the creation of the housing market bubble. When this bubble popped and the North American continent went into a recession, which Keynes would argue was the macroeconomic backlash on both a local scale and an international scale, as the ripples from this could be felt would wide. Keynes would argue that because capitalism has will always have a private market, it is a system that is ultimately doomed to failure and is doomed to constant cycles with peaks of success and valleys of recession and failure. In Keynesian economics this is why capitalism is a system that will always fail and will always lead to recession or in more extreme cases depression. With this knowledge, Keynesian economics has often had an uprising in popularity after failures in capitalism like the great depression of the 1930’s, after WWII, or after the 2008 economic recession. With that said however humans are designed to consume and so we go back to capitalism when things steady out again. Keynes would argue that the 2008 crises is the prime example of human nature and how this need to consume paints itself over our economic practises. Keynes would also show that this nature is why thus far in humanity there has yet to be a system of economic thought and practise that has proved to work in a manner that is efficient and concise enough to prove to be