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Summary Of The Book 'The Big Short: Inside The Doomsday Machine'

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The 2008 financial crisis happened on Wall st in New York City, Which was believed to be the result of high risk, complex financial products, undisclosed conflicts of interest and the failure of regulators, the credit rating agencies, and the market itself of Wall street. Wall street is known to be the most economical leading part of New York that included business for New York's stock exchange. In the book “The Big Short: Inside the Doomsday Machine” written by Michael Lewis, the Financial Crisis in 2008 is explained thoroughly, looking for the root cause of the crisis. A term that is discussed and repeated throughout the book, “Credit default swaps”, is believed to be a huge part of the crisis. A credit default swap is a financial contract where a buyer of corporate or debt in the form of bonds attempts to eliminate …show more content…

Just one year earlier while discussing the company's CDS portfolio with analysts discussing that it doesn't make sense to lose money in the attempted transactions. Stated, “The credit default swaps sold by AIGFP that insured pools of such loans proved to be a good business. By 2001,AIGFP , now being run by a fellow named Joe Cassano, could be counted on to generate $300 million a year, or 15 percent of AIG’s profits”(71). This shows how credit default swaps were sold and the money wasn’t even there, which put the company on a huge risky percentage that ended up leading the company to accomplishing a big loss for money that they owed, but didn’t have in the first place. And there the market weakened and caused the start of the crisis. As a result credit default swaps are the main start of the

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