Liar's Poker Chapter 8 Summary

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Liar's Poker Chapter Summary
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Read Liar Game Manga At the start of manga, a scrupulously fair college student named Nao Kanzaki - receives a bundle including 100 million yen (about 1 million dollars) along with a note that she's now a contestant in the Liar Game Tournament. Contestants should cheat and lie to have other contestants' cash, using the losing ones compelled to endure a debt proportional with their losses. One day in the summer of 1925, Tom White —the special agent in charge of the Bureau of Investigation’s field office in Houston—receives an urgent summons from headquarters in Washington, D.C. Edgar Hoover, the new man in charge of the bureau, orders White to come to Washington to meet in person. An Executive Summary of LIAR’S POKER by#Michael#Lewis! Michael#Lewis,#born#on#October#15th,#1960,#is#an#American#finance#journalist#who#has#authored#numerous#bestselling# books.#Lewis#attended#Princeton#University#to#attain#his#BA#degreein#Art#History.#Later,#hewent#ahead#to#work#with#.

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Publisher:	Penguin
Copyright:	1989
Printing:	1990
ISBN:	0-14-014345-9
Format:	Trade paperback
Pages:	249

I first encountered Michael Lewis through Moneyball, his excellent book on statistics-driven baseballmanagement. It's a great book and an exception to my generaldislike of sports books, but it also left me mentally filing Lewisinto the sports writer category and not that likely to write otherbooks I wanted to read. But then I found an excellent piece hewrote for Portfolio on the current banking crisis, followedby a wonderfully entertaining article for Vanity Fair onthe collapse of the Icelandic banking system. Based on those, I lookedfurther and picked up Liar's Poker, to which the Portfolioarticle is a sort of postscript.

Liar's Poker is about bond trading at Salomon Brothers during thefinancial boom of the 1980s. Lewis, fresh out of the London School ofEconomics, was hired by them in 1985. He became a bond salesman with theLondon office of the company, apparently a fairly successful one, beforeleaving the firm in 1988. Liar's Poker is about half biography,following Lewis's training and career, and half the history of 'modern'bond trading at Salomon Brothers. In pursuit of the latter, Lewis goesback as far as the late 1970s, when John Gutfreund became managingdirector. Salomon Brothers was swallowed by Citigroup in 1998, but notbefore it invented mortgage-backed securities, played a significant rolein junk bonds, and inspired (in part) The Bonfire of the Vanities.

Liar's Poker Chapter Summary

The first thing I noticed about Liar's Poker, the aspect that jumpsout to a current reader, is the degree to which it prefigures both thecurrent financial crisis and some of the elements of Enron's collapse.The historical roots of the current crisis have been covered elsewhere,but Lewis provides more detail and feel for the attitude inside thecompany. The corporate attitude of egotistical intelligence, greed,everything-goes capitalism, and the willingness to manipulate and inventmarkets in pursuit of profit that Lewis portrays bears a remarkableresemblence to accounts of the internal politics and attitudes at Enron.Based on the fallout from the mortgage crisis and the antics on CNBC, Isuspect it remains common on trading floors to this day.

This is not a work of journalist-quality investigation. Both thebiographical aspect and Lewis's colorful storytelling technique workagainst that. Rather, Liar's Poker struck me as a personalexploration of the motives and attitudes behind the trading floor of adominant Wall Street firm, the mindset that it taught its trainees (andthat the trainees brought into the firm), and the way financial feedbackand firm culture enabled and rewarded incredibly antisocial behavior. Itlacks the journalistic integrity and methodical investigative approach ofMcLean & Elkind's exceptional The SmartestGuys in the Room about the collapse of Enron, but it adds an insiderperspective. Lewis tries to stay the observer, but he benefitted hugelyfrom that culture, was caught up in the unreality of it and the obsceneamounts of money flowing through the hands of people like himself withremarkably little training, and came across to me as conflicted about hisrole and involvement. I suspect his personal involvement in the storymakes it less fully accurate, and I suspect some of the anecdotes of beingexaggerated to tell a better story, but it adds an interesting feeling ofexpiation.

As in Moneyball, Lewis is excellent at explaining complex systems.His brief histories here of junk bonds and mortgage-backed securities arewell worth the price of the book. He presents a detailed account of theorigin of mortgage-backed securities in the savings and loan crisisalongside the best explanation I've ever heard of why the invention ofthose securities was a watershed event in financial markets. Untilreading this book, I hadn't understood the scale of money involved, thedifficulties in securitizing mortgages so that they looked liketraditional bonds, or the links with savings and loans. The junk bondexplanations are also valuable, if somewhat less timely and now a moretraditional part of the financial landscape.

Liar's Poker has a tendency to meander, leaving me with a grab-bagimpression. There's a bit of history, a lot of biography, a catalog ofextremely unappealing people and a viciously sophmoric culture, a fewfascinating characters, and a bizarre fantasyland of more money than onecan hope to understand. It's not a book with solutions; it is a book thatwill give one a deep dislike and mistrust for the Wall Street tradingculture and which drives home the ways in which Wall Street firms are noton the side of their supposed clients. I would be suspicious of the sheerugliness of the culture Lewis portrays had not every other episode, suchas Enron, that opened the lid on that culture revealed similar scurryingcockroaches. As is, whether or not individual anecdotes are entirelyaccurate, I suspect that Lewis has captured the cultural mindset all toowell.

This is not a work at the level of The Smartest Guys in the Room oreven Moneyball, but it's an interesting book that filled in somehistorical gaps for me. It's also less dated than one might think. ReadLewis's magazine articles linked above first, but if you like their style,Liar's Poker is worth picking up.