“One hand. One million. No tears. The game was Liar’s Poker,” thus begins Michael Lewis’ account of the rise and fall of Salomon Brothers.
Written in 1989, Liar’s Poker has an uncanny resemblance to the most recent financial meltdown.
The exponential rise of the mortgage bond market, the creation of junk bond trading, and the crash of Wall Street, are all reminders of the chaos that gripped the financial markets and sent the economy hurling in 2008.
Lewis builds the story of Salomon Brothers with an insider’s eye. As a trainee and a bond salesman in the firm, he exposes the culture of the then-most powerful investment firm on Wall Street. His accounts of the big top men of the firm, John Gutfreund, Lewie Ranieri, and the executive he refers to as the “Human Piranha,” are insightful and hugely entertaining.
The picture Lewis paints of the training class is terrifying and hilarious at the same time. Lewis quotes one trader’s advice to the training class:
“The trading floor is a jungle..and the guy you end up working for is your jungle leader. Whether you succeed here or not depends on knowing how to survive in the jungle.”
Throughout the book, Lewis illustrates the ugliness and the vulgarity of the Wall Street trading culture. The bigger and more successful the trader, the more crude, gluttonous and selfish he’s portrayed by Lewis.
The story of the mortgage department was fascinating. In a comical manner, Lair’s Poker gets to the most complicated of the financial products and their inception. The beginning of mortgage trading on the back drop of government’s deregulation clears a lot of the mystery behind this controversial financial investment.
This book also serves as a mini-biography of the author himself. Lewis was an art history major at Princeton who became an investment banker quite coincidentally. He then makes his way from the training class to becoming a “geek,” a bond trader with no experience. He dealt in millions of dollars, outsmarted his clients, and learned the hard way to not trust his fellow traders.
Lewis, in his account, makes Wall Street seem more like a gambling casino than a legitimate financial industry, except that in the case of traders, it’s someone else’s money that’s being put in the line.