“There was more than one way to think about Mike Burry’s purchase of a billion dollars in credit default swaps. The first was as a simple, even innocent, insurance contract. Burry made his semiannual premium payments and, in return, received protection against the default of a billion dollars’ worth of bonds. He’d either be paid zero, if the triple-B-rated bonds he’d insured proved good, or a billion dollars, if those triple-B-rated bonds went bad. But of course Mike Burry didn’t own any triple-B-rated subprime mortgage bonds, or anything like them. He had no property to “insure” it was as if he had bought fire insurance on some slum with a history of burning down. To him, as to Steve Eisman, a credit default swap wasn’t insurance at all but an outright speculative bet against the market—and this was the second way to think about it.”
Quote by Michael Lewis
Work
The book delves into the intricate details of the financial crisis, providing an in-depth look at how a group of investors foresaw and profited from the impending disaster. It examines the role of Wall Street, the government, and the housing market in the lead-up to the crisis, offering a critical analysis of the events that led to the global economic downturn. more
Author
Michael Lewis, born on October 15, 1960, is a renowned American author. His works are known for their in-depth investigations and revelations of the truths in the financial, business, and sports worlds. more
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