I read this today as well. Michael Lewis is a great writer, brutally honest. Anyone who enjoys reading business should pick up some of his books; Liar's Poker, the New New Thing, Blindside, Moneyball, and a few others are awesome.
» I read this morning a great article on the history of the Wall St collapse.
» Here is the link.
» For those who have not sone so and who have an interest in banking....read
» it. Fantastic stuff.
» For Aussies I copy below a small section from the article (referenced
» Note the Australian Median Residential Property Price is $401,000 AUD.
» The Median household income is $41300 AUD. Ratio 9.71
» At the end of 2004, Eisman, Moses, and Daniel shared a sense that
» unhealthy things were going on in the U.S. housing market: Lots of firms
» were lending money to people who shouldn’t have been borrowing it. They
» thought Alan Greenspan’s decision after the internet bust to lower
» interest rates to 1 percent was a travesty that would lead to some
» terrible day of reckoning. Neither of these insights was entirely
» original. Ivy Zelman, at the time the housing-market analyst at Credit
» Suisse, had seen the bubble forming very early on. There’s a simple
» measure of sanity in housing prices: the ratio of median home price to
» income. Historically, it runs around 3 to 1; by late 2004, it had risen
» nationally to 4 to 1. “All these people were saying it was nearly as high
» in some other countries,” Zelman says. “But the problem wasn’t just that
» it was 4 to 1. In Los Angeles, it was 10 to 1, and in Miami, 8.5 to 1. And
» then you coupled that with the buyers. They weren’t real buyers. They were
» speculators.” Zelman alienated clients with her pessimism, but she
» couldn’t pretend everything was good. “It wasn’t that hard in hindsight to
» see it,” she says. “It was very hard to know when it would stop.” Zelman
» spoke occasionally with Eisman and always left these conversations feeling
» better about her views and worse about the world. “You needed the
» occasional assurance that you weren’t nuts,” she says. She wasn’t nuts.
» The world was.