Monday, March 15, 2010

Michael Lewis

By Chadwick Matlin

Our money laureate.

Michael Lewis' new book, The Big Short, is released today, and it's the latest bravura effort from the financial journalist. (You can read an excerpt in TBM by clicking here.) Author of Liar's Poker, The Blind Side, and many other books and long-form magazine pieces, Lewis is arguably the finest financial journalist in the country. In February 2009, Chadwick Matlin argued just that in an assessment of Lewis' work. Because of The Big Short's publication, TBM has reprinted that piece below.

When I was hired to work for The Big Money, the first question a colleague asked was whether I had read Liar's Poker. Coming from political journalism, I had an average American's amount of business knowledge. That is to say, I didn't have any. So I bought Michael Lewis' Liar's Poker, a book written in the late ’80's about the late ’80's, and it was there that I first learned about derivatives. Twenty years after the book’s events, some of the very same derivatives that Lewis described would end up disemboweling the financial system from within. On Sept. 15, 2008, I was thankful I’d read the book.

The book’s prescience—and Wall Street's stubborn refusal to change—has left Lewis uniquely situated to comment on our current disaster. Don't think that Lewis and business editors are unaware. In his October 2008 (post-Lehman, AIG, and Merrill) Portfolio essay, he writes that "there was an umbilical cord running from the belly of the exploded beast back to the financial 1980s." In his and David Einhorn's mammoth op-ed from January 2009, his regulation suggestions are grounded in the kind of alarms he sounded in the late '80s. And in a stroke of professional luck that often seems to follow Lewis, his newly edited anthology Panic arrived on bookshelves this year, promising a retrospective look at—surprise—20 years of financial catastrophe, including the subprime meltdown. Thanks to the meltdown, he's now working on a new book, tentatively called The Big Short, that seems certain to land on best-seller lists in November.

Put simply, this financial crisis has solidified Michael Lewis' position as America’s money laureate. And it's not just because he happened—as some critics would construe it—to be in the right place at the right time. Nor is it because he's sold a ton of books—1.2 million copies since 2001, to be precise. It's because Michael Lewis is by far the best business journalist in the country. His assessment of the country's economic situation—and thus the country's economic mood—has provided some of the finest, most accessible prose available. Lewis serves as translator for the confused, financially illiterate masses. Which makes his secret to success all the more intriguing: His writing isn't actually about money.

Above all, Michael Lewis is a man obsessed with characters. Business journalists are often left with a false choice between writing about inanimate objects—collateralized debt obligations are always a hit—or about stuffy corporations and CEOs—scions, Pfizer, and Bear Stearns, oh my! Lewis has managed to chart a third course. Instead of detailing financial instruments, he finds characters within the underbelly of the market and lets them do the hard work for him. At least hundreds, often thousands, of words in his magazine pieces are spent describing Lewis' characters to set some type of financial and psychological scene. For Lewis, stakes are established by outlining a character's motivations and then detailing the reactions when the principles and artifacts of Wall Street interact with those desires. This process allows his subjects to become emblems of broader economic themes. In other fields, this technique is the norm; it's called storytelling. In business, however, Lewis' type of narrative yarn is rarely pulled off deftly.

Take that New York Times op-ed I mentioned earlier. Almost immediately Lewis (and Einhorn) launch into an anecdote about then-little-known, now-infamous Madoff whistle-blower Harry Markopolos. Markopolos' futile plight becomes a microcosm of all that's wrong with the regulatory system in the country and serves as a narrative catalyst to discuss all of Lewis' proposed fixes. Then there's the piece on Lewis' old colleague John Meriwether and the decline of his hedge fund, Long-Term Capital Management. By profiling Meriwether and LTCM's strategists, Lewis manages to summarize a fraught and decaying economic era—without really leaving the walls of LTCM. Oh, and don't forget about his New York Times Magazine missive on Google, which is really about the effect of shareholders on the eternal tension between profits and social good. There's an entire NYT Magazine essay about Lewis' disbelief that so few people in Washington actually get access to their subjects. The point: Lewis would rarely write a piece like this one—in which its principal subject is purposefully never contacted nor heard from.

At times, Lewis' lust for character backfires. In his tech book, The New New Thing, Lewis gets swept up in Netscape founder Jim Clark's utopian visions of the future. By allowing Clark to muscle the narrative, the book and its author get swept away into the very tech bubble that Lewis would later cover after the dot-com crash. It's a fact that Lewis admits in Panic, where he includes a New New Thing passage as an artifact of journalism that was too idealistic, too fast. Consider it an occupational hazard for the character-dependent writer.

That Lewis is so devoted to profile-driven journalism is surprising considering his influences (which, it should be said, are influences that I—and The Big Money—share). Lewis’ career owes much to the tutelage of Michael Kinsley, co-founder of Slate and a man who once said that profiles are "encrusted with useless anecdotes." That quote appears in Slate's collection of assessments, the column that this piece is closely emulating. Lewis has written for Slate, which Kinsley cofounded and my boss, Jacob Weisberg, has edited. Kinsley and Weisberg both make an appearance in the acknowledgement section of Lewis' upcoming book Home Game, which is essentially a collection of his Slate columns. Kinsley is credited as the godfather of Lewis' first child, and Lewis says lovingly of Weisberg, "If he's never matched my self-pity he has often encouraged it." This would also probably be a good time to mention that The Big Money routinely syndicates Lewis' Bloomberg News columns.

For the record, I've never met the guy.

When market news is too aggregated and abstract to produce compelling characters, Lewis takes the opportunity to talk about himself. This, presumably, is to yet again distract the reader and the writer from focusing too intently on business. Lewis' devotion to the first-person singular is prolific. His two most famous books—Liar's Poker and Moneyball—begin with the word I. Three of his books—Liar's Poker, Coach, and the upcoming Home Game—have been memoirs in one way or another. The ones that aren't—New New Thing, Losers, and Moneyball, namely—may as well be, as Lewis' voice is so present that he not only serves as the narrator, but as one of the central characters, ready to propel the narrative forward. Every book is an artifact of the years spent researching and working on the title; Lewis is comfortable laying that bare through his writing. J.D. Salinger this man is not.

Through all of these advertisements for himself, Lewis has created his own public persona. On the page, Lewis is a reformed slacker who stumbled into an industry and onto the story of a lifetime. But when it comes to his own life story, Lewis is an inherently biased storyteller. It's not unlike the way a politician—Barack Obama, say—crafts his own image by choosing what his personality will be. Not all believe the image, of course. The late Marjorie Williams (who is also closely intertwined with Slate, having contributed to the site and been married to Slate senior writer Tim Noah) wrote a blistering profile of Lewis in Vanity Fair back in 1997, taking issue with Lewis' love life. (Unfortunately, the profile is not available online.) Lewis was reportedly miffed; and since then, Williams' thesis—that Lewis was an antsy Lothario—now appears to have been disproven by Lewis' current, long-standing marriage.

But Lewis' actual personality doesn't matter for our purposes. Just as politicians interact with the public through their carefully managed handlers, the money laureate projects himself through his writing. And it's through his writing that Lewis is so atypically intelligible on financial matters. Much of his success is attributable to the way he writes about himself as a conduit for an unknowing audience.

Lewis' origin story is first sketched in Liar's Poker. Our unwitting hero has stumbled into the world of Wall Street through a chance encounter at a dinner party. He gets a job at Salomon* Bros. but is amazed that he is trusted with a client's money. In a recent piece, he claims that "to this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me."

Nevertheless, he has the job, and he's not afraid to tell us just how incomprehensible it all is at first. In Liar's Poker, he holds our hand as he screws up repeatedly, overwhelmed with jargon, cultural mores, and Salomon* protocols. He learns on the job and keeps a sense of humor about the absurdity of it all.

It's both a useful and purposeful story arc since his experience, give or take a few details, mirrors Americans' own experience with the economy. In every crisis, we are thrown in unexpectedly and forced to grapple with our own illiteracy in a sea of data, information, and prognoses. Eventually, we stumble out, survive the trauma, and some among us go on to make money in the aftermath. He is our boy-wonder proxy.

If his story resembles the American experience, he himself is a conduit for the average American. Repeatedly, he makes clear that he is as lingo averse as the rest of us. His step-by-step description of mortgage derivative pools in Liar’s Poker still guides my understanding. (The explanation is too lengthy to reprint here, but you can read it at In a 1999 magazine piece, he bluntly tells the reader that "there is no reason anyone should feel obliged to understand interest-rate-swap arbitrage." (He then goes on to explain what actually is important about it.) He provides a glossary in Panic, introducing it with this footnote: "Some of Wall Street's private language is necessary and useful, but a lot of it seems designed to mystify outsiders." That Lewis even thinks of the outsider dovetails with his desire to be seen as the average American's stand-in.

Perhaps most importantly, Lewis' first-person musings allow him to discuss socioeconomic class. Underneath all business journalism lies an implicit power dynamic—the subject is almost always more wealthy than both the journalist and the audience. Lewis recognizes this disparity and takes the side of the audience, forming a populist union with his readers. And when you're writing about really rich people, the more populism the better. He begins his introduction to Panic by pointing out that "the striking thing about the seemingly endless collapse of the subprime-mortgage market is how egalitarian it has been." Much of Liar's Poker and Lewis' Silicon Valley book, The New New Thing, are devoted to the question of what one really does with all that money. He wrote a satirical Bloomberg News column posing as a hedge fund trader who blamed the poor for taking too much subprime money they could never afford. His mini-memoir Coach is about high school baseball—not business—yet is still dominated by the lessons Lewis learned about class, and therefore about money. The moral of the story is delivered by Lewis' high-school baseball coach: "Privilege corrupts. [The rich] were always doing what money could buy instead of what duty demanded." Some version of that vignette makes an appearance in almost every piece of Lewis' writing, no matter the topic.

His Portfolio piece on living in an entirely too-large mansion is the ultimate synthesis of Lewis' first-person narrative skills. The conceit is simple: The Lewis family rents out a mansion it can't afford in New Orleans. What follows is a comedy of bourgeois maladies: The house is so big Lewis can't hear his kids scream; the rent doesn't include exorbitant utility costs, like running the estate's fountain; his children get trapped in the house's elevator. The piece provides fertile ground for Lewis to reflect on subprime America, Americans' never-ending desires for higher status, and Lewis' childhood realizations that some people have money and some people don't. This is only tangentially a piece about money. It's really about American society.

So the reality is that Michael Lewis is a money laureate who doesn't write about money that often. Remember, he has arguably been as—if not more—successful writing about politics, sports, technology, and family. And it's likely that if everything hadn't melted down, Lewis wouldn't have re-emerged in business publications so prominently. Before the crisis, his next two books were slated to be Home Game, a compilation of his writing on family due in June, and a sequel to Moneyball, his blockbuster story of how statistical eggheads were changing the market for baseball players. But now his new book about this crisis will push back the Moneyball sequel.

As Lewis himself says in a Panic introductory passage, "Crashes and panics make for interesting stories and, once I'd become a full-time journalist, I found myself pulled back to write about them." It's only the car accidents that draw Lewis back to the fold; routine traffic no longer intrigues him.

Which, when you think about it, is a pretty good way to sum up the American interest in business as well. It's always there in the background, but even when we do pay attention, we care much more about the characters and class implications than the fiscal specifics. Thus, the question is: Do we model ourselves after our laureate, or does our laureate model himself after us?

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