Excerpt from The Big Short

by Manshu on May 12, 2010

in Books

I started reading The Big Short last weekend, and it is a great read. One would imagine that a book about stuff such as CDOs, MBS and fixed income securities would be dry, but this is quite the opposite.

There are several interesting characters in the book, and there are some great stories, and I plan to review this book in detail later.

For today, I am just going to present this excerpt where Steve Eisman talks about the rating agencies:

They’re underpaid,” said Eisman. “The smartest ones leave for Wall Street firms so they can help manipulate the companies they used to work for. There should be no greater thing you can do as an analyst than to be the Moody’s analyst. It should be, “I can’t go higher as an analyst.’ Instead it’s the bottom! No one gives a f*** if Goldman likes General Electric paper. If Moody’s downgrades GE paper, it is a big deal. So why does the guy at Moody’s want to work at Goldman Sachs? The guy who is the bank analyst at Goldman Sachs should want to go to Moody’s. It should be that elite.”

This concept was not new for me, and I guess there are a lot of others who think in this manner as well, but when I read it in the book, I felt that this was very nicely put, and cuts to the heart of the matter in a few words.

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