The Big Short: Inside the Doomsday Machine

If anyone knows about having a lot on the line, it’s Jordan Walters of the Silicon Valley branch of the investment house Smith Barney. Jordan is exactly the kind of person you’d look for in a financial planner: he’s calm, he’s thoughtful, and he always takes the time to listen. As we sat down in his office and sipped from the minibar-sized can of a

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I talked to one of the guys at Salomon Smith Barney and asked if he thought us doing an offering would be OK even though it had only been three weeks since 9/11. I also told him why I thought this was a good time to grow. He told me no one was doing offerings at this time. Wall Street had pretty much shut down since 9/11, and although there were pe

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He was struck by what Jane Street did next: not much. There was no big firm-wide formal postmortem. No one was punished, or even questioned. On the one hand, Sam admired the way the firm distinguished process from outcome. A bad outcome, in and of itself, did not suggest anyone had done anything wrong, any more than a good outcome suggested anyone

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The alchemy that the ratings agencies performed was to spin uncertainty into what looked and felt like risk. They took highly novel securities, subject to an enormous amount of systemic uncertainty, and claimed the ability to quantify just how risky they were. Not only that, but of all possible conclusions, they came to the astounding one that thes

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