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Nadworny: The Big Short

07/20/11 7:55AM By Rich Nadworny
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(HOST) Commentator Rich Nadworny was looking for some vacation reading this summer. But he found more than he bargained for.

(Nadworny) Summer is the time for reading. I'm a picky reader; I need summer books that are interesting enough that I'll keep reading them but that don't make me work TOO hard. For that reason non-fiction books are usually out. I made an exception this summer and chose a book by Michael Lewis, author of favorites "Liars Poker" and "Moneyball." His book "The Big Short" tells the story of the disaster of the mortgage backed security business that Wall Street got us into.

What's most surprising is how good a tale it is. It tells the story of our financial implosion from the viewpoint of a few misfits in the financial industry. They had one thing in common: they all saw this coming and bet money that the mortgage hysteria would lead to economic implosion.

"The Big Short" is a pretty depressing story from the viewpoint of common sense and even the rule of law. There was too little of both. It tells an age-old story of how greed and money makes people blind to everything. People who made millions and even billions of dollars took needless risk with a vast Ponzi scheme that they either should have known was dangerous, or knew it and illegally gamed the system to keep making more money. In either case, almost all of the guilty parties got off scot-free, and are still making vast sums of money while the rest of us pay, or are in economic pain.

When you think about it, the Titans of Wall Street's behavior is no different than that of millionaire, Hall of Fame bound baseball players who decided to take steroids. How much more money did they need to make and how much greater did they need to be that they had to cheat to do it? The answer, as on Wall Street, is that they thought they could get away with it.

Which brings up the whole issue of rules and regulations. We create rules, regulations and laws so that these things DON'T happen. They provide an insurance or safety net for the rest of us. Even Ronald Reagan said "Trust, but verify." That's what regulations do: they verify. While it might cost a little bit up front to comply with some regulation , those costs pail in comparison with what we citizens end up paying to cover the bill for non-compliance.

As for the people who hate ALL regulations, to them, I say, take a look at the Bible, specifically the Old Testament. While the first two chapters contain some great stories, the rest of it is a book of rules. Do this, don't do this. That's because religion, and the modern societies that sprang from it, realized that we humans would do lots of stupid and even bad things without a good set of rules and consequences. It was true 5,000 years ago and it's still true today.

"The Big Short" is a tale of human fallibility, stupidity and even criminality. Yet three years after this mess imploded not much has changed. And that is the truly scary part. Yes, my vacation reading was highly entertaining and engaging, but it didn't really do much to relax me. Lucky I have a good mystery novel up next.
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