Dealing Another Hand of Liar’s Poker

November 12, 2008 | 1 book mentioned 2 2 min read

coverThree and a half years ago in some brief comments on Michael Lewis’ seminal memoir of Wall Street in the 1980s, Liar’s Poker, I noted,

While the period that Lewis chronicles is interesting in its own right, its impact is somewhat diminished by the many corporate scandals and Wall Street improprieties that have occurred since the book was first published. Against this backdrop, Liar’s Poker is no longer an exceptional story that defined an era, it is merely another moment in the cycle of Wall Street corruption and ensuing retribution that continues today.

In a remarkable piece for Portfolio magazine this week, Lewis revisits Liar’s Poker amid the wreckage of Wall Street and readily admits that the book now seems “quaint,” tragically so:

I thought I was writing a period piece about the 1980s in America. Not for a moment did I suspect that the financial 1980s would last two full decades longer or that the difference in degree between Wall Street and ordinary life would swell into a difference in kind. I expected readers of the future to be outraged that back in 1986, the C.E.O. of Salomon Brothers, John Gutfreund, was paid $3.1 million; I expected them to gape in horror when I reported that one of our traders, Howie Rubin, had moved to Merrill Lynch, where he lost $250 million; I assumed they’d be shocked to learn that a Wall Street C.E.O. had only the vaguest idea of the risks his traders were running. What I didn’t expect was that any future reader would look on my experience and say, “How quaint.”


In the two decades since then, I had been waiting for the end of Wall Street. The outrageous bonuses, the slender returns to shareholders, the never-ending scandals, the bursting of the internet bubble, the crisis following the collapse of Long-Term Capital Management: Over and over again, the big Wall Street investment banks would be, in some narrow way, discredited. Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces?

In the long piece, Lewis posits, convincingly, that the obit for Wall Street that he wrote more than twenty years prematurely is finally relevant, though rendered absurd by the cataclysmic collapse.

The essay is a must read. In it he profiles a few who will, when the dust eventually settles, be known as – not the heroes; there are no heroes – the ones who saw it coming. And at the end he sits down with the legendary Gutfreund, whose career Liar’s Poker ruined, for the first time since Lewis left Solomon Brothers back in the 1980s.

Kottke also highlighted the Lewis article today and he points out that this essay is likely material (along with several others Kottke points to) for a forthcoming book that Lewis intends to write about the death of Wall Street as we knew it. There’s little doubt that this new book will be the obit that Liar’s Poker was meant to be.

created The Millions and is its publisher. He and his family live in New Jersey.


  1. Thanks for directing us to this, Max. It is indeed well worth everyone's time, even though I'm still lost on C.D.O.s I get the basic derivative (and derivative-of-a-derivative) concept, but don't understand how Eisman's end of the C.D.O. trades mean he's "in effect, paying to Goldman the interest on a subprime mortgage." Is he saying the banks securitized the C.D.O.s on securitized mortgages? A derivative of a derivative of a derivative? This is like calculus, but up two orders of abstraction. I'm not feeling especially sanguine about the economy anymore…

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