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The Financial Crisis Five Years Later - And The One Still To Come

Interview: Michael Lewis on the Next Crisis
By Brad Wieners | September 12, 2013 | BusinessWeek

Michael Lewis is the author of The Big Short which has reached 691,000 print copies in the U.S.

Was Lehman unjustly singled out when it was allowed to fail?

Lehman Brothers was the only one that experienced justice. They should’ve all been left to the mercy of the marketplace. I don’t feel, oh, how sad that Lehman went down. I feel, how sad that Goldman Sachs (GS) and Morgan Stanley (MS) didn’t follow. I would’ve liked to have seen the crisis play itself out more. The problem is, we would’ve all paid the price. It’s a close call, but I think the long-term effects would’ve been better.

What surprised you most while reporting on the crisis?

The realization that it had actually paid for everyone to behave the way they behaved. Working on The Big Short, I first thought of it as this bet, and there were winners and losers on both sides of the bet. In one sense there was—but on Wall Street, even the losers got rich. So that was the thing I couldn’t get out of my head: that failure was so well-rewarded. It wasn’t that they’d been foolish and idiotic. They’d been incentivized to do disastrous things.

Henry Paulson, the man behind the bank bailouts, recently said, “The root cause of every financial crisis is flawed government policies.” Is that fair?

Continue at BusinessWeek

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Not to be a spoiler, but if you don't read the whole interview (it is short), this is how it ends:

Is there a particular threat you’ve identified that’s most likely to blow up next?
The answer is yes, but I can’t talk about it yet, because I’m in the middle of a book about it. It’ll come out next March.

And will that be before or after it erupts?
I can’t actually tell.

Which means, it could erupt and any second. So stay on your toes.

The funny thing about Michael Lewis - he also wrote The Blind Side, that got made into a movie with Sandra Bullock. He's a versatile dude.