"This Is What Happens When You Lend Money to Poor People"


Why Michael Lewis is a god among men:

So right after the Bear Stearns funds blew up, I had a thought: This is what happens when you lend money to poor people.

This is the lede of a hilarious piece on what the hell happened in the sub-prime mortgage kerfuffle. Other lessons Lewis has learned (and managed to articulate with his tongue stuffed into his cheek) about the poor–and "by poor, I mean anyone who the SEC wouldn't allow to invest in my hedge fund":

* I trusted these people to get their teams of lawyers to vet anything before they signed it. Turns out, if you're poor, you don't need to pay lawyers. You don't like the deal you just wave your hands in the air and moan about how poor you are. Then you default.

* It was my fault, for not studying the poor more closely before I lent them the money. When the only time you've ever seen a lion is in his cage in the zoo, you start thinking of him as a pet cat. You forget that he wants to eat you.

* Lending money to poor countries was a bad idea: Does it make any more sense to lend money to poor people? They don't even have mineral rights!

Lewis is right, as always, underneath all the jokes. Money culture matters–people with no money do think differently about money than people who have lots of it. So for those wondering how class war looks to the Other Half, here it all. Laid out for you in black and white by a man who is pretty sure that the moment he got "out of touch with 'poor culture.'" was when he "stopped flying commercial." Awesome.

For more Lewis, read Matt Welch on Moneyball.