Study Guide

The Big Short: Inside the Doomsday Machine Chapter 8

By Michael Lewis

Chapter 8

The Long Quiet

  • Michael Burry is still having trouble with his investors, despite having accurately predicted the current crisis before anyone else. His poor social skills don't help.
  • At the same time, Burry's son Nicholas is having trouble at school because he lacks motor and social skills. Burry thinks he's just an "absentminded genius," but it turns out Nicholas actually has Asperger's syndrome (8.8).
  • While reading the list of symptoms, Burry comes to a sudden realization—he has Asperger's, too. This explains many aspects of his life that have always caused him trouble, like his social skills. On the other hand, he has Asperger's to thank for his intelligence and incredible focus.
  • On the business side of things, Burry is shushed by his Wall Street pals whenever he tries to get them to adjust bond prices. He starts wondering if he's the victim of fraud.
  • That causes even more unrest among Burry's investors, leading some to try to withdraw their funds. To counter this, Burry decides to "side-pocket" their investments (translation: he refuses to release them) by claiming that the current marketplace is "fraudulent" (8.39).
  • As you might imagine, this only infuriates these people further. They spread a bunch of nasty rumors and criticize Burry every chance they get.
  • Finally, in July 2007, the Wall Street people stop answering Burry's calls. That only means one thing: the bonds are going bad, and the banks owe him money.
  • By August, one of the bonds Burry bet against reaches a 37.7% default rate, which means it's totally worthless. The end is nigh, folks.
  • Despite currently making them tons of money, Burry is met with silence from his investors.