Lost in Their Bloomberg Terminals

The Wall Street wizards who brought on catastrophe by pretending to eliminate risk.

By Brendan I. Koerner

Panic: The Story of Modern Financial Insanity
edited by Michael Lewis
W. W. Norton, 352 pp.

For those of us who enjoy watching twenty-two behemoths maul each other on autumn weekends, no figure of speech beats a good football simile. So helmets off to Michael Lewis for coming up with a classic in his 1999 New York Times Magazine account of the collapse of Long-Term Capital Management, a tale now anthologized in Panic: The Story of Modern Financial Insanity. A hedge fund that specialized in fixed-income arbitrage, LTCM was run by ex-academics who were widely considered too brilliant to lose money, let alone preside over one of history’s greatest financial disasters. Lewis had worked with several of these LTCM eggheads during his days on Salomon Brothers’ bond desk, and he recalls the humbling experience of asking them to elucidate one of their arcane trades. Minutes after receiving a step-by-step explanation, Lewis realized that he had barely understood a word.