This article is about the book. For the bar game, see Liar’s poker. This article needs additional citations for poker art. Liar’s Poker by Michael Lewis, W.
Liar’s Poker is a non-fiction, semi-autobiographical book by Michael Lewis describing the author’s experiences as a bond salesman on Wall Street during the late 1980s. The book’s name is taken from liar’s poker, a high-stakes gambling game popular with the bond traders in the book. Liar’s Poker follows two different story threads, though not necessarily in chronological order. The second thread is a history of Salomon Brothers and an overview of Wall Street in general, especially how the firm single-handedly created a market for mortgage bonds that made the firm wealthy, only to be outdone by Michael Milken and his junk bonds. Lewis jumps back and forth between these two threads in the book. Lewis was an art history student at Princeton University, who nonetheless wanted to break into Wall Street to make money.
He describes his almost pathetic attempts to find a finance job, only to be roundly rejected by every firm to which he applied. While in England, Lewis was invited to a banquet hosted by the Queen Mother, where his cousin, Baroness Linda Monroe von Stauffenberg, one of the organizers of the banquet, purposefully seated him next to the wife of the London managing partner of Salomon Brothers. Lewis then moved to New York City for Salomon’s training program. Here, he was appalled at the sophomoric, obtuse and obnoxious behavior of some of his fellow trainees, and indoctrinated into the money culture of Salomon Brothers and the Wall Street culture as a whole. From New York, Lewis was shipped to the London office of Salomon Brothers as a bond salesman.
Despite his lack of knowledge, he was soon handling millions of dollars in investment accounts. In 1987, he witnessed a near-hostile takeover of Salomon Brothers but survived with his job. The book is an unflattering portrayal of Wall Street traders and salesmen, their personalities, their beliefs, and their work practices. During the training sessions, Lewis was struck by the infantilism of most of his fellow trainees. Lewis attributed the bond traders’ and salesmen’s behavior to the fact that the trading floor required neither finesse nor advanced financial knowledge, but, rather, the ability and desire to exploit others’ weaknesses, to intimidate others into listening to traders and salesmen, and the ability to spend hours a day screaming orders under high pressure situations.
He referred to their worldview as “The Law of the Jungle. Lewis also attributed the savings and loan scandal of the 1980s and 1990s to the inability of inexperienced, provincial, small-town bank managers to compete with Wall Street. He described people on Wall Street as masters at taking advantage of an undiscerning public, which the savings and loan industry provided in abundance. Lewis portrays the 1980s as an era where government deregulation allowed less-than-scrupulous people on Wall Street to take advantage of others’ ignorance, and thus grow extremely wealthy. He traces the rise of Salomon Brothers through mortgage trading, when deregulation by the U. Congress suddenly allowed managers of savings and loan associations to start selling mortgages as bonds. However, Lewis believed that Salomon Brothers became too complacent in their new-found wealth and took to unwise expansion and massive displays of conspicuous consumption.
When the rest of Wall Street wised up to the market, the firm lost its advantage. Another problem Lewis noticed was a large disconnect between what Salomon Brothers mortgage traders were paid, and what they believed they should have been paid. Ranieri and his fellow traders felt that, since their department generated so much money for the firm, they ought to receive considerably higher salaries and compensation. Likewise, Lewis argued that Salomon Brothers tried to “professionalize” itself. Despite their lack of academic credentials, the group was extremely successful financially. But in order to improve its “image,” the firm began to hire graduates of prestigious business and economics programs.
Lewis argued that Salomon Brothers’ mortgage-bond success was based not on innate intelligence or trading skill, but on pure luck. Lewis noted that, although Ranieri was often hailed as a “visionary” for creating a mortgage department before a mortgage market existed, deregulation caught him completely by surprise. After dealing with mortgage bonds, Lewis examined junk bonds and described how Michael Milken built junk bonds from nothing to a multi-trillion-dollar market. Because the demand for junk bonds was higher than its supply, Lewis argues that corporate raiders began to attack otherwise sound companies in order to create more junk bonds. Lewis remarked in his conclusion that the 1980s were a time when anyone could make millions, provided they were in the right place at the right time, as exemplified by Lewis Ranieri’s success. Big Swinging Dick — A big-time trader or salesman. If he could make millions of dollars come out of those phones, he became that most revered of all species: a Big Swinging Dick.
The opposite of this term is Geek, used to refer to a just-hired trainee. Equities in Dallas — A particularly undesirable job within a finance firm. Thus, Equities in Dallas became training program shorthand for ‘Just bury that lowest form of human scum where it will never be seen again'” p. Blowing up a customer — Successfully convincing a customer to purchase an investment product which ends up declining rapidly in value, forcing the client to end up withdrawing from the market.
Feeding Frenzy — The Friday-morning meal shared by a certain clique of bond traders. A reference to Tom Wolfe’s character in The Bonfire of the Vanities. No Tears — Used to describe a preset alternate rule Michael Lewis describes in the book, John Gutfreund challenges John Meriweather to a game of Liars Poker, in which he states “no tears” which means players of the game who lose can’t complain about losing afterwards. Lewis, Michael, The End, Condé Nast Portfolio, December 2008. Written by Lewis, this cover story can be read as the epilogue or wrap-up of Liar’s Poker. This page was last edited on 3 February 2018, at 12:35.