Michael Lewis, author of The Blind Side (made into an Academy Award movie), and Liar’s Poker, has written another spellbinding book, The Big Short, Inside the Doomsday Machine.

He tells the story of the meltdown of the subprime mortgage market from the 1990’s through the eyes of several traders who saw it coming. They gambled on it collapsing before anyone else, and shorted the market with credit default swaps. As a result they made millions while the major investment banks went bankrupt.

He describes a Wall Street culture of arrogance, greed, condescension and ignorance. Financial products were invented to maximize profits and bonuses. Private companies were turned into public corporations where the shareholders’ money was leveraged way beyond what was reasonable. Each financial entity was in the other’s pocket. The incestuous way in which AIG and Goldman Sachs and others laid bets on one another and tried to minimize risks through hiding the truth about their asset values is mind-boggling.

Of course nothing changes. Each crisis produces winners and losers. In this case even the losers are protected by TARP money from the government, which means that taxpayers’ money is used to reward them for bad behavior. Multi-million dollar bonuses and salaries are still paid to executives who do not take responsibility for their errors. AIG is given billions by the Treasury, so that it can pay insurance to Goldman Sachs, so that it can continue to rip off the taxpayer.

Mortgages and lines of credit were advanced to people with teaser payments that two years later were adjusted upward, so that the borrower could not pay them, and had to refinance to interest only loans. While housing prices continue to go up this Ponzi scheme could continue. When defaults on these loans began to happen on a large scale, the whole house of cards collapsed. I can remember a commentator on CNBC claiming that the subprime market was such a small percentage of mortgages that it would not be contagious. He obviously had not done his homework.

The CEO’s of the big companies and banks did not know all that was going on with their big producers. They were content with reaping the profits. Their ignorance and inability to understand and explain what happened revealed a culture of deceit and cover-up that is endemic to the industry. No wonder Wall Street has gotten such a bad name.

Will the players clean up their act? I doubt it. No matter how stringent the regulations, the smart guys will find ways around them. I would like the SEC, the Federal Reserve and the Treasury to include in the financial regulation bill that Congress is trying to pass that all traders, all bank officials, and all employees in their branches of government, read through the book of Proverbs every month – there are thirty-one chapters, one for every day. “How much better to get wisdom than gold, to choose understand rather than silver.” (16:16) They would also profit from reading the book of Ecclesiastes.

One bright nugget was the story of Dr. Michael Burry, who in the midst of discovering the sham of subprime financing, and betting that it would fail, found out through his son’s diagnosis, that he himself suffered from Asperger’s Disorder. Here he was, a medical doctor, a neurologist, who figured out the financial system, and who had poor social skills, and yet he made millions for himself and others. His story should be made known to all those who suffer from autistic disorders to encourage them that they can win big.