Against the Rules: The Big Short Companion

Episode: Lessons of the Great Depression

Date: November 11, 2025
Hosts: Michael Lewis & Lydia Jean Kott
Main Guest: Andrew Ross Sorkin

Episode Overview

Theme:
To mark the 15th anniversary of "The Big Short" and reflect on the legacy of the 2008 financial crisis, Michael Lewis and Lydia Jean Kott explore the historical echoes and divergences between the Great Depression (post-1929 crash) and the 2008 crisis. Michael sits down with financial journalist and author Andrew Ross Sorkin—whose latest book covers the 1929 crash—to examine what lessons remain unlearned, how crises shape reform, and what recurring behaviors shape America’s economic landscape.

Key Discussion Points & Insights

1. Comparing Financial Crises: 1929 vs 2008

• Conceptual Framework:
  Art history technique of putting two pictures side by side:

  “As a tool for forcing our mind to move about the 2008 financial crisis, I can't really think of a better event than the 1929 crash and the slow rolling depression that occurred after it.” — Michael Lewis (02:46)

• Why Compare?
  • Both crises involve mass speculation, credit overextension, and a shift in public psychology toward finance.
  • The policies, characters, and reforms in each event shape subsequent attitudes toward risk, regulation, and recovery.

2. What Led to the 1929 Crash?

• Credit Boom & Mass Stock Mania:

  “The 1920s were probably one of the greatest stock booms in history, in large part because Americans got access to credit for the first time… It had become a national pastime to trade.” — Andrew Ross Sorkin (04:43)

• Speculative Bubbles:
  • Leverage and instruments piled upon each other like “Russian dolls of leverage” (05:20).
  • Market manipulation and easy credit created a culture of gambling.
• Aftermath:
  • The crash fundamentally changed the psychology of a generation. A personal story:

    “My grandfather… watched somebody jump out of a building and kill himself. He… never bought a share of stock his entire life after that.” — Andrew Ross Sorkin (06:30)

3. Crafting History: Sorkin’s Approach

• Motivation:
  • Sorkin sought to uncover the motives and personalities behind 1929’s turmoil, similar to what he’d done for 2008.
  • Research involved “eight years of excavation” in disparate archives (08:00).
• Colorful Finds:
  • “Fishing with Hitler” anecdote exemplifies the unexpected humanity and blindness of financial leaders (09:18).

4. Historical Characters & Their Modern Equivalents

• Thomas Lamont:
  • De facto JP Morgan leader.

    Analogy: “Maybe he was the Jamie Dimon of that period.” — Andrew Ross Sorkin (10:27)

  • In both crises, JP Morgan’s leadership played pivotal roles in shaping government responses.
• Jesse Livermore:
  • The era’s short-selling superstar—part public philosopher, part tragic figure.

    “He was so sure of his ability to make judgments under uncertainty, and yet… made so many mistakes.” — Michael Lewis (11:52)

• Carter Glass:
  • Virginia senator, architect of the Federal Reserve and Glass-Steagall Act.
  • Compared to Elizabeth Warren: a regulatory response “Cassandra” focused on reform post-crisis (13:16).

5. Reformers: Carter Glass vs. Elizabeth Warren

• Similarities:
  • Both loud, widely covered figures warning of systemic risk.
• Key Differences:

  “Carter Glass… was genuinely a capitalist… not so quick to completely and utterly break up [the system]. Elizabeth Warren was much more about protecting ordinary Americans from the financial predators.” — Andrew Ross Sorkin (18:11)

• Nature of Reforms:
  • Glass-Steagall (1933) vs. CFPB (post-2008): differing emphases on structural prevention and consumer protection.
• Public Attitudes:
  • In 1929, blame was less directed at elites; by 2008, there was explicit outrage at financial predators (19:51).

6. Societal Narratives and Political Change

• The aftermath of 2008 was “much more about bashing the financial elites for their predatory behavior.” (19:51)
• In 1929, reform and outrage developed slowly:

  “People did have to blame themselves… they knew they were gambling.” — Andrew Ross Sorkin (20:52)

• Prohibition, not financial reform, dominated early 1930s politics (22:59).
• After 2008, American trust in experts and institutions sharply eroded, influencing later political outcomes:

  “Almost draw a straight line to the election of President Trump in 2016 and arguably again in 24… The institutions, the experts let us all down.” — Andrew Ross Sorkin (23:38)

7. Unlikely Modern Parallels: John Raskob and Elon Musk

• John Raskob: GM executive, inventor of consumer credit, political player, builder of the Empire State Building.
• Raskob’s outsized ambition and media savvy likened to Musk, but 2008 had “no Elon Musk.” (25:11–27:11)

8. How the Federal Reserve Responded

• 1929:

  “The response… was mostly for the Federal Reserve to sit on its hands… They were scared that… Congress could decide to shut them down.” — Andrew Ross Sorkin (32:01)

  • Reluctance led to passive inaction and eventual disaster.
• 2008:
  • Central bankers, schooled in 1929’s lessons (notably Bernanke), aggressively flooded the system with money:

    “The counterfactual is so ugly. The counterfactual is the depression. It’s 25% unemployment rate.” — Michael Lewis (34:38)

  • These policy differences likely averted another global depression.

9. Competing Narratives and Lasting Impacts

• Post-1929, blame was divided among reckless banks, short sellers, and “investment pools”—proto-meme stock schemes (36:19–37:25).
• Sorkin shares a modern example: the spontaneous creation of a “Sorkin Coin” as a modern echo of 1920s manipulation (38:42).

10. Regulatory Backsliding & Enduring Distrust

• In both eras, reform is followed by efforts to dismantle it; currently, less interest in regulation and more tolerance for “innovation” over enforcement.

  “There’s a lot less people minding the store. And when people aren’t minding the store and you add in the leverage and you add a little speculation, you get problems.” — Andrew Ross Sorkin (41:14)

Notable Quotes & Memorable Moments

• On the enduring American Dream:

  “The American dream becomes the get rich quick dream, which… we live with to some degree today.” — Andrew Ross Sorkin (05:13)

• On generational scars:

  “My grandfather… never bought a share of stock his entire life after that.” — Andrew Ross Sorkin (06:30)

• On historical blindness:

  “Fishing with Hitler is just an image that I couldn’t get out of my mind once I read it.” — Michael Lewis (10:04)

• On historical agency:

  “[Glass] was the Elizabeth Warren of his time. He creates what is now known as Glass-Steagall…” — Andrew Ross Sorkin (13:16)

• On modern echoes:

  “The investment pools of 1929 are very much alive and well today [in crypto]…” — Andrew Ross Sorkin (39:52)

Timestamps for Key Segments

• Introduction & Art History Analogy: 02:32–03:54
• 1929 Crash: What Happened and Why: 04:32–07:03
• Sorkin’s Motivation & Research: 07:03–09:18
• Profiles: Lamont, Livermore, Glass: 09:18–14:19
• Comparing Reformers (Glass vs. Warren): 17:24–19:51
• Societal Blame & Political Change: 19:51–23:38
• Parallels: Raskob & Musk: 24:18–28:21
• Federal Reserve Responses: 31:29–35:43
• Narratives & Market Manipulation: 35:43–39:52
• Current Erosion of Regulation & Trust: 39:52–41:14
• Closing Reflections: 41:14–41:55

Tone & Style

Michael Lewis blends curiosity and storytelling with a playful yet incisive tone; Sorkin is analytical, clear, and candid—infusing personal anecdotes and drawing lively parallels between past and present.

Final Thoughts

This episode paints a richly comparative portrait of two pivotal financial crises—reminding listeners that while history rarely repeats, it certainly rhymes. The cascade of speculation, the limits of reform, the unpredictability of political and regulatory responses—and the human need both to speculate and to forget—underscore how financial history remains a living force.