John Snow
October 31st, 2013
Business in Society
Liar’s Poker Analysis

The book Liar’s Poker begins with Michael Lewis, the author saying "Wall Street,” reads the sinister old gag, "is a street with a river at one end and a graveyard at the other.” This quote, symbolizing competitiveness, refers to the river as growth and prosperity and the graveyard as death in a company proves to be the fundamental principle that led Michael Lewis to write this book. The book portrays Michael Lewis’ time with Salomon Brothers (SB), the largest bond dealer in the 1980s. It outlines the business model that SB used to maximize capital in the mortgage bond market. By the mid- 1980’s SB had become the most influential bond dealer in the market. However, there prominence as the top performing bond dealer was short lived and subsequent events led Michael Milken to take over their position as early as 1987. Even though Sb had success and made millions of dollars, Liar’s Poker showed that businesses can’t continue to prosper with a flawed business model. Even though SB’s success was short lived the theme of taking advantage of every opportunity is ongoing throughout the entire book. The driving force that led SB to their success in the early 1980s was pure luck. The mortgage bonds division of SB was set up by Lewie Ranieri, a man who was fascinated with trading anything. However, at the time mortgage bonds were not valuable because people were able to simply borrow from the banks at a steady rate and there was no need for these types of bonds. Thus, the mortgage bond division was unsuccessful when it was first incorporated into SB. It was so unsuccessful that employees became weary of why John Gutfriend continued to finance it. In 1979, when the Feds enacted a law making the interest rate of the markets float, the perception of the mortgage bond market vastly changed. SB began