>> coming up on q&a," dr. michael lewis talks about his latest book, "the big short." after that, a speech by former prime minister tony blair to labour party supporters. .

>> because they do. it is the profanity of that environment that is part of describing that environment. you cannot write about people and take that out and have the flavor preserved. if you listen to people on wall street, it is extremely high. that is the way people talk. i just do not change it. it is the way of manipulating the environment if i changed it. >> have you thought about how often it happens? it is almost on every page. >> probably not every page. >> -- there is one character in particular. i thought about how they spoke when i was wide and the character. there are characters that use no

profanity at all. the doctor does not use profanity, but another character exists in the story and in the real world and runs around and insults people on wall street. but that is how the sounds. i could not remove it. -- that is how he sounds. when he talks, that is what comes out of his mouth. >> in the last chapter, you have lunch with the former leader of a company that you work for. how do you pronounce his name, john gutfreund. >> your "f-ing book"

i wrote a book about liar's poker. he kept repeating that line. he was just emphasizing how intense he felt about it. i do not completely agree. he did make my career. it was a great way to start a literary career. the book was a big success. my book dealt him a glancing blow. i think, at that moment, he was thinking that here is this guy that i have never laid eyes on who wrote this book and followed me wherever i go. it has caused me some annoyance. i will say what i think about it. i let him say it. >> pronounced his name again -- pronounced his name again -- pronounce his name again.

>> it sounds like "good friend." i was drawn back to this because of the experience that i had. one of the themes that are teased out of the story is that an awful lot of the crisis that we have been living through has its seeds in things that happened in the 1980's. i thought that it was appropriate to end the book by boat -- by going back to the person that was there. he was a seminal figure in wall street. he had taken this legendary bond trading partnership and turned it into a corporation.

this completely changed the relationship of the wall street firm to the rest of society. it was a very big deal. as i say in the book, it was to double that was kicked off the top of the cliff that led to the avalanche. i thought that that wasn't important first act out that that was an important first act. -- that that was an important first act. >> you have one of the biggest standoffs that you can get on a new book, 60 minutes. >> it came out of the blue. steve kroft, the interviewer, who i thought was fabulous, but i never met him before, he really wanted to do it. when he showed up at my house in berkeley, he said that they tried to do me two years ago but

i told my publisher that i would not talk to them because they would steal all the material and not mention the book. i got so used to these news magazine programs that you help and do their piece and they forget where they got their material. they went to the publisher and said that they are serious. i cave, in a moment of weakness, i caved. i did not know what this was going to be. they came and spent two days. me and my wife had to ask if they were leaving any time soon. we sat and talked. it was great. i had no idea, having not seen

the piece, i cannot comment on it, but it was an interesting experience, this business of doing media, unlike this experience, but you sit and talk to them for five or six hours and it is reduced to 20 minutes. because you said so many things in six hours, you really don't know what will come out of it. the main sensation one has when engaged in this activity is total self boredom. you wonder how anyone can be interested in me. i just bore myself for six hours and they are going to reduce this to an even more boring 20 minute piece. >> the only focus on one of your characters. >> the one that does not use f- bombs. >> he was an interesting character.

did he say that he would not participate? >> he said that he would not participate. i had a privileged access to wall street because of "liar's poker." i developed relationships with these subjects over a long time and day allowed me to write about them very intimately. it became an intimate experience for them. it was just me and them hanging around, talking. they thought that this was a book and a trusted me. now, the book comes out and they are getting calls from 60 minutes. morgan stanley will not let steve go on the air. he does not want to be a famous

person. he does not want to be on television. charlie and jamey, who i had to badger, i think they are on an island somewhere waiting for this to end. they actually all spoke to 60 minutes and talk to the producers and said that they would explain things, but there was no way their face was going on television. >> why did mike, who described as shy, agree? >> why did he agree? a year-and-a-half ago, he felt completely betrayed by the financial world. >> he is on the screen right now. >> he felt neglected. he thought that he had been buried pressured in diagnosing what was going on in the american financial system.

he had made a lot of money for a lot of people. it wound up being a very unpleasant experience for him. and then, nobody noticed what he had done. so, when i called him, he was the one character who was very eager to talk to me. he had a story. he had a three years of emails to document every move. the 60 minutes people were reinforcing that. >> you are still number one on an assigned to it but you did not show on the wall street journal today, which is interesting. what about these numbers? >> i will give you a quick -- the way it works generally,

there is a bit of a lag with the papers. the "new york times" is based on sales from two weeks ago. the market surprised even me. the market seems to be a vast -- the vast -- be vast. there is clearly a reservoir of anchor, but of real intense curiosity to know what actually happened on wall street that i did not expect i. i thought it would get -- it would be difficult to get people to read the story 3 >> new orleans is where you grew up? >> that is where most of my gene pool still is.

>> you live in berkeley and you are married to somebody my age, cab of a sore and -- tabitha soren. >> she was 21 when she went on the air. she used to anchor the news for mtv. we have three kids, two daughters and a son. the only major piece of my biography is that i spent eight years living in london. >> an art history major at princeton? >> my ambition was to be an art historian. >> "liar's poker" came out in 1989. >> i got there in the summer of 1985 and left end early 1988.

>> could you give us a couple of lines about "liar's poker?" >> sure, the fuel for that story was my own bewilderment that anybody was willing to pay the large sums of money for advice. i had a pretty strong sense -- as interesting as i was in sociology and finance at salomon brothers, i was not particularly well suited. i did not know what was were to happen in the stock market. i did not feel like i was actually a useful contributor to the global economy. it was clear that if i sat in that seat, i would get rich. i was puzzled. why on earth should i get paid all of this money just to sit in

the seat? the trick was just getting to the seat. so, i left to write a story about that, a nonfiction story. it explained what happened on wall street to make these jobs possible and make them so lucrative. i really did think that this was it. the 1980's was a strange episode in u.s. history. you had to get the story on paper so that future generations would believe it. little did i know that 20 years later, people would pity me for how little i made back then. >> the first person in your book is meredith whitney who seems to have a strong character. >> she is the strong catalyst in my story.

she works for the wall street firm that has offered stocks to the public. she was a bank analyst. meredith whitney, who i had never heard of, starts saying pains -- saying things in late 2000 about the wall street firms that sounded different from anything i have ever heard. she was saying that they basically did not understand the own risks they were taking. citigroup would have to cut or eliminate its dividend a week before they actually do. she seems to know more about what is going on then the people that run the companies. she was actually kind of condescending today's wall street people. -- tds wall street people.

-- to these wall street people. she made such cents that she persuaded me early on that the wall street firms have become the down money at the table. when i left salomon brothers, the last thing you wanted to do if you were an investor what was to be on the other side of one of salomon brothers trades. you were sure to lose money. some firms had turned a stupid as institutions. they became the dumb money. that made me curious. something big had changed. the natural question was, who is the smart money? >> there is another word

throughout your book besides the f-word, the word "lie." i want to read one paragraph. >> it is not a word that i am using, but a word that the character uses. >> i am pulling this out of page 174. >> is that fair? >> is it fair? >> yes. >> it is a pure and free --

interpretation of his view. those kinds of statements are very important in a story like this one. is the guy really dumb? no. he can get out of bed and function. he is not done in that sense. he is done in the sense that he does not understand his own business. it is his blood way of getting that point across. >> let's talk about steve asman. >> i met steve through meredith whitney. he was a new york, going and bred, student at harvard.

-- going and bred student at harvard. -- going and bred -- born and bred student at harvard. his parents were brokers at oppenheimer secure letters -- securities. his mom got him the job. in the mid-1990s, when he joins, subprime mortgage markets are beginning in the early form. these were people who were looking for borrowers. someone asked him if he wanted to be an analyst. he became one of the first two or three analysts on wall street. pretty quickly, he is the world

expert on the subject. >> hal old is he? >> he is in the mid-40s, now. when this first happened, he was in his early '30's. >> he seems-and angry about everybody. >> as a character, it did not occur to me that one of his colleagues pointed out that when "curb your enthusiasm" came to hbo, he said that they just told that, that is larry david. his own wife says that her husband is a brood -- is a brood and there is nothing that she can do about it. -- is rude and there is nothing that she can do about it. he was never rude or mean too little people, to the secretary, to his many, he was wonderful

with them. he was protecting and caring about people believe him. the people above him made him angry. he would find himself in situations where he is in meetings with wall street big shots and he would say things that would cause the meetings to come to end and the big shots would say they would never sit in a room with him again. it got to a point where his colleagues would just stop their jobs to follow him wherever he was going because they want to see the show. they know that he is one to be needing someone important on wall street and something as one to happen that they will want to see. it is like watching a car crash. you cannot watch, but you can't not watch. >> he did not want to be on

camera with 60 minutes? >> no. i appreciate these people letting me what about them the way i did. i do not blame him for not wanting to be on tv. it is a peculiar kind of desire to want to be on tv. it changes your life a little bit to have your face amount. >> do you have that blood? >> to be on tv? >> yes. >> no. >>about 10 years ago, my wife ad i lived in paris and i did a documentary for the bbc. it basically paid for a house renovation. i had to be on camera all the time. i wrote the show. it was a documentary. i loathed it. what i'd do is learn about something and communicating in

words. then, having to get the pictures to go with it and stand up in front of a camera, it is unbelievably tedious. if you do not have a picture of it, you cannot communicated. i would like to create a picture out of words. i do not particularly like it. you cannot avoid it, but i don't particularly like it. >> i picked a paragraph in your book on page 68. i want to read it. it is long, but i want you to interrupt us to go along. you even say that if you have gotten this far, god bless you. it does not have to be a long explanation, but try to get through all of this. >>.

>> go back to subprime mortgage. define it. >> sure, you know what a mortgage loan is. a prime mortgage loan is someone who has a credits for over a certain number. the credit score supposedly measures the likelihood that you'll prepare your loan. there is a company called the fair isaac corp. that comes up with the final score -- the fico score. on a scale of 800, above all about 660 is a prime mortgage. below 660 is a subprime mortgage. >> wendy goldman sachs saleswoman called --

there are two things here. the credit defaults swaps. >> sure, this was created in 2005. the credit defaults what is an insurance policy. if i buy a credit defaults swap , i pay you a premium, a couple% a year. -- a couple% a year. i bought insurance on the bond. the general idea is that people who own the subprime mortgage bonds, it is a silly idea.

you could just not by the subprime mortgage in the first place. but that is why these instruments were created. but they quickly became tools for speculation. instead of buying a credit defaults slo swap, i would have tibet. >> you referred to the other side of the bet. >> the whole financial system is organizing itself to run a bet -- and grab a bat -- around a bet. >> there are a bunch of people who bought a house. the vast majority of the financial system said it would repay their loans. >> i want to simplify it even

more. i am going to buy a house. i go to a bank. so often now, the realtors says they could get a mortgage to a mortgage company. you get $100,000. then, the bank says that that mortgage has been sold. who does that banks sell the mortgage to? >> there could be lots of steps in the chain, but the simplest step is that they sell it to ray wall street firms that pulls it together with a lot of other loans that form a trust. the bondholder could be anywhere. he is the ultimate lender. the ultimate lender is very far removed. >> it could be somebody at goldman sachs? >> yes. >> but if i were originally going to write checks to the

local bank, i invite -- i am now writing checks to goldman sachs. >> there is a servicer who is standing in between. >> let me go back to your paragraph. go to install the americans. are you an insolvent american? >> the dollar volume is unbelievable. if put into perspective, the subprime mortgage loan business does not exist in the early 1990's. >> it came from where, by the way? >> it came from where? >> who promoted it? >> it was -- several companies

were going all at once. it existed to find people and packages them into securities and sell them off. these companies do not exist anymore. it was small. it was tiny. >> why was there a need for subprime mortgages? >> it was an opportunity. it has to do with what happened in the american economy. you have lots of people living beyond their means in using their credit cards to do it. credit became one of the big changes in american lives in the last 20 to