Fire insurance for a slum with a history of burning down
When describing credit default swaps on the mortgage bond market, Lewis notes that they were a particular kind of bet; they were not simply like buying insurance, but rather like buying insurance on something that was guaranteed to go bad sometime soon. As he says, for those like Mike Burry, who had bought credit default swaps, it was "as though they had bought fire insurance on a slum with a history of burning down". A credit default swap wasn’t exactly insurance, since they didn’t own the thing they were insuring, but rather an outright speculative bet against the market. And the market was like "a slum with a history of burning down," almost guaranteed to go bad sometime soon. The irony of offering insurance on something that is guaranteed to implode soon is that this becomes less like insurance, and more like a guaranteed payoff in the near future.
Closeness as a disadvantage
As Lewis points out, "The closer you were to the market, the harder it was to perceive its folly." By this, he means that those who were most enmeshed in the intricacies of Wall Street, and most in the middle of everything, were those who were least able to recognize the many ways in which it was going down the wrong path. For example, the CEOs of major companies like Morgan Stanley and Deutsche Bank failed to see just how dangerous CDOs really were. Instead, it was outsiders like Michael Burry and the founders of Cornwall Capital who saw that the industry was headed toward a crash, and managed to bet against it. The irony of this is that people who were in leadership positions might be expected to have the most knowledge, and be best able to recognize flaws within their own system. As it turned out, just the opposite was the case with Wall Street.
Eisman's personality change
After the 2007-2008 financial crash, which proved many of Eisman's predictions and beliefs about Wall Street correct, he did not respond by becoming ever-more cynical or by obnoxiously touting his success, as he had been wont to do in the past. Instead, Eisman suddenly became a more pleasant, affable person overall. This is an ironic personality change for someone who had always hated Wall Street more than anything, and felt that he needed to stand up to its corruption; he should have emerged from the crisis feeling vindicated and even more angry at the system that had gone so wrong. Eisman's more open and accommodating personality is an ironic change, given everything we know about him as a character.
Contrast between Daniel and Eisman
At the beginning of the book, Lewis contrasts Vincent Daniel and Steve Eisman. Whereas Eisman grew up in an upper-class family and was able to get his job easily through family connections, Daniel grew up in Queens, in a lower class family. But it was Eisman, ironically, who went on to dress and behave boorishly; he wore casual attire to work and wasn't afraid to insult people or speak crassly. On the other hand, Daniel went on to dress and behave very seriously and carefully in his professional life. Given their backgrounds, this contrast is an ironic one.
