Mar 8, 2016
During the mortgage meltdown, a small number of outlier hedge fund managers and other dubious financial types made a killing shorting the housing market. Michael Lewis immortalized their tale in his book and subsequent movie The Big Short. However, while the housing bubble was in its final stages, The Real Big Short was actually under way. Around the world, individuals and companies believing the end of the US Dollar was imminent, bet accordingly. They borrowed huge sums denoted in dollars, figuring that they could pay them back in drastically depreciated currency units in the future. Effectively, the entire world went short the Dollar and now the folly of their actions has become clear. No one could have foreseen the Dollar would dramatically appreciate, thus causing a massive short squeeze and costing trillions as a result.
Perhaps one day, Michael Lewis will write a book about it and document another small group of fund managers who saw it all coming and profited accordingly, if he can find them!