I just devoured the UK paperback edition of The Big Short, which author Michael Lewis has been here publicising this past week. It's one of the popular classics of the Great Crash, managing to be both a page turner and a clear explanation of the financial instruments at the heart of the financial meltdown. (Having said that, every time I thought I'd understood the CDOs and CDSs, I forgot, and had to go back and remind myself. In the end Lewis's phrase 'pile of shit' seemed a perfectly adequate synonym.)

Lewis is a terrific story teller, and he recounts the origins and unfolding of the sub-prime crisis through interwoven stories about a handful of characters who were amongst the only investors to foresee the crash. Hence they shorted the financial derivatives on sub-prime mortgages – the infamous CDOs, sometimes using the CDSs which were bets on them. Intriguingly, all turn out to be in various ways misfits, loners or eccentrics. It took a distinctive character to stand against the crowd – Lewis successfully brings these people to life. As for the crowd, the Goldmans, Bear Stearns etc traders and bosses, they made the sub-prime derivatives complex to fool their clients and ended up fooling themselves. Once they kept some of them on their own books rather than shuffling all of it onto AIG and the like, disaster was only a matter of time.

Once the sub-prime market got going, after 2005, almost all the mortgages originated were bound to go belly up. In 2005 alone, half a trillion dollars worth of mortgages were extended to non-creditworthy borrowers; the figures got bigger in successive years. There was no way loans on this scale could be repaid by low income borrowers. Nevertheless, the Wall Street machine wanted the mortgages created because the margins from fees on the bonds and derivatives spun on top of them were so juicy.

But throughout the second half of the noughties, the rising incidence of default and fraud was clear in the statistics. Wall Street managed to ignore the implications because the ratings agencies meekly rated almost all the CDOs as triple-A, even those which were created out of the riskier tranches of previous CDOs. The eagerness of investment banks to screw their clients, and the inadequacy of the ratings agencies are two key elements in this story, along with the denseness of a few individuals who just did not understand the risk they were taking. (This includes the CEOs of the investment banks.)

Lewis is also very clear about the wider purpose of the sub-prime machine, to allow poor people to spend as if they were rich, and paper over the yawning inequality in the United States. In this he agrees with Raghuram Rajan's Fault Lines. While more than 2 million people lost their homes, the losers on Wall Street walked away with millions or tens of millions in payoffs. Equally, he points out forcefully that Goldman Sachs managed to transfer around $20bn directly from the taxpayer (bailing out AIG) to itself at the height of the crisis, and suffered hardly at all for its own greed and misjudgement. In this he echoes Matt Taibi's Griftopia (Taibi has a detailed account of the negotiations between Goldmans and the authorities at the time).

So The Big Short joins my list of gripping and accessible reads about the crisis – along with Whoops! by John Lanchester as well. The behaviour of the Wall Streeters defies belief in retrospect – as does their continuing insistence that they can go back now to business as normal. I think not.