I’ve always found movies with an economic or financial base fascinating to watch. Not because I study the field as an undergrad in economics, but because the concepts are so intricately detailed, that it’s always interesting to see how the directors and screenwriters tune everything down to grasp the true essence of the economy without spilling into too much fiction and drama. And the stock market, let’s call it the wheels of the economy, is filled with the majority of these complicated stories.
THE BIG SHORT is a movie about how a few weirdos and outsiders on Wall Street somehow tap into one of the many complex webs of tangled bonds, loans and financial instruments, to realise something that nobody is even bothering to look at. Based on the book by Michael Lewis of the same name, the movie overlooks the 2008 Financial Crisis through the eyes of a few opportunists, and how they find out that the whole American financial system is fraudulent, unethical, illegal, and about to cause a global economic meltdown.
Source – UX Collective
The characters are entertaining and you might get the feeling that they aren’t real. But rest assured, they are. And that’s what seems to make the viewers plunge into the movie.
The acting is engaging, barring a few side characters. Ryan Gosling as the wolf-like Jared Vennett, who gets wind of an unorthodox deal being carried out by the peculiar Michael Burry (played by Christian Bale), who tries to short, i.e., bet against the housing market when the entire world is going the other way because he thinks they are propped up by these really bad loans called subprime mortgages. Subprime mortgages are essential to the story.
They are basically loans given out to anyone who wants to buy a house, and this does not exclude people with abysmal credit ratings and no income as well. They apparently were also adjustable, so you could decide when to pay.
The main question here is, if these loans were so bad, why were they floated on the market?
One simple reason. Profit.
Source – Amazon
The banks made a profit out of these loans by putting a large number of these loans together and selling them to investors as mortgage bonds. The rating agencies that valued these bonds, although they were aware of the conditions of these bonds, rated them high so as to ensure that the banks who wanted them to rate these bonds kept them in their business and did not go to their competitors who would do their bidding. Simply put, they didn’t want to lose money as well.
The regulatory bodies who were meant to watch over such illegal activities slept on the wheel as the housing market slowly went towards a catastrophe.
Jared Vannett realizes all of this and convinces a group of peculiar investors headed by Mark Baum, portrayed by the infamous Steve Carell, to buy credit default swaps (a form of insurance against housing bonds if they go bust), so that when the subprime mortgage loans plummet, they can profit fromthem.
And so they do. Immensely.
We also get the story of two amateur investors and their journey as they stumble on to the same knowledge as the above protagonist and the way they too try to outsmart the market using the help of their friend-slash-mentor Ben Rickert, played by the beloved Brad Pitt, a former trader who helps them get super-rich.
Source – Amazon
The movie is filled with cocky jokes, testosterone-filled shouting, and fun 4th wall breaking scenes wherein celebrities like Margot Robbie, Selena Gomez and the world-renowned chef Anthony Bourdain explain concepts like CDOs or subprime mortgage bonds.
The narrative momentum, combined with the profane wit of much of the dialogue, and the committed acting going on beneath the hairpieces, all did their job. And they got across the angry, pessimistic conviction behind the movie, which is that the major banks all engaged in fraudulent, criminal activity, and that the U.S. government bailed them out at the expense of the little guy, and that there’s no indication that the banks aren’t going to do the same exact thing all over again. You are free to disagree. But this is a movie that uses both cinema art and irrefutable facts to make its case.
A true and unreal story of how humans caused one of the greatest recessions of all time for one reason- greed. An informative and engaging movie that will certainly leave you interested and disgusted by the world of money.
Written by- Prahlad Borthakur
Edited by- Riya Khetan
The post Seeing what others didn’t- The Big Short Movie Review. appeared first on The Economic Transcript.