3 Stars - Powerful
The true story of the 2008 economic crash is powerfully told by Adam McKay in his film The Big Short. Based on the book by Michael Lewis, McKay joined Charles Randolf in creating the adapted screen play. The result is a disturbing account of how the banking industry created fraudulent mortgage investments due to a weak regulatory oversight if not collusion by the U.S. government. Although McKay brought his experience with Saturday Night Live humor into the telling of the tale, it is nevertheless depressing to watch.
The story is told from the perspective of several groups of people who discovered the fraudulent instruments and capitalized on them by buying them short. This scheme is one of banking on the failure rather the success of the investment. Though the evidence was clear and the investment bankers became eventually aware of the danger, the general public was not aware that mortgages were being taken out by people who could not afford to pay them back and then sold as investments. These cheap and easy mortgages drove up the cost of housing and created a “housing bubble” that would soon rupture. One of the strengths of the film is the humorous way McKay uses to explain the rather complicated banking and investing schemes that were involved in the event.
The first group was led by socially awkward but brilliant neurologist Dr. Michael Burry, M.D. (Christian Bale). The manager of Scion Capital LLC hedge fund, he researched the actual strength of the variable mortgages that were bundled and sold by the investment banks. Realizing they were seen as safe but inevitably going to fail, he talked the investment banks into selling him a short position on the bundled investments of over one billion dollars.
The second group was another hedge fund managed by Mark Baum (Steve Carell). An angry and cynical manager who had a ragtag team assisting him, Baum is a fictional character loosely based on the real Steve Eisman of FrontPoint partners.
A third fund that identified the problem was two young men who created Brownfield Capital. Charlie Geller (John Magaro) and Jamie Shipley (Finn Wittrock) started the hedge fund right out of college and had parlayed their own $100,000 into an impressive $300 million. Assisted by their eccentric and paranoid neighbor Ben Rickert (Brad Pitt) whose investment banking connections and knowledge allowed them to profit from the nation’s distress, they inappropriately celebrated the crisis.
Perhaps the most powerful moment in the story, told with humor to soften the alarm, is the moment near the end of the film when…well, we will not spoil the moment. But it is a fitting irony that both reveals the depth of the problem and the powerlessness and often innocence of investors.
The credits describe the 5 Trillion dollars in pensions and real estate that disappeared because of this debacle and how the government not only bailed out the banks but the bankers gave themselves bonuses. The sad part is that none of that is fiction.
- What did you personally experience in 2008 when the individual wealth of the nation took a 5 Trillion dollar loss? How does this film effect you as you think back to your personal loss?
- The film claims that many of the instruments used on Wall Street are simply to confuse the investor. Have you found that to be true?
- If we do not participate in the investment opportunities of Wall Street where would you recommend we invest for the future?