Monday, December 21, 2015

The Big Short [2015]

MPAA (R)  CNS/USCCB (A-III)  ChicagoTribune (2 1/2 Stars) (3 1/2 Stars)  AVClub (B+)  Fr. Dennis (3 1/2 Stars)

IMDb listing
CNS/USCCB (J. Mulderig) review
ChicagoTribune (M. Phillips) review (G. Kenny) review
AVClub (J. Hassenger) review

Wall Street Journal (J. Morgenstern) review
Wired (A. Watercutter) review

The Big Short [2015] (directed and screenplay co-written by Adam McCay along with Charles Randolph based on the book [GR] [WCat] [Amzn] by Michael Lewis [wikip] [GR] [WCat] [Amzn] [IMDb]) is a film that both entertained me and made me (at least for the moment) quite angry.   So I guess it accomplished its mission ;-/ -- at least with me.

I've long believed that there are things can be said only with a smile, otherwise they'd just too nasty to bear.  And then there are crimes that are so nasty that short of jail -- and by now we all know that NO ONE is going to jail for crashing the world's economy eight years ago -- the next best option (the _only_ real option...) is to at least publicly ridicule the perpetrators.  And so it is here in this film.  The role of the powerless if at least funny "Court Jester" lives in our time ;-).

So then, this film is about the six "oddballs" in the investor class (hence ALL themselves _quite rich_ to begin with) who _saw_ the housing / mortgage crash coming BET ON IT and ... "WON" while the Rest (indeed, the rest of us ...) lost. 

The principal narrator of the story is the fictionalized Jared Vennett (played in the film by Ryan Gosling) of Deutsche Bank (the character being based on the real-life Deutsche Bank trader Georg Lippmann), who explained that up to the late 1970s "banking was boring."  Yes, it made bankers enough money to "belong to the country club."  But it took the invention of the "mortgage bond" in which blocks of said mortgages came to be "sellable" between banks / investors, for bankers to "make it from the country club to the strip club" (and when banking profits began to get obscene).

To explain HOW banking profits became obscene through the trading of "mortgage bonds" (soon to be chopped-up / rearranged into Collateralized Debt Obligations or CDOs), the film-makers then have Jared invite various iconic (and quite funny) celebrities explain the financial jargon involved utilizing imagery that truly everybody could understand.

So actress Margot Robbie of Wolf of Wallstreet [2013] fame (sitting sipping champagne in a bubble bath) explains the inevitable bubble which resulted from increasingly greedy bankers giving increasingly unqualified people mortgages -- "When you hear 'subprime', think 'shit'" the beautiful actress tells Viewers as she sips said champagne in said bubble bath -- which the bankers would unload to "investors" in "mortgage bonds."

Now why would "investors" BUY increasingly precarious (subprime / shitty) mortgages from the bankers that wrote them?  Well enter world famous chef Anthony Bourdain of CNN - Parts Unknown [2012-15] fame ;-) who explains, while CHOPPING (smelly...) FISH, the cooking trick of "taking LEFTOVER 3 day old Halibut, chopping it up and ... MAKING STEW" saying wryly "It's not THREE DAY OLD HALIBUT, it's A WHOLE NEW THING..." ;-).  Basically those Collateralized Debt Obligations which involved BLOCKS of mortgages were INCREASINGLY MADE UP of A LOT OF "shitty" / "smelly" / "subprime" BLOCKS.

Now even if this were the case -- that these CDOs were increasingly "filled with 'smelly shit'" --  shouldn't have Wall Street's venerable Rating Agencies like Standard & Poor's or Moody's "sounded the alarm" (and give increasingly poor ratings to increasingly poor products, PARTICULARLY when a lot of those "subprime mortgages" started going into default ...)?

Well, it turned out that the Ratings Agencies were _under financial pressure_ to give high (AAA) ratings to the financial products presented them "or else they'd go to the other guys..." as a (fictionalized) Standard & Poors analyst explained (in the film) to two of the "odd balls," Jamie Shipley and Charlie Geller (played by Finn Wittrock and John Magaro) of an upstart Boulder, CO based Hedge Fund, who came to see the crash coming (and staked their financial fortunes on it coming..) and who were becoming _increasingly frustrated_ that obviously deteriorating CDOs (due to the increasing number of defaults existing among the mortgages that they contained) were STILL BEING TRADED as if they were "AAA" (the _safest_ rating for an investment product).  Those two hedge-fund investors came to believe that THE WHOLE RATING SYSTEM HAD BECOME ROTTEN TO THE CORE and came to bet against even the highest rated CDOs in the months before the crash and ... came away making the most money of all the "odd balls" in this story.

Now, what's all this talk of "betting" on financial products collapsing?  Well to explain that, the film makers enlisted Selena Gomez once of Disney but more recently of Spring Breakers [2012] fame in an appropriately glamorous / slinky "black dress" seated besides Behavioral Economics Professor Richard Thaler at a blackjack table in Las Vegas, explaining "Credit Default Swaps" / Synthetic CDOs.   Basically Credit Default Swaps were financial products that served as "insurance" in case a CDO failed, which of course, since they were so highly rated, were assumed to be basically FAIL SAFE.  So Credit Default Swaps ("insurance against failure") were CHEAP (yet the payoff if failure came WAS GREAT, since it was assumed that "this would never happen").  Then since CDOs, despite the increasing default rates within their parts, remained so highly rated, financial institutions became increasingly greedy / careless AND started CHOPPING UP various CDOs already composed of blocks of mortgages of various ratings, into "Frankenstonian" (and increasingly unrate-able) "Synthetic CDOs" or "CDOs-squared."  This practice made the rating of the quality of these financial products akin to gambling, hence the "blackjack" (gambling) metaphor.

Well a small group of disparate "odd ball" investors, six portrayed in this film, saw the Crash coming, bet on it, and ... made a fortune while everybody else (including most of us, who may not have even known that we were involved in such increasingly risky investments -- through pension funds, etc) lost.

It's all very funny, and infuriating.  And remember NOBODY (or NEXT TO NOBODY) ever went to jail for ANY of this.  A great if infuriating presentation!

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