The Big Short Movie Review
On Dec. 23, 2015, “The Big Short,” directed by Adam McKay, stunned audiences everywhere. The film, an adaption of a Michael Lewis book under the same name, tackles a topic not everyone might want to pay 11 dollars to struggle through on a Saturday night. It delves into the massive crash of the mortgage market that somehow went unnoticed and the 2008 Financial Crisis on Wall Street.
“The Big Short” flaunts a star lineup before the screen, an intelligent tactic possibly to draw public acclamation and box office sales, ameliorating the fact that the topic itself is complicated for an average theater-goer to comprehend. Steve Carell plays Mark Baum, a depressed pessimist who manages a hedge fund on Wall Street. Christian Bale plays Michael Burry, another eccentric hedge fund manager with a glass eye and wears plaid running shorts to his office job. Brad Pitt enters the spotlight as Ben Rickert, a former Wall Street banker who knows the lay of the land and has been sought out by two young investors looking to get a “seat at the table” of big time hedge funders. The story of how these separate characters come to work towards the same economic reform is narrated by a character making occasional appearances to explain confusing terminology, Jared Vennett (played by Ryan Gosling).
The movie opens on young Michael Burry describing his secluded childhood and how he has always seen things a bit differently than the other kids, literally because of his glass eye and figuratively because of his acclimation to oppression as a child. Winding up in the investing business, this ability came to be advantageous for Burry. With a background of small investments on minor happenings of the stock market and other fluctuating economic systems, Burry had a pristine record in his foretelling. However, he took a bold leap one day when he became suspicious about the decline of the housing market. He had one of his employees forge a protracted list of individual prices of mortgage rates around the country. When Burry saw the list, he discovered the brimming instability of the housing market. With this knowledge he predicted that soon there would be fewer and fewer returns from individual homeowners, and by the second quarter of 2007, the whole market itself would crash. The investment in the failure of a business or system is called “shorting,” and this was exactly Burry’s plan.
With such a ludicrous accusation, none of the big bankers believed his findings, so they allowed him to invest massive amounts of money with the security of believing the market was stable. He established a credit default swap, which would allow him to make a profit on his investment if his predictions proved correct.
Soon, word made it down Wall Street that an independent investor had made big shorts on the housing market. Once Baum and his company caught wind of the news, they looked into the numbers and discovered that his accusations were not as farfetched as they had first appeared. Vennett, a private trader and the narrator of the movie, began a partnership with Baum, making his own credit default swaps.
In collaborative research, Vennett and Baum discovered that in addition to the slowly failing market, the system was being further perpetrated by CDOs, or collateralized debt obligations. These are packaged loans that are incorrectly labeled by the mortgage companies as AAA, although their values are significantly less. It is technically a case of fraud to mislabel value in this way to cover up the failure of a market or business, but no one noticed until Vennett and Baum paid a visit to the American Securitization Forum in Las Vegas to see the source of the synthetic CDOs first hand.
In their conversations with homeowners, realtors and mortgage experts, Baum and Vennett were truly the first to realize the magnitude to which this lie had grown beneath their noses. As a pessimist by nature, the moral wrongness of the felony was obvious to Baum more than it was to Vennett, who was more concentrated on fulfilling their financial bind to the whole project.
Working together, a much larger truth was unveiled, one that went deeper than just the decline of the housing market first shorted by Michael Burry (who was right). Once the synthetic CDOs were ratted out by these small hedge funders, the government bailed out the large banks to cover up the case. Vennett and Baum uncovered a truth showcasing magnificent corruption deep inside the financial institutions of America and the government alike to the uninformed public. Their discovery infuriated many.
To this day, the specifics of what caused the recession of 2007 go unknown to many homeowners who suffered the economic crash themselves. Using Hollywood as a venue to educate Americans on the beautiful strengths and frightening flaws of our country’s past is a new approach to modern entertainment and, in my opinion, a very effective one. As A.O. Scott of the New York Times so aptly put it, “‘The Big Short’ will affirm your deepest cynicism about Wall Street, while simultaneously restoring your faith in Hollywood.”
Yet I think the most accurate summary was a comment made by an anonymous reviewer who described “The Big Short,” “a spinach smoothie skillfully disguised as junk food.”
A bold, yet successful undertaking displaying the epitome of American cinema. Educational, dramatic and funny: everything a perfect movie should be.