The Big Short

The Big Short is the latest entry into the growing genre of films about corporate malfeasance. Maybe we should call it “Corporate Noir?” It joins films like Arbitrage, The Wolf of Wall Street, and probably the best of them so far, J.C. Chandor’s Margin Call. These films all depict the dark dysfunctional underside of American commerce.
Based on Michael Lewis’ non-fiction account of the 2008 economic collapse, which started in the housing and credit sectors, the plot concerns a group of high-finance outsiders who saw what was happening in the mid 2000’s and decided that they may as well profit off it. The first to see it is Dr. Michael Burry, played by Christian Bale who runs the SCION mutual fund. Burry probably sits somewhere on the autism spectrum and has the ability to do a deep dive into prospectuses. He discovers that the majority of mortgages in many mortgage funds are sub-prime, which means a lot of money was lent to people who couldn’t pay it back and this bad debt was being laid off on the investors in the funds, which often included state retirement programs. Fund rating companies went along with it and gave these funds triple A ratings because they got all their business from the brokers and if they didn’t give the funds high ratings, the brokerage firms would go to the competition. Plus, historically, mortgages had always been seen as a safe, even boring investment sector.
Burry decides to short sell these funds, which means a broker or a bank buys them, with the promise that Burry will eventually buy them at whatever market price is currently in effect. If the fund fails, that price is ridiculously cheap. He is essentially betting that these funds will fail. When the whole thing collapses Burry’s fund stands to make billions.
Gradually word about what he’s doing gets out. Two more groups decide to invest as well. They concoct similar schemes.
Obviously, the problem facing the screenwriters here is one of exposition. This plot turns on these esoteric business concepts. That means there’s a lot of explaining going on. Fortunately, Charles Randolph and Adam McKay, the screenwriters, are very good at dialog. These concepts are clearly explained for the most part. McKay also directed. Also they constructed their plot in such a way that the exposition is what moves the events along. The one team of investors led by Mark Baum, played by Steve Carell, investigates the mortgage funds to confirm what Burry is assuming. They talk to real estate agents, mortgage financiers and brokers, learning about the corruption at the heart of the system. They explore neighborhoods in Florida where there are hundreds of houses with maybe four of them inhabited.
Often the characters break the fourth wall to explain a concept further. Jared Vennett, played by Ryan Gosling, another fund manager, does this the most. He serves as the narrator of the story. There are points where things happen and a character will stop and say, “OK, it didn’t really happen this way.” Or, “Incredible as it seems this is exactly what happened.” They also bring in celebrities, playing themselves, to explain certain concepts. For example we see Margot Robbie in a bubble bath explaining why these mortgage funds are so unstable.
These meta non-fictional elements add a certain energy to the film. You think you’re seeing something you’ve never seen before. The plot kind of falls apart at the end, mostly because I did get lost and didn’t understand what was going on. But for the most part it worked and it could be that this is a film you need to see more than once.
The performances of the ensemble cast are terrific. Chief among them is Steve Carell, who plays Mark Baum as a principled man but a cynical curmudgeon who thinks he can’t be surprised by the depths of everyone else’s venality. He’s wrong, of course.
Christian Bale turns in another amazing performance as an eccentric genius. Brad Pitt plays a retired broker who left because he was disillusioned with the whole system but comes back in to help a few friends. He also is surprised by the fact that the corruption is so pervasive when he didn’t think he could be. He’s also aware of the human cost of what’s happening.
I read once that libertarians believe that people have an innate instinct for self-preservation; that they will always do what is in their best interests. This seems like a dubious idea to me. People do stuff against their own interests all the time especially in the realm of money. But even if it were true, it’s certain that clever dishonest people will create scams and contracts that are complicated enough to confound this instinct. Evolving on the savannah did not leave us with an innate understanding of adjustable rate mortgages. So even in a libertarian paradigm the response must be the same. There must be honest regulation and consequences for hurting other people.
Nobody responsible for the crash of ‘08 is currently in jail. The Big Short makes this point. The characters in this film were all insulated from the consequences of this disaster. This is in part a comedy and a caper film. But it also shows what was at stake with all these shenanigans. People lost homes, pensions, and even their lives because the banks decided they weren’t making enough money.
The makers of The Big Short want you to get mad. I’m mad.

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