Movie Review: The Big Short (2015)
by Alan F. Zundel
“The Big Short” pulls off the improbable feat of being highly entertaining, educational, and timely all at once. This is fitting, as it is the improbable tale of an odd collection of traders who bet against the housing market before the 2008 crash and won.
Seem like old news? It would be if the problems in our financial industry had been cleared up since then, but as the ending coda makes quite clear, they have not. And as the coda also hints, this Presidential election will be a referendum on what we are going to do about it—for better or worse.
Based on the 2010 non-fiction best-seller by Michael Lewis, it follows three sets of traders who peeked behind the curtain when everyone else was mesmerized by the Wizards of Oz on Wall Street. (Most of the characters are fictionalized versions of real people.)
Dr. Michael Burry (Christian Bale) runs an investment firm and is good with details because he has Asperger’s syndrome. He digs into the specifics of the mortgages that have been bundled into supposedly safe investment vehicles and goes to several banks offering newly created credit default swaps, essentially purchasing an insurance policy guaranteeing the value of an asset. He pays a huge monthly premium to the banks, but if the housing market tanks he will win even huger.
Word on the Street of these strange transactions (everyone else thinks Burry is nuts) reaches Jarred Vennet (Ryan Gosling), who figures out what is happening and goes around to the banks to try to get them to bet against the market. He is repeatedly rebuffed until he reaches the small trading outfit of Mark Baum (Steve Carell), who is intrigued because he already knows enough about the workings of the financial industry to hold it in contempt. He investigates the housing market and finds corruption on a scale even he didn’t imagine.
The third set of traders starts with a couple of young guys barely out of college who created their own investment company (John Magaro and Finn Wittrock). They come across a sales pitch pamphlet written by Vennet and solicit the help of a former investment banker who was a neighbor in Colorado (Brad Pitt) to front them in their trades. The banker, like Baum, is sour on the morals of the financial industry and willing to help them place bets against the market.
This all plays out in wickedly funny exposition, with Gosling and guest celebrities often addressing the movie audience directly to explain what is going on. Bale and Carell are particular stand-outs in a uniformly excellent cast. They’re funny as eccentrics with abysmal social skills but also provide a dramatic center to the film when events seem to be turning against them. Far from being villains, you want to root for them as the rare honest men who can’t understand why no one else sees the emperor has no clothes.
All is not funs and games, however, as you get increasingly frequent glimpses of the effects of these abstract transactions on the lives of ordinary people. This sobering undercurrent crests in a climatic outburst when Pitt’s character yells at his youthful colleagues for celebrating their win, informing them of how many people will be losing their homes, their jobs, and even their lives when the economy crashes.
Director and co-writer (with Charles Randolph) Adam McKay somehow manages to maintain a tone which balances the multiple threads of the story and multiple emotional responses invoked by it. This is no small achievement, although the show runs so smoothly you’d think it was easy.
My one small critique would be that the movie gives the impression that chicanery in the housing market was the root of the problem, when in my opinion the rot goes much deeper. A larger view would show how and why the investment industry shifted from investing in productive work (i.e., making real things or selling useful services) to speculation (i.e. gambling with other people’s money) and promoting debt (i.e., preying on people trying to hold on to an eroding standard of living).
The film mentions early on how the economy shifted direction in the 1970s but doesn’t really go into the reasons for this, but maybe that’s asking too much from a two-hour movie. The lesson either way is the same lesson anyway.
It comes down to this: if everyone begins buying into a culture of taking advantage of other people, the foundation of a free society—trust in your fellow citizens—erodes. The only way to maintain order then is raw power. That is when police states and dictators emerge.
Can’t happen here? Conventional wisdom ten years ago said the housing market, let alone the world economy, wasn’t going to crash.
Are you willing to bet on it?