The Big Short
released 2015
www.ink2quill.com

“The Big Short” is an American film based on the Michael Lewis book called “The Big Short: Inside The Doomsday Machine”. This is the same Michael Lewis that wrote “Liars Poker: Rising Through The Wreckage On Wall Street”. (I highly recommend it as a fun and informative read). It was produced by Dede Gardner, Jeremy Kleiner, Amon Milchan and Brad Pitt and directed by Adam McKay. The screenplay was written by Charles Randolph and Adam McKay. It stars a huge cast with famous people playing themselves. That cast includes Ryan Gosling, Rudy Eisenzopf, Casey Groves, Charlie Talbert, Harold Gervais, Maria Frangos, Christian Bale, Hunter Burke, Bernard Hocke,  Shauna Rappold, Brandon Stacey, Aiden Flowers, Peter Epstein, Anthony Marble, Silas Cooper, Steve Carell, Leslie Castay, Andrew Farrier, Tracy Letts, Ingrid Steed, Vanessa Cloke, David Zalkind, Carrie Lazar, Marisa Tomei, Rajeev Jacob, Adepero Oduye, Stanley Wong, Colette Divine, Melissa Leo, Marcus Lyle Brown, Byron Mann, Sue-Lynn Ansari, Nicole Barre, Tom Bui, Jae Suh Park, Jeffrey Estiverne and Brad Pitt among many others.

The Big Short IMDb website

“The Big Short” is a description of the housing bubble that struck the US around 2008. It is three separate but parallel stories of people who saw the bubble of fraud before it collapsed and realized the impact a collapse of that scale would have on the US and the World. The film gives us a glimpse at how deeply corruption runs in the financial industry.

Corruption runs deep on Wall Street and the world financial markets. “The Big Short” is a glimpse into that corruption from different perspectives of the financial world. Several scenes sum up the nature of the corruption very well.

The first scene that comes to mind is where a regulator, played by Melissa Leo, from the S&P 500 says that she will not give an accurate rating of financial instruments because the companies that sell those instruments will take their business several blocks down Broadway to Moodys where they can get the rating they want.

There is another scene where the famous chef Anthony Bourdain describes what he does with fish that won´t sell and likens it to how financial instruments are repackaged to look more appealing. So eventually the consumer has no idea what they are buying and neither does the financial institutions selling them.

The last scene is where Selena Gomez describes the long line of investors who bought the toxic debt and constitute the Ponzi pyramid. If you look at financial instruments as a wager or bet and the repackaging of those instruments as someone making a bet on the bet, you create a line of people who bet but are detached from the original transaction. This also gives the false idea that there is more money in the system then there really is because that line of people all put money in the system and expect to get paid but most of them won´t. It´s basically a Ponzy scheme where the investors who get out first will be the only ones paid.

Now one important question you might ask is where was the Federal Govt. in all this? Well it seems they were on the sidelines twiddling their thumbs. You see no politician or govt. bureaucrat wanted to touch this for fear of being scapegoated or being the bearer of bad news. So things spun out of control as the years passed and when the housing fraud bubble could get no larger it burst and millions lost their homes, financial assets and the economy is still shrinking from it in 2016.

So to sum things up, Michael Lewis gives us his views on why the housing bubble swelled and burst. The first and probably most important was the lack of oversight or transparency. All the regulatory bodies that were supposed to regulate the industry and give honest ratings of financial instruments refused to do so because they were being paid by the financial institutions at the center of the bubble. This has huge implications because it allows for the creation of toxic debt.

The next reason for the fraud bubble was the toxic debt. More precisely the creation of financial instruments based on toxic debt. To clarify what I mean by toxic debt, it´s the equivalent of building a skyscraper on quick sand and continuing to build up as the foundation becomes more and more unstable and then selling the new apartments to unsuspecting people. For the longest time housing has always been considered a reliable asset in the US that always increased in value. When mortgages were given to people who could not afford them with interest rates that could rise to loan shark levels this scheme was a recipe for disaster. There was fraud on all levels of this housing bubble. From the fraudulent inducement of the real estate companies toward home buyers to the investment banking companies that repackaged these toxic debts and sold them to investors.

The last reason Michael Lewis states is the Ponzi scheme structure of the housing bubble. More and more people were throwing money into a system where only a small few would see any money. Investors lost their money, home buyers lost their homes and many people in the financial services industry lost their jobs. The impact of this fraud was ginormous and impacted the entire world economy.

I really liked this film because it exposed so many problems plaguing the US today. It´s funny and disturbing and describes pretty well a moment in our past that still haunts us today. Unfortunately, truth be told, we are a nation of liars. Lying has become such an acceptable part of our culture. It´s deeply disturbing and it doesn´t look like things will change. Until we come to terms with this fact and decide to change, these types of frauds will plague us in the future.

Check out “The Big Short”. It´s worth it.

( Commentary by   www.ink2quill.com )
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