Sub-prime mortgages, credit default swaps, and CDOs. Most of us had no idea what they were. We just knew that the economy almost collapsed in 2008, leaving the Wall Street Banks, AIG, and entire financial industry as “too big to fail.” The television movie, Too Big to Fail, told the story from the perspective of Ben Bernanke, Hank Paulson, and the big Wall Street bankers. Now we get the story from the perspective of the few hedge fund managers who saw it all coming and bet against the economy.
The Big Short comes out later this month, and I had the chance to preview it today. So here is must-see viewing for your holiday viewing.
The Big Short (Christian Bale, Steve Carell, Brad Pitt, Ryan Gosling) – In the last six years, three best-selling Michael Lewis books have been made into movies: The Blind Side, Moneyball and now The Big Short. The first two resulted in multiple Academy Award nominations; this one should, too. The Big Short tells the back-story of the so-called Great Recession of 2008 through the eyes of three fund managers who foresaw the housing crisis and “shorted” the mortgages that almost destroyed the global economy.
Christian Bale plays Dr. Michael Burry, the enigmatic, quirky, anti-social, hard rock-loving geek who led Scion Capital in the early 2000s. His deep look into the sub-prime mortgage market revealed the house of cards built by Wall Street’s big banks through complicated financial instruments. He convinced Goldman Sachs to sell him Credit Default Swaps, which were essentially bets against the until-then-stable mortgage market.
Steve Carell plays it serious again (as he did in Foxcatcher), this time as Mark Baum, an equally enigmatic, anti-establishment, socially inept contrarian who sees evil everywhere. As told here, a misdirected phone call to Baum’s small hedge fund team at Merrill Lynch led him to Jared Vennett (Ryan Gosling), a trader (actually named Greg Lippman) at Deutsche Bank who realized that subprime mortgages would bring down the housing market. Together, they bet against the pooled asset Collateralized Debt Obligations (CDOs) that the big banks and insurance companies created to hide their bad mortgages.
Meanwhile, the two founders of Brownfield Capital (actually Cornwall Capital), a small “garage band” hedge fund in Colorado, uncovered the same thing. Jamie Shipley (Finn Wittrock) and Charles Geller (John Magaro) couldn’t get Wall Street to take them seriously due to their small size. So they enlisted the services of neighbor Ben Rickert (Brad Pitt), a Wall Street dropout, to buy the credit default swaps they needed. And they took it a step further, shorting even AA-rated mortgages for just pennies.
While The Big Short is told through these three firms, it essentially rates as a history of the financial crisis. And a scary one. The Wall Street bankers, the real estate agents, the Securities and Exchange Commission, and the press are all portrayed as inept, greedy co-conspirators which, it turns out, is just plain true.
To make the story palatable to the public, director Adam McKay (of the Anchorman trilogy) uses two interesting techniques. He has Gosling’s character “break the fourth wall“ and talk to the audience. At the same time, he uses celebrities, including Selena Gomez and Anthony Bourdain, to explain to the audience how the mortgages work. Yes, it is disruptive but it also provides the average viewer with a better understanding of what they are seeing fictionalized on screen.
The Big Short is an important film and a cautionary tale. During this already wearisome presidential campaign, it also serves as a well-timed political tale of how easy it is to manipulate financial markets and leave the public as the unwitting pawns of the ruling class.
Carell, Gosling and Marisa Tomei (who plays Mark Baum’s wife in a cameo), who starred together in Crazy, Stupid, Love, are reunited here. An amazing supporting cast bolsters the already star-studded line-up. This is must-see movie viewing even if you still walk away not completely understanding how we all got into the mess we did less than a decade ago.