The Big Short Review
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Michael Lewis' The Big Short is IMO one of the two indispensable books to help people understand the crash of 2008. The other book is Andrew Ross Sorkins' Too Big to Fail.
HBO's movie based on the latter was reasonably true to Sorkins' exhaustive, 624-page book given the compression that had to take place to keep a movie under 2 hours.
I haven't seen Short's movie as yet... not exactly the big-screen spectacular it takes to grab my movie dollar... but based upon the ad snippets, it seems to have wandered a bit from the book. The ads seemed to play up some pseudo-altruistic motive by some of those involved in the short of the century. They made it seem as if they were making the banks "pay for their greed" or some such stuff. That is not a plot theme I remember from the book... at all.
Regardless of the sources of the bad loans (which is where the political disagreements come in) the book was about the ferreting out of the most toxic CDO's (Collateralized Debt Obligations) and insisting that CDS's (Credit Default Swaps) be issued for their purchase on the identified CDO's... and then sweating out their bet.
Lewis did supply enough backstory on how CDO's came to exist, flourish and ultimately be abused to give context, but at it's heart the book was about the characters who found themselves in pursuit of the same prey... massive profits... and how they got there.
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The Big Short
Paramount
R. 130 min
I will admit that even though I watch a fair amount of political cable shows, left and right, and try to follow along with Financial issues I find the subject baffling.
On top of that even if one does consult an actual economist it's easy to get a skewed idea of what's going on depending on that economists ideology. In our politically charged world grassroots populism is always a factor and there will always be a fascination to look behind the curtain at the movies and shakers, crooks, liars and thieves of the financial establishment.
THE WOLF OF WALL STREET chronicled one man's memoirs of the excesses and here with THE BIG SHORT, they go even further, attempting to explain the great recession and the collapse of the housing bubble in the late 80's.
Depending on your political point of view you could categorize this as left wing propaganda or a hard-hitting expose, it's up to you. Personally I thought it was a pretty entertaining film about a subject that could easily bore you into a coma in a relatively short time.
At the outset we are warned that banks have their own cryptic language filled with impressive sounding phrases meant to confuse and obfuscate fiduciary matters from the great unwashed.
Ironically that's exactly what this film does as well.
The idea is that financial prodigy Michael Burry (Christian Bale), has concocted a brand new instrument which will eventually bring down the economy of the United States and the world. Mark Baum (Steve Carell) is a crusader devoted to protecting the common man and his investments.
At the heart of the plot is the perfect storm that happens when the newly created mortgage-backed funds meet the flood of subprime loans. The subprime loans make mortgage is ridiculously easy for those who probably shouldn't have been given credit in the first place. Examples might be liars loans where the lender is forbidden from actually finding out the borrowers income or work record, the interest only loan in which the borrower never gains an inch on the principle, and what the film refers to as ninja loans. No income no job. Are the borrowers who sneak through the loopholes to get loans they can't afford at fault?
Are the bankers who accept commissions whether or not the loan stinks at fault? Are the financial institutions that issue triple-a ratings for dangerous funds at fault?
I'd say it's a resounding YES on all three counts.
Still thanks to some snappy writing and fine performances by Bale, Carell, Brad Pitt and the rest, the big short winds up a lot more entertaining then 2 hours of watching Fox Business or CNBC.
The film's political ideas are fairly obvious here and even though I'd be skeptical of the premise that one guy single handedly took down the world economy, I admit there are more than enough crooks to go around.
C+
WSS
W
The idea is that financial prodigy Michael Burry (Christian Bale), has concocted a brand new instrument which will eventually bring down the economy of the United States and the world. Mark Baum (Steve Carell) is a crusader devoted to protecting the common man and his investments.
At the heart of the plot is the perfect storm that happens when the newly created mortgage-backed funds meet the flood of subprime loans. The subprime loans make mortgage is ridiculously easy for those who probably shouldn't have been given credit in the first place. Examples might be liars loans where the lender is forbidden from actually finding out the borrowers income or work record, the interest only loan in which the borrower never gains an inch on the principle, and what the film refers to as ninja loans. No income no job. Are the borrowers who sneak through the loopholes to get loans they can't afford at fault?
Couple points, Steve...
- Burry's "creation" the CDS was simply a means of shorting CDO's. It did not "bring down" anything. The CDO's did that. The CDS's were just bets that they would.
- Burry did not create them. He approached Goldman Saks about shorting CDO's and GS did the rest. GS and everyone were happy to sell Burry and others all the CDS's they wanted as they all believed the Mortgage securities were "rock solid" and housing markets "were never going to go down." So all the proceeds were simply more profit for the firm... and its employees.
- CDO's were not "newly created"... they were introduced in 1987 as a way to turn loans into an investible bond issue. Home loans were relatively late to the game, but they were the "brass ring". Their inclusion was the floodgate that opened. Prior to that individual mortgages could be purchased, but trading activity was virtually nil, i.e., Wall Street had no means commoditize them. The CDO opened a floodgate of commissions and fees.
- CDO's ripped through the inventory of existing mortgages relatively quickly. Think about notices you received in the early 2000's about your mortgage being sold... that was your mortgage on it's way to a CDO. The last home I bought in 2005 was with a local bank... two months later it was sold to a national lender.
- As the supply of existing mortgages were exhausted the answer was for more loans to be issued. Simply supply and demand... To do so loan standards were lowered. And since the loans were no longer being held on the books of the loan originators, even the "standards" were often not followed... no "skin in the game".
My other favorite story from the unravelling was the repository of the loan records. Once it was a function provided by the government for a fee. But the mortgage industry argued they could do privatize the function more cost effectively and finally convinced Congress to let them do so.
When the shit hit the fan and it was time to produce the loan records in foreclosure proceedings, lo and behold, the records had to be (illegally) recreated in many cases because it turned out the ultimate cost savings could be realized by not keeping the records at all.
Some other day I'll tell you about how AIG got pulled into this whole CDO mess... unless the movie version of The Big Short did not cover that.
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The movie is a couple of hours long.
One question I will ask you is something that I've heard from people who should know and that I believe.
Liars loans, no paper loans, interest only loans and the ones they mention in the film NINJA loans were made possible in part by the new regulations ensuring the privacy of individual borrowers in order to encourage home ownership and to put an end to red lining.
What is your understanding on those regulations?
WSS
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In a word limited, but I know the reg's stemmed from the same piece of legislation that repealed Glass-Steagall. Phil Gramm was a principle "sponsor", but the key features of which were crafted by lobbyists for the banking, insurance and investment industries.
As for the consumer privacy "protections" that rose from the bill... all I really know is that they are responsible for the annual notices I get from lenders and some business. And buried inside a bunch of legalize about what about me they share with who is a means by which I can "opt out" of the sharing. Same right as I have when it comes to the credit bureaus. Same option that will make it difficult to impossible for me to get a new credit card or loan should I want either.
Is that what you understand?
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I'd give it 3.5 stars. It was definitely entertaining, albeit a little lacking in some areas.
MUCH better than most of the other oscar nominees this year.
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I'd give it 3.5 stars. It was definitely entertaining, albeit a little lacking in some areas.
MUCH better than most of the other oscar nominees this year.
I'd give it 3.5 stars. It was definitely entertaining, albeit a little lacking in some areas.
MUCH better than most of the other oscar nominees this year.
I have two more I need to see this coming week room and Brooklyn. I'm surprised the Danish girl wasn't nominated just because it's about a transsexual.
I will have the reviews up for spotlight and the revenant soon.
WSS
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I'd give it 3.5 stars. It was definitely entertaining, albeit a little lacking in some areas.
MUCH better than most of the other oscar nominees this year.
I have two more I need to see this coming week room and Brooklyn. I'm surprised the Danish girl wasn't nominated just because it's about a transsexual.
I will have the reviews up for spotlight and the revenant soon.
WSS
I have two more I need to see this coming week room and Brooklyn. I'm surprised the Danish girl wasn't nominated just because it's about a transsexual.
I will have the reviews up for spotlight and the revenant soon.
WSS
look forward to reading it.
I'm watching "trainwreck" tonight.
I've heard it's a trainwreck so we'll see how it goes
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And I think they don't want another transexual movie since jared leto and matt mcC won something for it the other year.
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I have two more I need to see this coming week room and Brooklyn. I'm surprised the Danish girl wasn't nominated just because it's about a transsexual.
I will have the reviews up for spotlight and the revenant soon.
WSS
look forward to reading it.
I'm watching "trainwreck" tonight.
I've heard it's a trainwreck so we'll see how it goes
look forward to reading it.
I'm watching "trainwreck" tonight.
I've heard it's a trainwreck so we'll see how it goes
It was ok. Nothing special.
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And I think they don't want another transexual movie since jared leto and matt mcC won something for it the other year.
And I think they don't want another transexual movie since jared leto and matt mcC won something for it the other year.
Dallas buyers club and that Oscar was well deserved.
WSS
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