by Mark Gabrish Conlan • Copyright © 2016 by Mark Gabrish Conlan • All rights reserved
Three nights ago Charles and I watched a movie I haven’t had
the chance to comment about until now, which means I’ll inevitably give it
shorter shrift than it deserves: The Big Short, a 2015 movie directed by Adam McKay (his first feature for theatrical
release — but then Citizen Kane
was its director’s first feature
for theatrical release, too!) from a script by McKay and Charles Randolph based
on a true story as told in a nonfiction book by former financial-services guy
Michael Lewis. The story it tells is about a handful of people in the financial
industry, most of them in charge of small-scale hedge funds (one of the key
players was part of a hedge fund run out of the huge Morgan Stanley investment
bank but administratively separate and not responsible to the bank’s hierarchy
— sort of like a cosmetologist renting booth space in a salon), who realized at
pretty much the same time (around 2001, as the markets were just recovering
from the bursting of the last
stock bubble, in high-tech) that America’s housing market looked sound but was
really in deep trouble. The story really began in the late 1990’s, when a man from Citibank named Lewis Ranieri
(played in the film by Rudy Eizenkopf) had the idea of pooling hundreds or even
thousands of home loans into a package and selling securities based on them.
They became known as “mortgage-backed securities” and were considered
ultra-safe investments because virtually all home buyers regularly made their
mortgage payments. But then the investment houses selling these things got
greedy, and so did the banks issuing the mortgages; in the late 1990’s it
became considerably easier than it had been to get a home loan because the bank
issuing the loan was no longer on the hook if the borrower didn’t (or couldn’t)
make the payments.
By the mid-2000’s we’d entered the age of the “liar’s
loans,” in which banks would lend people money even if they didn’t have a job,
a credit history or any of the other traditional indicia of financial
soundness. The reason they were willing to make loans with such a blissful
disregard of whether or not the borrowers could ever pay them back was that
they were no longer on the hook if and when the loans went bad; they were
selling them to “servicers,” who in turn were selling them to other companies,
who in turn sold them to other companies, with the result that when the people stopped
making their payments it was often difficult to trace the loan and find out who
owned it and therefore had the legal right to foreclose on it. This also meant
that the so-called “AAA” mortgage-backed securities were in fact highly risky
investments and the assumption built into the sales pitch that 99 percent of
the loans in these things were going to be paid back regularly was so much B.S.
The protagonists of The Big Short
are Dr. Michael Burry (Christian Bale, making another movie about financial skullduggery
and one that’s considerably better than American Hustle!), who left medicine for Wall Street and ran a hedge
fund called Scion Capital; Jared Vennett (Ryan Gosling), an official at the
U.S. branch of Deutsche Bank who catches on to Burry’s insights; Mark Baum
(Steve Carell), an idealistic stockbroker who preaches the evils of greed to
his colleagues at inconvenient moments and sees the impending collapse of the
housing market as a sort of divine retribution; Charlie Geller (John Magaro)
and Jamie Shipley (Finn Wittrock), who’ve built up $100,000 of their family’s
money into a $30 million nest egg and want to keep playing the game; and Ben
Rickert (Brad Pitt, wearing bushy hair and glasses and for once turning in a performance instead of letting his blue eyes and baby face do
his acting for him), who like the painter character in Magnificent
Obsession got disgusted with the greed and
viciousness of Wall Street and quit finance, but gets sucked back into the game
when Geller and Shipley need his help to get an ultra-restricted trading
license usually available only to people with fortunes (their own, or other
people’s they’re managing) in the billions.
Inspired largely by the revelation Dr. Burry has when he actually reads the full text of a mortgage-backed security and sees
for himself how many of the loans it contains are shaky, these unlikely
partners concoct a scheme to buy credit default swaps on the housing market,
thereby selling it short — a bit of financial-industry legerdemain that allows you to sell something you don’t own and
thereby make money on it if its price goes down — against the opposition of
their financial backers and virtually everyone else on Wall Street who can’t
believe anybody is actually betting against the housing market. The Big Short could have been an excessively dull film — one
problem making a movie about white-collar crime is that it’s boring to watch
and needs a lot of exposition to
tell you why this group of people in suits (and it’s almost all men — a couple
of the participants in the Big Short have wives and we catch glimpses of them
occasionally, but virtually no women are shown working on Wall Street itself
and the avalanche of F-bombs and S-bombs on the soundtrack make the whole scene
seem like a giant frat party and were the main reason the ratings board gave
this movie an R for “pervasive language”) is doing whatever they’re doing and
what’s illegal or at least unethical about it. McKay and Randolph solve this
problem by turning their movie into a sort of bastard cross-breeding between
Charlie Kaufman and Michael Moore, complete with cameo appearances by
celebrities like Selena and Anthony Bourdain to deliver guest explanations of
some of the financial skullduggery involved, including the collateralized debt
obligations (CDO’s) sold from mortgage-backed securities and the CDO’s that
were piled on top of CDO’s until they were called “synthetic CDO’s” because
their value (if any) derived not from the mortgage-backed securities themselves
but the bets other investors were making on them — with the result that people
were investing (and ultimately losing) billions on financial instruments
several generations removed from the production and consumption of goods and
services which is what an economy is supposed to be about.
The film is a
nail-biting suspense tale — can our intrepid financiers hold out long enough
before their predictions come true and the housing bubble collapses? — and
though McKay and Randolph leave out one of the sourest and most radical points
Lewis made in his book, which was their fear that the government would step in
to bail out the home borrowers and thus render the Big Short a huge money-loser
(they needn’t have worried, a point Lewis made in the book: when government did intervene it was to save the asses of the big
financiers and the mega-banks, and the poor home buyers got lost in the shuffle
and forced into foreclosure and economic devastation), for the most part they
are able to turn this story into an indictment of capitalism, not just one particular
manifestation of it. Wall Street is depicted here as what essentially it is: a
bunch of super-rich people making casino bets on parts of the economy that can
ruin the lives of real people, and who simply don’t care that their financial
success is going to mean unemployment, homeless and privation for hundreds of
thousands, or even millions, of the 99-percenters out there. It’s also a
machine that systematically drives away anyone with a conscience, or even the
hint of one; it’s Rickert’s character, the one who’s already exited Wall Street
before the story begins, who points out to the other Big Shorters that if
they’re right millions of people are going to be ruined financially and the
American — and possibly the world — economy is going to tank. The grim picture The
Big Short paints of the world we live in is
one in which anyone with any real compassion for their fellow human beings is
systematically driven away from any position of power and replaced with the
most unscrupulous and (dare I say it?) evil — less in the immoral than the amoral sense — people humanity as currently constituted can
generate. And yet so enthralled are people in general and Americans in
particular with the idea that making money is a sign of superior wisdom,
sagacity and morality that this country is quite likely about to elect a
President whose only qualifications
for the office appear to be a massive bank balance and an equally massive ego!
