The Big Short

“The Big Short,” the film adaptation of Michael Lewis’s book of the same name, explains the 2008 financial crisis by detailing the actions of four groups of investors who foresaw the burst of the housing market bubble. Lewis (Moneyball, The Blind Side, and Boomerang) is in very familiar territory depicting the dark side of Wall Street; his first book, Liar’s Poker, recounted his days as a Wall Street bond market manager in the mid-1980s “when a great nation lost its financial mind.” According to Lewis, not much changed in twenty-five years – save a few names and outlandish increases in the amounts of money bet and squandered on Wall Street.

big shortOur family has been doing a Christmas Day movie for the past few years. Our initial Christmas Day excursion was in 2007 when we took in “Walk Hard: The Dewey Cox Story.” The next year we saw what still rates as one of the best of the Christmas Day pics: “The Curious Case of Benjamin Button.” “Up in the Air” (2009) and “Hugo” (2011) were good, but not memorable. “Anchorman II” (2013) was, predictably, funny in a juvenile type of way. “Les Miserables” (2012) had a great Sacha Baron Cohen as Thénardier, and . . . a whole lotta of singing.

“The Big Short” is well worth seeing. The movie title refers to the practice of short selling a stock or bond – betting that it will tank. The protagonists bet, correctly, that the housing market bubble would burst. The movie’s two hours plus run-time works continually to explain this and other components of the 2008 economic swoon to both those who have and haven’t delved into its causes. The movie’s narrative, including “breaking the fourth wall” explanations from Ryan Gosling’s character, and cameos from chef Anthony Bourdain, actress Margot Robbie, entertainer Selena Gomez, and economist Richard Thaler, help explain complex derivative trading, credit default swaps, collateralized debt obligations, and other roll-off-the-tongue market descriptors.

Neil Irwin, senior economics correspondent for The New York Times, reviews the movie favorably. He is critical, however, of the movie’s notion that no one – save the four groups of protagonists – foresaw the burst of the bubble. Irwin rightly claims that many other people suspected the bubble’s presence as early as 2005; the ferocity of the bubble’s burst is what caught so many by surprise. Subprime mortgage loans’ ability to corrode supposedly walled-off safer securities wiped out dreams on Main Street and Wall Street. American (and worldwide) common good took a beating: jobs and pension funds were lost; properties were squandered; and social and economic inequalities, on the rise for a generation, were exacerbated.

Steve Carell’s character, Mark Baum (Steve Eisman in real life) – haunted and obsessive – doggedly seeks out some sort of justice in the midst of the darkness. He’s a Wall Street player, undoubtedly, but the unmitigated fraud that imbues the financial side of the housing market won’t let him rest. His pursuit of what turns out to be contorted justice gives a glimmer of hope.

As 2016 approaches, we’re still a society that emphasizes fiscal over social policy. A balance between the two categories of policies would be an improvement. The lures of consumerism continue to take precedence over concern for and care of the environment. The realization and acceptance that we can’t continue to burn through unlimited amounts of oil and coal to fuel our desires of economic growth at all costs would be another improvement. And many yet believe that market activity, like a washing machine working a load of soiled clothing, somehow turns our collective greed into good. It doesn’t – and that’s the simple lesson of the 2008 crash well-told by “The Big Short.”

————————————————————————————————————

Understanding the 2008 crash, which had much in common with the economic crash of 1929, is essential knowledge for citizens who care about their families, neighbors, and communities. “The Big Short” – book or movie – is a good place to start. If you would like to understand the larger panoramic view, I humbly suggest you read Just a Little Bit More. Until Brad Pitt contacts me (ha!) to make a movie version of JaLBM (he co-produced “The Big Short”), this linked YouTube short on JaLBM will have to suffice!

 

 

This blog and website are representative of the views expressed in my book Just a Little Bit More: The Culture of Excess and the Fate of the Common Good. JaLBM, distributed by ACTA Publications (Chicago), is available on Amazon as a paperback and an ebook. It’s also available on Nook and iBooks/iTunes, and at the website of Blue Ocotillo Publishing.

isbn 9780991532827

If you’re a member of a faith community – Christian, Jewish, Muslim, Buddhist, or other – consider a book study series of Just a Little Bit More. The full-length book (257 pgs.) is intended for engaged readers, whereas the Summary Version and Study Guide (52 pgs.) is intended for readers desiring a quick overview of the work. It also contains discussion questions at the end of all eight chapter summaries.

Readers of both books can join together for study, conversation, and subsequent action in support of the common good.

Advertisements

6 Comments

Filed under Commentary

6 responses to “The Big Short

  1. Excellent Tim! You do such great work and I thank you! Arlin.

  2. Carl Anderson

    After trying to get through (and failing) the three hours plus of “The Wolf of Wall Street” you’ve inspired me to see “The Big Short.” Actually the “Wolf” had some great acting and great insights into the addicting qualities of greed and commerce, especially the Wall St variety, it was too long and a little heavy on the “f-ing” everything. And it is disappointing that after what we went through 2008-10, and the mounting evidence of a serious shrinkage of the middle class, we haven’t had much of any policy change. Let’s pray and work for a more rational health care system, sane gun control policies in our states, and a focus on economic and social health and well-being rather than only growth.

  3. Norb and Geanie Firnhaber

    I’ll have to see this movie. Tim, I appreciate your dogged push about the common good.
    Your blogs accentuate your book. As a b-ball player, golfer, pastor, and fellow Illini, you
    do write well and connect cultural and theological dots…

    For the Common Good in the New Year!

    Norb

    >

  4. John

    I read the book and would definitely watch the movie. While reading the book, though, it was absolutely amazing to note that Michael Lewis only mentions the government’s responsibility as an after though, and as usual he puts all the blame on bankers. But, that’s the usual Michael Lewis bias. He omits details and twists reality to fit his bias.

    Fed policy is what caused the excess capital prior to the crisis and and is the main culprit. I guess, though, blaming bankers as the root cause makes such a better story. Yes, they packaged subprime mortgages into toxic securities and all that, but that’s people, great and fear. Isn’t that what the bible is all about? Greed and fear. The reach for yield.

    The result of course, that these days, the pendulum has swung way too much to the other side and that hurts the middle class as well. Big banks, due to excessive regulation has not lend to small lenders, far more difficult to get mortgages and so on.

    Current excess in student loan debt which also pushes down the middle class, is due to government subsidies. Can’t wait for Michael Lewis’ next book about all the scam schools and evil bankers that caused it.

    At core CPI at its long trend of about 2%, I wouldn’t worry about too much focus about growth and would worry about the unintended consequences of government decisions, including political economic decisions.

    • Hey John – Thanks, as always, for jumping on board. I just saw your comment and had to give it “approval” in order for it to be posted . . . perhaps b/c you used a different email. I’ll get the Burry comment up too. Interesting . . .

  5. John

    I wrote along reply but it wasn’t posted, then noticed this interview with Michael Burry from today, where he notes the following, far better than I could:

    ” The zero interest-rate policy broke the social contract for generations of hardworking Americans who saved for retirement, only to find their savings are not nearly enough. And the interest the Federal Reserve pays on the excess reserves of lending institutions broke the money multiplier and handcuffed lending to small and midsized enterprises, where the majority of job creation and upward mobility in wages occurs. Government policies and regulations in the postcrisis era have aided the hollowing-out of middle America far more than anything the private sector has done. These changes even expanded the wealth gap by making asset owners richer at the expense of renters. Maybe there are some positive changes in there, but it seems I fail to see beyond the absurdity.”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s