It’s been a decade now since the big banks nearly toppled the world economy. Or so some will insist. But: Who really knows how close they came? One thing is for certain: they did precipitate The Great Recession. And that brought about all manner of misery for millions and millions of folks. And, sure, even a few of the rich and powerful who brought it all about. Or so some will insist.
And now we have yet another film that takes us behind the curtain to expose these guys.
But: Does it expose in turn the systemic nature of these calamitous transactions? Are these folks just “bad apples” or does the very nature of crony capitalism itself make this sort of thing inevitable? Meaning it is always only a matter of time before the next bubble will burst.
In fact, the cronies in Washington make no appearance at all. The folks in the White House and on Capital Hill are scarcely mentioned. They let all this happen but it is as though K street and campaign contributions were incidental to how “the system” is sustained. And until that part is understood we will go on having presidential elections in which folks actually do believe that with regard to the economy there really is a difference between electing Donald Trump or Hillary Clinton.
The only hope here is the fact that the Bernie Sanders campaign is proof positive that you can’t fool all of the people all of the time. Assuming of course that he’s legit.
And the next bubble will burst in part because only a handful of folks really understand the complexities embedded in these labyrinthian “financial” contraptions. Most of us can be told practically anything about them, right?
Here’s the thing though: The system is exposed, sure. But what if crony capitalism really is the least worst of all possible worlds? What if all the other systems really aren’t better?
IMDb
[b]The quotation that appears on screen, “‘Truth is like poetry. And most people fucking hate poetry.’ - Overheard at a Washington, D.C. bar”, was written by director and co-writer Adam McKay after unsuccessfully searching for the perfect quotation to use for that segment.
The character Mark Baum is based on real-life money manager Steve Eisman. Jared Vennett is based on real-life trader Greg Lippmann. Ben Rickert is based on Ben Hockett. Charlie Gellar and Jamie Shipley are based on Charlie Ledley and Jamie Mai.
After Christian Bale met with Dr. Michael Burry, the character he would play in the movie, he asked to have Burry’s cargo shorts and T-shirt, which he then wore in the movie. Bale later said he hoped Burry would make it to the L.A. premiere, “because I really want to sit next to him and see if he’s going to punch me in the fucking face.”
Jeffry Griffin was an extra on set for the day. He was pulled out of the crowd to play Jared Vennett’s assistant, Chris. Later, his role was expanded to two weeks of filming, sharing every scene with Ryan Gosling. [/b]
at wiki: en.wikipedia.org/wiki/The_Big_Short_(film
trailer: youtu.be/vgqG3ITMv1Q
THE BIG SHORT [2015]
Written in part and directed by Adam McKay
[b]Title card: It ain’t what you know that gets you in trouble. It’s what you know for sure that just ain’t so — Mark Twain
…
Jared [to the camera]: In the late seventies banking wasn’t a job you went into to make large sums of money. It was a fucking snooze! Filled with losers! Like selling insurance, or accounting and if banking was boring…Then the bond department at the bank was straight up comatose. We all know about bonds… You give em to your snot nosed kid when he turns fifteen maybe when he’s thirty he makes a hundred bucks. Boring! That is until Lewis rainieri came on the scene at Salomon brothers. You might not know who he is but he changed your life more than Michael Jordan, the I-pod and YouTube put together! You see, Lewis didn’t know it yet, but he already changed banking forever with one simple idea. The mortgage backed security.
…
Lewis [at a meeting]: You got your average persons mortgage fixed rate, thirty years, boring! Same, small payoff. Right! But when you add thousands of them all bundled together suddenly, the yield goes up, but the risk is still small, because…well, they’re mortgages, and who the hell doesn’t pay their mortgage?
…
Jared [voiceover]: The money came raining down! And for the first time, the banker went from the country-club to the strip-club. Pretty soon, stocks and savings were almost inconsequential. They were doing fifty, a hundred, two hundred billion in mortgage bonds and dozens of other securities a year. And America barely noticed that it’s number one industry became boring old banking and then one day, almost thirty years later, in 2008 it all came crashing down! In the end Lewis Rainier’s mortgage backed security mutated
into a monstrosity that collapsed the whole world economy and none of the experts, or leaders, or talking heads had a clue it was coming. And I’m guessing most of you still don’t really know what happened.
…
Michael [on the phone]: Lawrence, I’ve found something really interesting…
Lawrence: Great Michael, whenever you find something interesting, we all sit to make money. What stock are you vowing?
Michael: No, no, no no. I wanna, I wanna short the housing market…You know me…I look for value, wherever it can be found. The fact is that these mortgage backed securities are filled with extremely risky sub-prime adjustable rates. And when the majority of these adjustable rates kick in… in '07 they will begin to fail and if they fail above 15 percent the whole bond is worthless.
…
Jared [voiceover]: Mortgage backed securities, sub-prime loans, tranches…it’s all pretty confusing right? Doesn’t it make you feel bored…or stupid. Well… it’s supposed to. Wall-street loves to use confusing terms, to make you think only they can do what they do. Or even better…for you just to leave them the fuck alone.
…
Margot Robbie [the actress to the camera]: Basically, Lewis Rainieri’s mortgage bonds were amazingly profitable for the big banks. But then they ran out of mortgages to put in them. After all, there are only so many homes and so many people with good enough jobs to buy them… right? So the banks started filling these bonds with riskier and riskier mortgages. That way, they can keep that profit machine churning right? By the way, these risky mortgages are called: Sub-prime. So whenever you hear sub-prime…think: Shit,
…
Rabbi: Mark is an excellent student of the Torah and the Talmud.
Mark’s Mom: Then what’s the problem, rabbi?
Rabbi: It’s the reason Mark is studying so hard. He’s looking for inconsistencies in the word of God!
Mark’s Mom: So has he found any?
…
Michael [at Goldman Sachs]: I wanna buy…swaps on mortgage bonds credit default swap, that will pay off if the underlying bond fails.
Banker: You want to bet against the housing market? Yes
Michael: Yes.
Banker: Why? Those bonds only fail if millions of Americans don’t pay their mortgages. That’s never happened in history. If you’ll excuse me Dr. burry, that seems like a foolish investment.
Michael: Based on prevailing sentiment of the market and banks, and popular culture yes, it’s a foolish investment. But everyone’s wrong…
Banker: This is wall-street Dr. burry, if you offer us free money, we’re going to take it. Michael: My one concern is, is that when the bonds fail I want to be certain of payment, in case of solvency issues with the bank.
Banker: I’m sorry, are you for real? You want to bet against the housing market, and you’re worried we won’t pay you?
Michael: Yes, that’s correct.
…
Banker: We’re prepared to sell you 5 million in credit default swaps on these mortgage bonds.
Michael: Can we make it a hundred million?
Banker: Absolutely! We can make it one-hundred million.
…
Lawrence [on the phone after he learns that Michael dumped 1.3 billion dollars into credit default swaps]: We had an underlying understanding, you wouldn’t act like a goddamn crazy man!
Michael: This is not crazy. It’s all very logical.
Lawrence: So now we pay up premiums on these swaps against housing-market until the mortgages fail? In other words we lose millions until somethingthat has never happened before…happens?!
Michael: That’s correct.
…
Danny: You’re completely sure of the math?
Jared: Look at him, that’s my quant.
Mark: Your what?
Jared: My quantitative. My math specialist. Look at him, you notice anything different about him? Look at his face.
Mark That’s pretty racist.
Jared: Look at his eyes, I’ll give you a hint, his name is Yang. He won a national math competition in China and he doesn’t even speak English! Yeah I’m sure of the math.
Jiang [to the camera]: Actually, my name is Jiang, and I do speak English. Jared likes to say it though because he thinks it makes me seem more authentic. And I got second in that national math competition.
…
Jared [regarding credit default swaps]: Let me put it this way: I’m standing in front of a burning house, and I’m offering you fire insurance on it.
…
Mark: How can these underlying bonds be as bad as you say? It wouldn’t be legal!
Jared: Nobody knows what’s in them! Nobody knows, what’s in the bonds, I’ve seen some that are 65 percent AAA-rating. That I know, for a fact, are filled with 95 percent sub-prime shit. With fico’s below 550
Mark: Gaet the fuck out of here!
Jared: Want me to really blow your mind? When the market deems a bond too risky to buy, what do you think we do with it?Take a guess! You think we just warehouse it on the books? No, we just repackage it, with a bunch of other shit that didn’t sell and put it into a CDO
Mark: A CDO?
Jared: Yes, a CDO
[he turns to the camera]
Jared: A collateralized debt obligation.
Jared: That’s where we take a bunch of Bs, bb’s and bbb’s that haven’t sold, and we put em in a pile and when the pile gets large enough, the whole is suddenly considered ‘diversified’. And then the whores at the rating agency, give it a 92 / 93 percent AAA-rating, no questions asked…
…
Anthony Bourdain [the chef explaining a CDO]: OK, I’m a chef on a Sunday afternoon, setting the menu at a big restaurant. I ordered my fish on Friday, which is the mortgage bond that Michael Burry shorted. But some of the fresh fish doesn’t sell. I don’t know why. Maybe it just came out halibut has the intelligence of a dolphin. So, what am I going to do? Throw all this unsold fish, which is the BBB level of the bond, in the garbage, and take the loss? No way. Being the crafty and morally onerous chef that I am, whatever crappy levels of the bond I don’t sell, I throw into a seafood stew. See, it’s not old fish. It’s a whole new thing! And the best part is, they’re eating 3-day-old halibut. That is a CDO.
…
Mark [of Collateralized Debt Obligation funds]: So mortgage bonds are dog shit. CDOs are dog shit wrapped in cat shit.
…
Mark: The banks have given us 25% interest rates on credit cards. They have screwed us on student loans that we can never get out from under. Then this guy walks into my office and says those same banks got greedy, they lost track of the market, and I can profit off of their stupidity? Fuck, yeah, I want him to be right!
…
Title card: ISDA Agreement: An agreement that lets an investor sit at the “big boy table” and make high level trades not available to the stupid amateurs. Trying to be a high stakes trader without an ISDA is like trying to win the Indy 500 riding a llama.
…
Jared [voiceover]: Ben Ricker was a former trader in Singapore for Chase. Quit the whole game in disgust…But Ben was dark. He didn’t just think the whole system would fail he thought the whole world was going down!
…
Mark [after realtors basically tell him they will give anyone a mortgage]: I don’t get it. Why are they confessing?
Danny: They’re not confessing.
Porter: They’re bragging.
…
Mark: Do people have any idea what they are buying?
Realtor: I focus on immigrants! Once they find out they’re getting homes they’ll sign where you tell em to sign. They don’t ask questions, they don’t understand the rates.
…
Vinnie [on the phone]: How are you fucking us?
Jared: When you come for the payday, I’m gonna rip your eyes out. I’m gonna make a fortune. The good news is Vinnie, you’re not going to care cause you’re gonna make so much money. That’s what I get out of it. Wanna know what you get out of it? You get the ice cream, the hot fudge, the banana and the nuts. Right now I get the sprinkles, and ya - if this goes thru, I get the cherry. But you get the sundae Vinny. You get the sundae.
Vinnie: All right. I buy that. Thank you.
…
Title card: Truth is like poetry. And most people fucking hate poetry – overheard at a Washington D.C. bar.
…
Mark [on the phone]: Ok, I want you to walk back in there and very calmly, very politely tell the risk-assessors to fuck-off!
Vinnie [walks into the room]: Gentlemen, I just spoke with Mark Baum and he says to ‘fuck off’.
…
Mark: Georgia! Have you ever refused to rate any of these bonds upper-tranches AAA? Can we see the paperwork on those?
Georgia [of Standard and Poors]: Oooh, I’m under no obligation to share that information with you, whoever you might be.
Mark: Just answer the question Georgia, can you name one time in the past year? Where you checked the tape and you didn’t give the banks the AAA-percentage they wanted?
Georgia: If we don’t give them the ratings, they’ll go to Moody’s right down the block. If we don’t work with them they will go to our competitors not our fault, simply the way the world works.
Vinnie: You’re selling ratings for fees.
…
Jared: Didn’t I say, that when we made this deal, that the rating-agencies, the SEC and the big banks were clueless! Didn’t I say that? Didn’t I say it?
Mark: Yes you did, you did!
Jared: Now their foot’s on fire and they think their steak is done, and you’re surprised?
Mark: That’s not stupidity that’s fraud!
Jared: Tell me the difference between stupid and illegal and I’ll have my wife’s brother arrested. I guess you just don’t realize how clueless the system really is! Yes, there’s some shady shit going down! But trust me, it’s fueled by stupidity! Look at yourselves! You know you passed yourselves off as cynical people but you still have some faith in the system don’t you? I don’t.
…
Vinnie [at the American Securitization Forum]: It’s like someone hit a pinata full of white people who suck at golf.
…
Lewis: If the investors withdraw, what’s gonna happen here? Are we done?
Michael: Honestly I don’t know. The…the…the bonds aren’t going down! They won’t move! It’s possible that we are in a completely fraudulent system.
Lewis: Or you’re, you’re wrong.
Michael: Sure! It’s possible, I just don’t know how![/b]
Of course he wasn’t, was he?
Ben: Do you have any idea what you just did?
Charlie: Come on, we just made the deal of our lifetime, we should celebrate!
Ben: You just bet against the American economy!
Charlie: Fuck yeah we did!
Ben: Which means…which means if we’re right, people lose homes. People lose jobs. People lose retirement savings, people lose pensions. You know what I hate about fucking banking? It reduces people to numbers. Here’s a number - every 1% unemployment goes up, 40,000 people die, did you know that?
More do the point, did they care?
[b]Mark: Hold on, say that again! CDO A, has parts of CDO B and CDO B, has parts of CDO A and then they both get put inside CDO C?
CDO manager: Yeah and that one is called CDO square! A CDO of a CDO. And then there’s CDOs made up of the opposite sides of the bet you made with the swaps we call them, synthetic CDOs
Mark: What did you just say? Synthetic CDOs? That is fucking crazy!
…
Mark: Alright, let’s say you have a pool of 50 million in sub-prime loans how much money could be out there betting on it in your synthetic CDOs and swaps? Right now. Tonight.
CDO manager: Let’s see, 50 million? Hmm… A billion dollars
Mark: What?!
Jared [voiceover]: If the mortgage-bonds that Michael Burry discovered were the match…
Mark: How much bigger is the market for insuring mortgage bonds than for actual mortgages?
CDO manager: About twenty times.
Jared [voiceover]: …then the CDOs were the kerosene soaked rags. And then the synthetic CDO was the atomic bomb with a drunk president holding his finger over the button. It was at that moment in that dumb restaurant with that stupid look on his face
that Mark Baum realized that the whole world economy might collapse!
…
Jared [voiceover]: I know what you’re thinking! What the fuck is a synthetic CDO? Well, here’s Dr. Richard Thaler, father of behavioral economics, and Selena Gomez to explain…
…
Selena Gomez: Ok, so here’s how a synthetic cdo works! Let’s say I bet ten million on a Black Jack hand.
Dr. Thaler: Ten million, because this hand is to represent a single mortgage bond. Okay, Selena has a pretty good hand here. Showing eighteen, dealer showing seven that’s a really good hand for Selena. Good odds, in fact her chances of winning this hand are eighty-seven percent.
Selena: So, my odds are good I’m on a winning streak and everybody in this place wants to get in on the action. How could I lose right?
Dr. Thaler: Now this is a classic error. In basketball it’s called the hot-hand-fallacy. A player makes a bunch of shots in a row people are sure they’re gonna make the next one. People think, whatever is happening now is gonna continue to happen into the future. During the real-estate boom markets were going up and up! And people thought they would never go down.
Selena: So people who are watching and think that I won’t lose will make a side-bet. Now this, is the first synthetic CDO.
[spectators make a bet on Selena]
Dr. Thaler: Now somebody else is gonna wanna make a bet on the outcome of their bet. That will lead to synthetic CDO number two.
Selena: And this will go on and on, with more and more synthetic CDOs
Dr. Thaler: And we can transform an original ten million dollar investment into billions of dollars.
…
Title card: Everyone, deep in their hearts, is waiting for the end of the world to come — Haruki Murakami
…
Charlie: I asked bear-stearns to price our shorts they tell me the cdo’s still haven’t moved this is fucking insane!
Jamie: You realize that? These people are crooks and they should be in prison! Look at the theta-graphics, you can see that the CDOs are worth zero! So you know what they’re doing huh? You know what they’re doing right?
Charlie: They’re not loading them. They’re selling their dogshit CDOs then they go to another bank and short the shit, while they fucking sold it!
…
Jamie: Right now, every bank in town is unloading these shit-bonds onto un-suspecting customers and they won’t devalue them until they get them off their books this level of criminality is unprecedented even on fucking Wall Street!!
…
Jared [to the camera after looking down at a $47,000,000 check]: So I was right. I took a rash of shit for two years. But I was right! And everyone else was wrong! And yeah I got a bonus-cheque for it. So sue me! It’s a lot of money! I get it, I can feel you judging me. That’s palpable. But hey I never said I was the hero of this story.
…
Mark [to the audience]: My firms thesis is pretty simple wall-street took a good idea: Lewis Raneiri’s mortgage-bonds and turned it into an atomic bomb of fraud and stupidity that’s on it’s way to decimating the world economy
Bruce Miller: Tell us how do you really feel.
Mark: I’m glad you still have a sense of humor. I wouldn’t if I were you. We live in an era of fraud in America. Not just in banking, but in government, education, religion, food, even baseball. What bothers me ins’t that fraud is not nice. Or that fraud is mean. For fifteen thousand years, fraud and short sighted thinking have never, ever worked. Not once. Eventually you get caught, things go south. When the hell did we forget all that? I thought we were better than this, I really did. The fact that we’re not, doesn’t make me feel all-right and superior. It makes me feel sad. And as fun as it is to watch pompous dumbass Wall-Streeters be wildly wrong, I just know that at the end of the day average people are going to be the ones that are going to have to pay for all of this. Because they always, always do.
…
Mark [on the phine]: Paulsson and Bernanke just left the White House. There’s going to be a bail-out.
Vinnie: Well, they had to! Right?
Mark: We paid for mortgages with collaterals they knew! Cash would have stopped coming out the ATM, they had to back-stop this they knew the tax-payers would bail them out, they weren’t stupid, they just didn’t care!
Vinnie: Yeah, 'cause they’re fucking crooks! But, at least we’re gonna see some of them go to jail. Right? I mean, they’re gonna have to break up the banks. The party is over!
Mark: I don’t know, I don’t know. I have a feeling, that in a few years, people are gonna do, what they always do when the economy tanks. They will be blaming immigrants and poor people.
…
Jared [voiceover]: But mark was wrong! In the years that followed, hundreds of bankers and rating-agency’s executives went to jail. The SEC was completely overhauled and Congress had no choice, but to break up the big banks and regulate the mortgage and derivative industries.
[pause]
Jared: Just kidding. Banks took the money the American people gave them and used it to pay themselves huge bonuses and lobby the congress to kill big reform and then they blamed immigrants and poor people.
…
Title car: When the dust settled from the collapse, 5 trillion dollars in pension money, real estate value, 401K, savings and bonds had diappeared. 8 million people lost their jobs, 6 million lost their homes. And that was just in the USA.[/b]