Adviser Ratings would like to thank David Koch (@) and Paramount Pictures Australia (@) for the opportunity to attend a special preview screening of The Big Short with our guests at Paramounts Pyrmont offices. Thanks also to Dante De Gori (@ddegori10) from the FPA, Sarah Pfafflin from IOOF, Jeff Mclean from Eclipx, Tania Milnes from Mortgage Choice and Kochie for their ratings and reviews!
With recent media coverage of market volatility and murmurs of GFC Mk 2 grabbing our attention, The Big Short provided a timely reminder of how uniquely human traits such as greed and hubris overtook people and lead to massive fraud that almost imploded the Global Economy. It shows Private Enterprise at its unfortunate worst with wilful or ignorant collusion (take your pick) and lack of oversight. We can only hope the same human shortcomings won’t lead to it happening again. A timely reminder indeed.
Movie Review – The Big Short
The Big Short is a new movie based on a book of the same name by the author Michael Lewis. It details events of the sub-prime crisis that led to the GFC in 2008. Wait!, wait!, don’t switch off – this movie makes talking finance sexy! It has Ryan Gosling, Brad Pitt, Christian Bale and the ultimate sex bomb, the 40 year old virgin himself – Steve Carrell! Sorry blokes – eye candy for the ladies I suppose, although this does fairly reflect the male dominance in the industry that is still prevalent today. But I digress…
The books author, Michael Lewis, a former bond salesman for Saloman Brothers turned finance journalist, was educated at Princeton and the London School of Economics. He’s best known for the semi-biographical hit Lair’s Poker, about the creation of a market for Mortgage Bonds in the 80’s and several of his books have been successfully adapted to the silver screen including Moneyball and The Blind Side.
Rather than give a top down, overarching account of the crisis, the genius of this story is that it follows the real life exploits of several previously unconnected oddball characters who come to the conclusion that there is a massive bubble in the US mortgage market and then proceed to bet against it (or “Short” it), against all expert and conventional wisdom.
Christian Bale plays Michael Burry, an eccentric ex-doctor turned Scion Capital hedge fund manager. He does number crunching, prides himself on seeing things others don’t and cares not a jot for convention (or maybe he actually has an inability to care for convention – he’s obviously very smart and sure of his own intelligence but socially - the straightest cue in the rack he is not). Because of his previous successes and against the better judgement of his superiors he was allowed to convince a number of banks to let him effectively bet against the housing market. His analysis showed mortgage delinquencies were rising and that much of the market was made up of bonds that were rated AAA but were anything but. The banks thought he was mad and said "sure, we'll take your money!"
Ryan Gosling is wonderfully slimy as Jared Vennett, who sparingly narrates the film whilst playing the archetypical Wall St wanker who gets wind of this “crazy” deal, looks into it and agrees that if it’s true a massive payday could be on the way. His wrong number call to a company headed by Mark Baum (Steve Carrell) sees this information shared once again. Baum is somewhat of a crusader who is fed up with corruption in the financial industry and with the injustice of life in general, judging by the permanent scowl of incredulity he has etched on his face. Rounding out the oddballs is Ben Rickert (Brad Pitt), a former banker who is one step away from a becoming a full blown doomsday prepper who gets roped into helping two young investors he met through walking his dog. They need his connections to access the big trades they want to make after also stumbling across Burry’s thesis
Making the inane, jargon filled world of finance entertaining to your average punter could be a disaster waiting to happen but director and co-writer Adam Mckay (who co-wrote comedies Anchorman, Talladega Nights and The Other Guys with Will Ferrell) taps into the well documented hubris of the finance industry with great comedic effect. There are also several humorous standalone scenes that break the forth wall and speak directly to the audience to explain some of the vagrancies of finance like synthetic CDO’s (Margot Robbie in a bubble bath anyone?). Aided by strong performances and some great character acting by this fantastic cast, The Big Short provides plenty of pace and humour and a touch of drama, even though we know how the story ends. It provides a somewhat scary reminder of how greed, hubris, fraud and conventional wisdom conspired to bring the world economy to its knees. Remind me again, why do the Masters of the Universe get paid the big bucks?
Dante De Gori
Fascinating, confronting, unthinkable and funny but unfortunately so very true!!
The explanation that compared CDOs to Seafood Chowder summed it up perfectly for me... I knew there was a reason why I have never liked 'Seafood chowder'!
A thought provoking look at greed, wealth, and capitalism, and why the GFC shouldn’t have been a surprise to any of us.
Cleverly told and thought provoking account of the origins of the GFC, with a great cast.
The best explanation I have seen on what caused the GFC... confronting but hugely entertaining. Yes, Margo Robbie is in a bubble bath explaining mortgage backed securities.