Tuesday, January 26, 2016


We here at the blog formerly known as Movie Reviews For Greedy Capitalist Bastards have often taken a rather contemptuous tone with movies covering the financial sector.  Too often they have unintentionally glamourised the very profession they purported to condemn. And with very few exceptions they have failed to show the reality of what to many of us is life in financial services.  Away from the yachts and the blow and the strippers of cinema, most bankers are just insecure over-achievers, suckered into aligning their self-worth with a big-name brand, running on a treadmill where the big bonus is never as much as the next guy, increasingly doing twenty hour days, working weekends and trapped in a one percent bubble.  There was systematic fraud in the last crisis and plenty of people new their was a gigantic conflict of interest. But a lot of junior bankers were just people trapped in a complex system trying to do optimise their profit and impress their boss.

The only films I've seen successfully portray the reality of a financial bubble and endemic fraud are the documentary ENRON: THE SMARTEST GUYS IN THE ROOM and more recently, MARGIN CALL - a fictionalised retelling of the fall of Lehman Brothers. What I particularly liked about that film was the contrast between the knowingly fraudulent men at the top and the basically well-intentioned underlings underneath. It captured perfectly the moral corrosion that occurs when good people are surrounded by a cocoon of people telling them, it's okay, we all know it's wrong, but everybody's doing it and you'd be an idiot not to. No-one thinks they're the villain, right?  This leads me to my main conclusion from the financial crisis.  Regulators and governments should do more to legislate against wrongdoing and then prosecute when it occurs, but they won't, because the same self-interest and conflicts of interest that cause the bubbles also cloud their judgment. So if you want a sound financial system, heck a sound government, it relies on all of us to be the better people.  There's no way a regulator in a job earning a tenth of the banker he's hired to regulate will keep up with the banker massively incentivised to exploit every loophole.  We need more righteous anger and more willingness to do the right thing.

And this is the tone that suffuses Adam McKay's fictionalised adaptation of Michael Lewis' book about the sub-prime crisis, The Big Short. It wasn't obvious to me why this book should become a feature film rather than a documentary.  I would've thought that the ENRON treatment would serve the complex material best.  But once I saw the movie I realised that this was exactly the right choice. Because we, the ordinary tax-paying public, the voters, need to feel outraged by what went down, what's still going down.  And we need fictionalised characters who can express that anger and outrage rather than just measured talking heads calmly telling us what happened.

McKay does this by focussing on four sets of people who realised that the US housing market and credit boom of the 2000s was a house of cards.  The first is the a classic socially awkward but super-smart geek hedge fund manager called Dr Michael Burry played by Christian Bale. He just follows the numbers.  He can already see that ordinary mortgage-payers are starting to get into trouble as the Fed started to raise interest rates. And he figured that once all those super-cheap teaser rates ran out in 2007, even more would get into trouble - that their mortgages would go bad, that all those bonds sold on the back of those mortgages would go bad, and that all those other bets upon bets upon bets upon those mortgages would go bad too.  And so the Ordinary Joe who took a mortgage who couldn't really afford because some broker mis-sold him was going to end up foreclosed upon and in a kind of butterfly-tsunami effect it was going to really hurt some big banks. But even Dr Burry didn't predict that it would eventually take down the entire financial system until the governments stepped in to stop the rot.

So Dr Burry wants to bet against the housing market at a time when everyone - from ordinary home-owners up to the heads of the major banks believed it could ever go up.  It was such an improbable bet to everyone else that there wasn't even a way for him to bet against the housing market, so Burry got a bank to invent one.  If he was right, he'd win big, but in the meantime, Burry, and anyone else who took the bet, would have to pay to keep the bet running.

A few others twigged on to Burry's idea.  A slick-talking salesman called Jared Vennett (Ryan Gosling) realised what Burry was doing and replicated it. He sold the bet against the housing market to a small hedge fund run by Mark Baum (Steve Carrell), who literally went door to door in Florida to confirm that the housing market really was teetering on the brink before investing big.  And finally, two crazy-lucky kids just out of grad school realised the bet was running and tried to get in on the action helped by an ex-trader with access to the big trades (Brad Pitt). So you've got Burry, Vennett, Baum and the kids, pitted against the housing market and everyone who had a vested interest in keeping it propped up - and that was basically everyone from the Fed to the major banks to the rating agencies to the people who'd put their life savings into the mortgages.  That was the Big Short or Bet.

The resulting film is one that captures the grim reality of banks.  The schmoozy slick salesman as epitomised by Vennett. The socially awkward quants as epitomised by Burry.  The super-driven permanently rude and angry deal-men as epitomised by Baum. And the young kids who just want to get rich so damn much they forget their are real people somewhere underneath all the trades.  There aren't strippers except to satirise the early 80s and as examples of people who got mortgages they couldn't afford.  You may have idolised Gordon Gekko but no-one in their right mind could idolise these guys (unless they idolise Gosling's character because even with a bad brunette 'fro, well it's Gosling.)  And while everyone hates bankers these days, it's far more emotionally affecting to see Steve Carrell's character - Mark Baum - as greedy a capitalist bastard as ever there was - get angry because the game is rigged beyond anything even he could believe.  That's what this story is. It's the people on the inside falling out of love with Wall Street. All except Vennett maybe.  Because capitalism, to those of us who loved it, was the ability to win big, but it was never about rigging the game. It was the potential to lose big too.  But it turns out we weren't in a capitalist system after all, but a corrupt late Empire oligarchy.  We still are. 

THE BIG SHORT has a running time of 130 minutes and is rated R.  It is on global release.

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