| American and World Big Banks are found out, the sub-prime mortgages don’t stack up and the housing market is built on quicksand. It can’t last so the few who understand what is happening get their bets on that things will collapse.
Unusually for me, I’ve read the book. Michael Lewis is so good, and you don’t have to be an expert to follow what’s going on. He gives equal weight to the folly of the institution big shots and their hopeless employees, along with the oddball characters who have seen the truth and are shorting them. In the film, concentration is on the latter, and their oddities are faintly annoying.
Michael Burry (Christian Bale) plays loud rock music in his office, Mark Baum (Steve Carrell, one of his best parts) shouts at people and lacks social graces. Fine, we get it, they are potty geniuses.
There are many telling moments. The Bear Sterns CEO sitting smugly debating Baum while his company shares crash, that’s a memorable scene.
I do recall Michael Lewis talking about the Ratings Agencies – these he said are the people who weren’t smart enough to get a job on Wall St. When Baum asks a Standard & Poors official how she could give a AAA rating to a pile of junk mortgages, she says “If we don’t they will go right down the street and get the rating from Moody’s”. Ah, so that’s it.
The crash doesn’t come as quickly as the far-sighted shorters expect – there’s even less logic in the pricing of the bonds than they realised – but it does come. We knew that. The only concern Michael Burry has about dealing with Goldmann’s, and he tells them, is – once they lose, will they have the liquidity to pay him. They laugh out loud.
You’ll probably not have realised that our big banks were so stupid. If you think they’ve learned their lessons, well you are probably wrong about that too.
One tip about the Big Short – don’t watch it in Cameo 2 Edinburgh. It’s the worst movie theatre in town anyway, a wide room with no depth so that you are a few feet from the screen, but this movie has emails displayed the full width of the screen which with their white background give you headaches.
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