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|Cinema Signal: Not quite a green light but has elements of strong appeal for a limited audience.||MOBILE version ||
"The Big Short"
Adam McKay, the man who wrote "Ant Man," "Get Hard," "The Anchorman" and a host of sketches for "Saturday Night Live" comes up with a dramatization of Michael Lewis' book on what led to the stock market crash of 2007-2009 that traces the means by which the greatest market crash since The Great Depression of the thirties became not only possible but inevitable and how those who saw it coming made fortunes.
The key to it all was virtually unrestricted credit. Mortgage credit that was allowed by diminished regulation to flow to the real estate market like a biblical river. Credit that had become illusion and sales pitch.
With fictionalized characters McKay takes the license to depict how far the forces of Wall Street are prone to go to keep the money tap flowing -- for their benefit and no others. It's not a pretty picture.
As far as audiences go, if you don't have an MBA or don't trade in the market, you might find the details a bit daunting if not incomprehensible. When I first came upon the title, it triggered no thoughts of market trading. A big short? Is that an article of clothing? A short "cut?" as in a driving route? And, yet, I do know what a short sale of a market security is. So, for the multitudes who might not, who might want to understand a movie that assumes so much, let me offer some underlying principles.
In stock trading you would buy a portion of a company if you expected it to increase in value. You would then have a "long" position in the stock. The reverse is also within the rules. If you want to try to make a profit on a company's decline, you would sell it short. The uninitiate will ask, "how can you sell something that you don't own?" If you, too, would ask that, read on.
Your brokerage will not accept a short trade unless it has enough control over the stock to ensure that it can "cover" your trade (at a gain or loss) when you cash out with a "buy to cover" order. Stocks which are in good standing on one of the major indexes (S&P 500, Dow Jones, Nasdaq, etc.) and not facing a wipeout are in most times available for this up and down trading.
In fact, as the movie illustrates, any instrument of trading, however derived from something of value, may be shorted if there's someone who'll accept your trade. But, doesn't this allow wall streeters to approach some sort of line as far as the law may allow? Well, that, and the side issue of morality, is pretty much what this movie (and The Great Recession of the 21st century) is about. Trading in derivatives.
The drama begins when Michael Burry (Christian Bale), a financial manager with the past as a neurologist and the social skills of an Asberger victim, figures out (some time in 2007) that free-wheeling mortgage debt has created a bubble in the market and is heading for a pop -- a massive sell-off of sub-prime mortgages that millions of people bought with more hope than money. All Burry needed to find was a security -- a derivative of the mortgage market -- which would allow him to sell overbought real estate doomed to topple.
Enter the "Credit Default Swap," the mortgage-backed security from hell that almost destroyed the country's financial system and the world's banks. Never heard of it? You're in good company.
But, put yourself in Burry's position. He saw it coming and, naturally, wanted to profit from a disaster no one else saw coming.
When he consulted a few bankers to short the market, the bank mavens did their due diligence by advising him against what they unanimously viewed as a highly dangerous play, if not witless. But when he stood his ground on the inevitability of a market selloff, what could they do? They placed his short trades in an aura of amusement (chuckling openly as soon as he left the office).
Wall Street being a village within the big town of New York, word got around about this crazy investor who thinks a melt down imminent. Which brings the foundation of Burry's analysis to the attention of several other major movers -- hedge fund shark Jared Vennett (Ryan Gosling) and CEO Mark Baum (Steve Carell) among them -- who see and agree with Burry's wisdom and foresight. Soon, the prediction spread as major Wall Street institutions (Bear Stearns, Citigroup, AIG, etc.) were suffering huge losses and being seen as about to close their doors. (too big to fail) became
I have to say that in real time, newspapers steadily reported on the real estate boom in "sub-prime mortgages" to people with a burning desire to be homeowners who could realize their dream without the need to prove financial capability. Reality struck when the monthly payments came due and their brokers' rosy pictures turned into delinquency and repossession.
As we now know, delinquency rates rose to tsunami proportions, and traders who saw it coming and had shorted in time, ended up with fabulous profits, graphically illustrated by a close-up of Jared Vennett (Ryan Gosling) smoothing a finger over the amount of a check -- for $57 million dollars.
The picture has the great virtue of an excellent cast, calling for a platoon of supporting players capable of understanding the issues and, in some cases, bringing a succint, rapid-fire delivery of their place in the grand scheme of illusionary credit, insurance against loss for insiders and an ethic with no regard for who pays for the profits.
Bale and Gosling are standouts while Steve Carell as Mark Baum lends a few emotional notes in the vortex of financial disaster. Brad Pitt plays it cool while helping a pair of earnest young entrepreneurs by turning their stake of $110,000 into $120 Million. (Pitt co-produced through his production company, Plan B Entertainment).
Some stock footage is incorporated, seemingly to lend a few notes of authenticity to the drama and, in a montage, shows some of the real people who had a seat on this runaway train. The effort to represent a big chunk of those involved causes some confusion and the film's editing gets a little sloppy at times.
Told the way it is, the story is both expose' and entertainment because the traders taking the biggest profits come off as sypathetic heroes. We tend to like stories about underestimated people who get the last laugh or which expose corruption in high places. All you have to do to enjoy this movie is adopt the film's Wall Street perspective. I can't avoid thinking, however, that the laugh is on us. Because the economy is such a vast and interrelated phenomenon, a winner on Wall Street may be picking your pocket... and your bank balance.