In 2007 I lived in a suburb of Phoenix, way out in the far West Valley where homes sprung up like weeds in the desert sand. Mortgage brokers couldn’t give homes away. Bad job? Poor credit? No savings? Here’s a house. It was harder to stand on a busy street corner and give out $10 bills. And then one day it all ended.
The newspaper I was with at the time covered those terrible years, back when people used air quotes around the word “recession” and then when they dropped the air quotes entirely as they drove off in a moving van, their belongings hanging out the back like the Beverly Hillbillies. The sub-prime mortgages, the interest-only loans, the house flippers who extended themselves one house too many. It was like a huge game of musical chairs, but instead of 100 people and 99 chairs, it was 100 people and one chair — lots of people had nothing when the music stopped.
The Big Short is the story of how and why the recession happened. How American banks were dragged to their knees by hubris, and why they sold the American people down the river to save their own skins. It’s a powerful indictment of greed, capitalism, and the “American way,” which in this context is golden parachutes, profit and satisfying shareholders. If this film doesn’t make you frothing mad, then you’re still not paying attention.
The movie, directed by Adam McKay (Anchorman) and based on a book by Michael Lewis, begins with Michael Burry (Christian Bale), an eccentric trader who stares at market prices the way Rain Man counts toothpicks. From amid vast spreadsheets of information he notices a pattern in how mortgage defaults are creeping upward. Never one to miss an opportunity, he bets against the house market — he shorts it — something that is never done, because the housing market is a constant, it’s like betting against gravity. When he shows up at all the investment banks to place these bets, they almost feel sorry taking his money.
It’s abundantly clear very early that McKay is going to work with all the market jargon and banking terms, and do so with reckless abandon. So he enlists help, including Margot Robbie, playing herself naked in a bathtub with bubbles up to her chin. She lifts a champagne flute and promises to teach us about collateralized debt obligation, credit default swaps and “shorting” the market. It’s sexy and effective, and I promise it actually teaches you about CDOs and the other dirty bombs that sunk the housing market. In other sequences characters address the camera directly and explain to the audience what’s happening and why it’s important. Anthony Bourdain teaches us about junk bonds and how they’re rated while filleting fish, and Selena Gomez explains betting against the market at a Vegas blackjack table. It’s the best economics class you’ll ever take.
Meanwhile, we also drop in on money manager Mark Baum (Steve Carell), hedge fund manager Jared Vennett (Ryan Gosling) and on two young up-and-coming analysts who want a seat at the big boy table. All of these characters eventually find what Burry finds, what is essentially a doomsday machine built into the housing market. And one by one, they all start to plot how to make money on what they know.
Now, I don’t know if these men (and their composites) are villains in this story, but The Big Short portrays them as innocent financial geeks who discover the terrible secret of the economy and do what they can to profit off it. They don’t keep it a secret, in fact several of them had shared their bets with other bankers, who promptly laughed at them for their faulty investments. Carell’s character is especially convincing as he wanders back and forth between the people who rate bonds, Goldman Sachs (never forget the Rolling Stone line about the company: “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”) and the mortgage brokers on the ground in places like Florida, Arizona and Nevada. One government oversight worker is so negligent to what’s happening under her nose, she is quite literally blind. As the chips stack up against the housing market, these men watch in horror as their bank accounts grow off the failure of the American economy, and although they are rich, their souls will never recover. If that makes you mad, then what happens to the banks will send you ballistic.
McKay dissects the collapse with the precision of a surgeon, but the wit of a comedian. The movie is funny, often hilarious, especially as character narrate their own stories or address the camera to wink and smile and tell us “this sounds crazy, but this actually happened.” One of those instances comes when the Bear Stearns CEO sits in front of analysts telling them the company’s stock is rebounding, even as members of the audience are watching it freefall. The best parts are the characters and how they balance each other out: Bale is the anti-social genius, Carell is the moral overseer one step behind the market, and Gosling is the crude stock-bro playing a dangerous game of brinkmanship with the American economy. They couldn't be any more different, except they all have a keen sense for money and its hidden value in places only bankers have access.
This is a movie we need right now. The recession is over. The Fed is hiking the interest rate back up. Jobs are returning. Wages are stagnant, but all signs are pointing to eventual increases. And just few a years out, it’s already forgotten. Banks are still pushing their way around with no consequences, and they have still not been held responsible for the swindling of the American economy. The Big Short holds their feet to the fire, and it arms the public with their best weapon — information.
