The Big Short

ShortJust stop dancing.

“Everything changed after 9/11.” Is there a single phrase that was said more times more earnestly by smart people? In the aftermath of that event, the world was provided with a single, clear, and incredibly complicated lesson about the fragility of reality that Western imaginations had sanitized. The only thing that the 2008 financial meltdown shares with 9/11 is that it was a disaster that most people associate with the Financial District. The meltdown was wide-ranging, opaque, and we barely learned a thing. That is, until we saw The Big Short (2015), when the writer/director of Anchorman (2004), Step Brothers (2008), etc., Adam McKay read a book and decided to make something serious.  Well, the subject is serious, at least, and while Will Ferrell wasn’t in attendance, McKay musters all the available comedy to make this highly educational film not only palatable but suitably hilarious. Not since All the President’s Men (1976) has a film condensed something as complicated as this and that film, at best, gives only a glimmer of an impression whereas The Big Short explains the details.

We begin in 2005, when a socially incompetent (possibly autistic) fund manager, Michael Burry, M.D. (Christian Bale), suspects something foul in the property market, specifically mortgage backed securities (MBSs), which are…securities (bonds)…backed (derive value)…by (from) …mortgages (real, individual loans). Burry has a wild idea: why don’t I look at the underlying mortgages? What he finds sets off a chain of epiphanies in surprisingly few people. Burry finds that these MBSs, which are rated AAA (i.e. rock solid), are actually backed by mostly bad mortgages (i.e. not being paid regularly and/or have adjustable rates that borrowers won’t be able to pay and/or the borrowers have terrible credit scores) and are therefore wildly over-valued. How do you profit from something being over-valued? You short it, or bet against it. He does this with credit default swaps (CDSs), which are essentially insurance policies (including premium payments) on debts defaulting.

Burry does this with a lot of the large banks–who all think they’re basically getting free money, like insuring the sunrise–which puts him on the radar of Jared Vennett (Ryan Gosling) who then starts trying to broker these CDSs for Deutsche Bank. Vennett accidentally gets in touch with Mark Baum (Steve Carell) who runs a fund out of Morgan Stanley and has a penchant for pushing back against cozy consensus. Later, up-and-coming investors, Charlie Geller (John Magaro) and Jamie Shipley (Finn Wittrock), who have made millions betting on the theory that markets underestimate bad news, get a hold of this CDS wheeze and bet short big with friend Ben Rickert (Brad Pitt). We know (vaguely) what happens next.

The film explains all of this over a much longer period and with a lot more humor.  And it’s always good to have a brilliantly funny, over-bronzed Ryan Gosling make all of that financial jargon go down with relative ease.  The script from McKay and Charles Randolph is pretty terrific and hits the audience on the nose with its earnestness less frequently and less painfully than you might expect from a subject matter this technical. In fact, the script gives the audience a fair amount of credit in their ability to keep up with the emotional response–and emotion plays a big part in this film–appropriate to the Standard & Poors ratings agent saying a AAA CDO is still sound. And don’t worry, if you don’t understand that at all, but would like to, The Big Short will sort you out very comfortably. McKay and Randolph–possibly with the help of the source book from Michael Lewis–provide a number of terrific metaphors with visual queues like something out of Bill Nye The Science Guy.

As far as the filmmaking is concerned, The Big Short is solid work. The visuals are a little hackneyed at this point with its documentary shooting style, though it’s probably out of focus more often than anything professional I’ve ever seen. [Though the first five minutes gets the film off to a rocky start, trying to execute an impressionist backstory for Burry that wasn’t stylistically revisited again.] Any acting nominations that go its way are certainly well-earned. [Though McKay should be slapped for letting a certain someone read off the f***ing cards. This ain’t SNL, Adam, and it’s pretty annoying on Saturdays come to that.] The substance of the film is, as already described, mostly terrific.  They did do the best, most substantive–possibly uncontrovertible–explanation I’ve ever heard of fraud by the ratings agencies and certain major banks that clearly called for widespread prosecutions. Forget CEOs on negligence grounds or any rich fall guys, look at the folks that genuinely, directly defrauded their clients, our heroes, and the market.

Another bright spot is the examination of the ethical position of our heroes. Only once do we see or hear characters talk about going to the press. I’m not sure I heard anyone mention haranguing regulators. There are also moments of reflection, shown in the trailer, about how we need to realize that these guys are just on the other side of this particular gambling den and our pleasure at their win is pleasure at the inevitability of our destruction. There are no Casandras, they’re just doing it for the money. Insure the sunrise may seem like free money for the insurer, because if you have to pay out, we’ve got bigger problems…

Which leads to the stuff the movie doesn’t cover. The most glaring and intellectually dishonest moments of omission or inconsistency concern the nature of the bailout and its outcome. The final moments of the film describe–mostly in copious, uninspired text–the financial calamity where people lost pensions, jobs, and homes. The characters also assert that the government knew what was happening (despite going to great lengths to show almost everyone was ignorant, if willfully so) and that the banks knew they’d get bailed out (despite going to great lengths to show no one even knew there was a problem). There is no mention that the bailout was not only repaid but profitable and there was only one throw-away line to suggest that the bailout saved the world from even worse calamity.

This is not an issue of time management or priorities or what this story is “really about”. It cannot be explained away so easily. This film is explicitly educational and goes to some length to provide real-life context alongside high finance. It is designed to be definitive. They brilliantly skewer the banks and the ratings agencies with clear details–the latter taking up only a minute of screen time–and indict the government with a single, unsubstantiated sentence and a regulator that wants to work for Goldman. Despite all the work they put in along the way, they absolutely cave to simplification and political sound bites in those final five minutes. The familiarity of those sound bites make it clear that McKay is captured by the hip lefty politics of the day rather than telling the full story. Any perspectives or policies that wouldn’t fit into a Bernie Sanders campaign ad are absent. While I don’t begrudge the perspective, the end of the film is misleading and pernicious. If United 93 (2006) ended with text saying “Three thousand people died and many first responders would develop chronic medical conditions and we never brought the people responsible to justice”, one might justifiably baulk. The “true story” didn’t end on 9/11, that was just the climax of a much larger story.

Still, it’s a great movie and an absolute must-see.

P.s. In 2014, Chris Rock was interviewed around the release of Top Five (2014) and the conversation moved into the issue of making comedies versus making dramas, with Rock asserting that comedy was harder than drama.

“Let’s put it this way. Take Anchorman. Now switch the directors of Anchorman and Gone Girl and give them their movies to do. Adam McKay’s going to get closer to Gone Girl than Fincher is going to get to Anchorman.

The Big Short is fairly solid proof that, on McKay’s first go-round, Rock is wrong. Of course, The Big Short is not Gone Girl, but it is serious material. McKay was an excellent choice as screenwriter because he makes the material digestible and entertaining. What he didn’t accomplish was to make a film that was visually striking or tonally consistent in the way that the persnickety Fincher would have demanded. If McKay had delivered a weaker script, we would have been in Pain & Gain (2013) territory with the worst bits of The Wolf of Wall Street (2013). Sometimes, The Big Short lets that comedy derail the flow of the film. I guess we’ll just have to wait for Fincher’s broad comedy to test the theory.

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About Prof. Ratigan

A semi-lawyer and amateur enthusiast.
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