By Michael Parnell
“The little guy always gets screwed.” That was the comment the gentleman who sat next to me said after watching The Big Short.
After seeing this movie I was mad. It was not because I was ill informed about the subject matter. I knew much of the topic of the movie, the history of the housing collapse in mid-2000s. But the way it was presented made me very upset.
The movie is made up of three separate but parallel stories about how a group of investors saw the burst of the bubble of the housing market and profited off it.
The story begins with Michael Burry (Christian Bale) a physician turned hedge fund manager who saw that the mortgage market in the United States was being held up by lots of bad loans. Burry believes he can profit from the coming burst in the bubble. He has large Wall Street firms create a “credit default swap.” This pays him money if and when the housing market goes south.
Meanwhile Jared Vennett (Ryan Gosling) hears of Burry’s bet and he begins promoting it to other hedge fund groups. Mark Baum (Steve Carell) gets drawn into the process and his hedge fund bets heavily against the housing market.
Enter the picture Charlie Geller (John Magaro) and Jamie Shipley (Finn Wittrock). They are two small-time traders trying to break into the financial markets. They learn of this and know they need help with it. They bring in an old hand at the markets, Ben Rickert (Brad Pitt,) to help them get in on the action.
As the movie progresses the things in the housing market that should cause the credit default swaps to kick in do not. The rate of default on mortgages is very high. But none of the holders react to it. This leads the groups assembled to believe that there is fraud in the system. And there was. Lots of fraud. What this movie does well is take a story that is very complicated and make it as simple as possible. Adam McKay, the director, uses cameos of famous people to explain the macro economics of the story to the viewer in a humorous way.
But there is nothing humorous about this story. The point that is made clearly is that these things that happen in the larger economy end up hurting not the people at the top but those at the bottom. Two scenes bear this out.
First, when Baum’s group investigates the possibility that the housing market could crash, they go to Florida. In one subdivision they found that most of the houses were abandoned. The only house in which they found someone at home was inhabited by a working class family. The house was owned by a person who had not made a payment in over 90 days. The man of the house came to the door and said he had faithfully paid his rent each month and he was current. The person from the firm told him he needed to call his landlord. The reason was clear: this family soon was going to be evicted.
The other scene was when Geller and Shipley realized that they were rich because of the housing market crash. They start to celebrate. Rickert tells them to quiet down. He points out that this success these two are having is coming through the misery of working people. A statistic is given that for each percentage point the unemployment rate rises 40,000 people lose their lives. Not jobs, lives.
The hardest thing to swallow from the story is this: the things that bankers did that caused it are still going on. When they got the bailout money from the government, they paid themselves big bonuses and kept doing business as usual.
Add to that not one major figure went to prison over the fraud in the housing market. To requote the man who sat next to me: “The little guy [tax payer] always gets screwed.”
The Big Short
Rated R for pervasive language and some sexuality/nudity
Directed by Adam McKay
Written by Adam McKay and Charles Randolph, based on the book by Michael Lewis
With: Christian Bale (Michael Burry), Ryan Gosling (Jared Vennett), Brad Pitt (Ben Rickert), Steve Carell (Mark Baum), Finn Wittrock (Jamie Shipley), John Magro (Charlie Geller)