The Long And Short Of The Big Short

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Ok so the Big Short to date (25.02.16) has grossed around $60m worldwide. It’s hardly a staggering amount, even in terms of a typical box office hit at the Cinema; the latest instalment of Star Wars has already generated around $900m so far. If you were to then go and compare it to what a few ‘lucky’ investors made from the Subprime crisis, it would be on a similar scale to how big an iPhone 6 Plus is compared to an old Nokia. You get the gist.

The Big Short is the latest film on the subject of Wall Street greed, adapted from Michael Lewis’ book by the same title it follows the three true stories about the few that saw the US mortgage crisis coming and bet against the market. Christian Bale plays the socially awkward hedge fund manager Michael Burry, who was one of the first to back the outlandish idea. An idea more farfetched than if someone had said Matthew McConaughey would win an Oscar back in 2005 – and look how that turned out. Ryan Gosling plays Jared Vennett – real name Greg Lippmann – who is considered by Michael Lewis as the closest thing to a ‘patient zero’ of the Subprime crisis. While working for Deutsche Bank he got wind of Burry’s odd idea and decided to buy a front row ticket too by creating the now infamous instruments CDSs, whilst DB still issued CDOs.

[Sidebar]:  A credit default swap (CDS) is a form of insurance on a fixed income product, whereby the seller of the swap agrees to reimburse the buyer of any shortfall in interest and or capital payments by the issuer (usually unconnected) on the agreed bond/loan. Much like an insurance company the seller of the CDS is making a calculated assessment that the total premiums they receive will outweigh any potential losses and the buyer is diluting their returning in exchange for security. In reality though the buyers of CDSs are often speculators believing the risk of default is likely to increase and therefore the value of the CDS will do likewise.

[Sidebar]:  If an income stream of either revenues or interest payments is an alcoholic spirit then a collateralised debt obligation (CDO) is multi-shot cocktail, and some might say a highly toxic one at that. CDOs are usually issued by counterparties who are pooling together the income streams from multiple sources and offering them to the buyer as a singular product with the underlying streams (mortgage payments, aircraft leases, ticket sales) the ‘collateral’.

Anyway, ipso facto DB plays both sides of the bet. An errant phone call introduces Mark Baum (Steve Carrell) and an errant prospectus introduces two small time investors who team-up with retired banker Ben Rickert (Brad Pitt). Whilst we won’t spoil the story for you, these true, inexplicably linked stories add a Hollywood edge to the otherwise tedious subject of CDSs. A touch of comedy is brought from Adam McKay as director whose previous work includes Anchorman and Stepbrothers, its well made, entertaining, makes a light hearted mockery of the financial world and is a worthy Oscar nominee. Seeing banks get their comeuppance is and probably will forever be a winning formula with audiences and with the constant negative press there’s sure to be surplus of potential cinematic portrayals of the banks and bankers getting it wrong. Hollywood eternally thanks you Wall Street. With that in mind here are some other similar titles you may have missed;

The Wolf of Wall Street; if you have been living on your own remote island or you’ve taken a real life sabbatical for the last couple of years you may not have seen Di Caprio’s portrayal of Jordan Belfort. The true story based around the corrupt stock-broker who was eventually un-done by BeniHana. To give a taster, the film has a Guinness world record for the most uses of expletives (2.81 times p/min). It’s a goldmine for slogans, memes and quotes and makes a stag weekend in Vegas look like an episode of EggHeads. It’s worth spending over 3 hours watching just to learn effective ways to sell a pen, if nothing else.

Margin Call; this couldn’t be further away from the midget tossing scenes in the Wolf of Wall Street. Kevin Spacey heads a strong cast as it replicates scenes in an investment bank during the early part of the financial crisis. Slow at times it accurately re-enacts the moment most bankers will have felt at some point during 2007-2008; the ‘drat, double drat and triple drat’ moment.

Wall Street 1&2: Want to see Charlie Sheen before he went all Charlie Sheen? Want to see Shia LaBeouf before he went all Shia Labeouf? There’s maybe a theme here but that’s another story. The original came out over 20 years before Wall Street II, even Michael Douglas looks youngish in it, a rare cinematic treat and they have computers with coloured screens now. Overall the films are an easier watch depicting similar traits in two very different Wall Street eras.

Inside Job: Billed as the film that cost over $20,000,000,000,000 to make it’s probably the most thought provoking and accurate film about the crisis. The Oscar winning documentary (narrated by Matt Damon, yes the Matt Damon) looks at the latest financial crisis from beginning to end. With interviews from the likes of Christine Lagarde and George Soros it provides a punchy and grippingly detailed version of how people Belfort-esque basically led the banking industry down a ‘costly’ path. The quote overheard by Michael Lewis in a Washington Bar that features on the Big Short; ‘’The truth is like poetry, and most people f****** hate poetry’’ is very fitting of this documentary. Again worth a watch to see those deemed responsible for the latest crisis make excuses in court on par with ‘the dog ate it’ type excuses we all tried while we were 6.

Rogue Trader: Is the true story of how Nick Leeson brought down British banking institution Barings Bank in the mid-90’s, racking up hidden losses of £1bn in the process. The film is an relatively easy and entertaining watch, however we would also recommend reading the book first which perhaps gives a greater understanding and insight to Nick’s motives and actions.