WASHINGTON, February 9, 2016 – Having managed, rather belatedly, to head for the local cinema to see Paramount’s late 2015 sneak hit, “The Big Short,” this critic feels compelled to observe that if there’s any justice in La-La Land, this quietly amazing film would win the upcoming Academy Award for Best Picture.
Alas, it looks like the extensive PR campaign on behalf of “The Revenant” will take care of that category. If that’s the case, perhaps the Academy should create a special Oscar category and award a statuette to “The Big Short” for simply telling the truth about the still vastly misunderstood (and still ongoing) financial chicanery that led to the Great Recession, the worst economic catastrophe of our times. Better yet, this film succeeds telling an impossibly complex story in a most entertaining way.
The film’s official trailer gives you a hint about what’s to come:
Based on Michael Lewis’ bestselling nonfiction book on the advent of the Great Recession, “The Big Short: Inside the Doomsday Machine,” the film version, directed with crackling good storytelling vitality by Adam McKay, explores the complicated and meticulously covered-up financial mess that eventually sacked not only the U.S. economy but the entire developed world’s economies as well.
The way both the book and the film accomplish this task is to follow the forensic accounting trail that was slowly and painstakingly established by a number of unrelated, quirky, maverick investment advisors.
In real life (and in Lewis’ book) these still largely unsung geniuses included opinionated hedge fund manager Steve Eisman (Mark Baum in the film, portrayed by Steve Carell); Deutsche Bank senior trader Greg Lippmann (Jarred Vennett—Ryan Gosling); uncannily intelligent but excruciatingly distant ex-neurosurgeon-turned investment genius Michael Burry (Michael Burry—Christian Bale); and a pair of young hedge fund wunderkinds (Charlie Geller, Jamie Shipley—John Magaro, Finn Wittrock).
Brad Pitt also stars in a small but unforgettable role, portraying a wealthy, retired and extremely reclusive investment banker named Ben Rickert who’s persuaded by Geller and Wittrock to act as their reluctant guru, helping confirm their suspicions of a financial conspiracy as well as assisting in finding a way to profit from their discovery.
What is (and was) the Big Short?
“The Big Short” is a fast-paced, reasonably detailed account of the mortgage and collateralized debt-obligation scandal that originated in the late 1990s and ultimately exploded in late 2007, very nearly obliterating the U.S. banking system and economy.
The Byzantine backstory involving a massive yet largely unspoken conspiracy of dishonesty, lies, and outright financial manipulation—not to mention backdoor politics—is complicated enough to baffle even the most astute layman.
To grossly oversimplify on our part, what was largely behind the financial collapse that caused the Great Recession were artificially constructed, easily misunderstood bond-like investments known as collateralized debt obligations (CDOs). What they were in actuality were stacks of mortgages bundled into packages and re-sold to individual and institutional investors as high quality debt instruments (bonds). The “collateral” in most cases were the stacks of mortgages, collateralized by houses, contained within the package.
Many of these packages contained a few high quality mortgages on top, but also included, mainly or in part, poorly underwritten mortgages that were almost certain to fail in any economic downturn. But, coerced by lending institutions, ratings agencies rated them in the A, AA, or AAA (highest quality) range and they were marketed as such. When the defaults started to cascade, the whole system was brought to the verge of collapse. Things have never been the same.
Unknown to the general public once again, however, there are still ways to make money, even in the most hellish of market collapses. A key maneuver here—and a perfectly legal one—is to “short” the securities your research indicates are about to take a turn for the worse.
“The Big Short” is an aggregate of individual stories involving various astute analyst-investors and small firms that were smart enough to see through the gathering mortgage and CDO mega-scandal, leading them to take a big gamble and “short” them; that is, to bet against them in the open market, a move that seemed insane at the time they began to make their move.
Most people think that you make money in stock and bond markets by “buying low and selling high,” and indeed this is usually the case. However, what most people do not know is that you can borrow securities you think are about to tank, sell them first, and then buy them back after they drop, thus profiting on the downside. When you buy investments first, then sell them when they go up, you’re “profiting on the long side.” Selling investments you borrow and then buying them back at a lower price when they go down—and pocketing the different—is called “profiting on the short side.”
(For more detail on the “short side” of investing, see our companion article in CDN’s business section.)
So why is this film so good?
The reasons are three.
- Great… no, brilliant screenplay
- Fast-paced direction that turned what could have been a yawner of a plot into something akin to a finance-oriented episode of CSI.
- Awesome acting by a first rate cast
We’ve noted this earlier. Somehow, this film’s scriptwriters—Charles Randolph and director Adam McKay—simplify this complex story enough so that most of the film’s audience will easily grasp what’s going on.
A nice touch are the deliberately funny scenes the writers interpolate at key moments in the film—points at which the average moviegoer might be finding his eyes glazing over as bizarre financial maneuvers become somewhat difficult to comprehend.
It’s at this point that wildly inappropriate special guest commentators—notably chef-raconteur Anthony Bourdain and actress-chanteuse Selena Gomez—inexplicably pop up to define key terms in humorous, fourth-wall shattering asides.
Without any disrespect for either Bourdain or Gomez, neither celebrity likely knew jack about his or her given topics before getting involved in this film. But the writers give them remarkably clear and concise explanatory lines to deliver, which both of them happily proceed to do as if they had always been world class experts on the subject.
These mini-scenes are so funny and informative that most in the audience will immediately be able to grasp and internalize the concepts enabling them to easily follow the ever more complicated maneuvers that drive this film forward. It’s a masterstroke, and provides the necessary humor breaks in the film.
No need to say much about this. If you have seen or plan to see the film (it’s still in many theaters), you’ll agree that McKay’s direction is top-notch. He takes what is so often a desert-dry, impossible-to-understand financial topic and transforms it into a quick cut, fast-paced thriller—a business thriller no less. The resulting film is nothing short of a miracle. It’s entertaining, it’s turbo-charged, it’s personal, it’s funny, and—mirabile dictu—its unbelievably educational in a way the classroom never is.
Perhaps the most impressive performance in this film is turned in by Christian Bale, who portrays the supremely weird but genius-caliber physician-turned-investment-guru Michael Burry.
Aside from his brilliance as an investor and hedge fund manager, the real life Burry was and is a tricky individual to portray in a film. Among other things, he’s afflicted (if that’s the correct word) with Asperger’s syndrome, a subset of autism. Generally highly intelligent, the affected individual habitually hyperfocuses on certain details and also has difficulty empathizing with others.
Unlike a wholly autistic individual, however, an Asperger’s sufferer can largely function decently in general society in most situations, although his motives and motivations can prove to be inscrutable.
The way nature sometimes rolls, Burry’s Asperger’s-driven personality traits are likely what helped Michael Burry spot the accounting tricks employed for years by institutions to cover up the rottenness of the risky securities they were peddling as high quality to institutions and the general public. Consequently, Burry took a huge gamble and used massive amounts of his customers’ and his firms’ cash to short an immense number of these securities, holding firm even as markets continued to move against him.
When investors and his own firm objected, he simply froze the accounts to prevent the withdrawal of funds, convinced of his correct judgment while having essentially no ability to truly grasp the fear and panic on the part of either his investors or his firm.
Bale’s phenomenally effective portrayal of Burry echoes his personality to a remarkable degree. He’s totally driven by numbers and logic while largely immune to the terror and panic of others. Burry’s (and Bale’s) attitude is perhaps exemplified in a quote that’s attributed to Davy Crockett: “Make sure you’re right. Then go ahead.” To the moviegoer, this complex portrayal is tough to grasp at first. But its logic proves impeccable as Bale-Burry claw their way to a victorious final inning.
Nearly as intriguing is Steve Carell’s portrayal of Mark Baum. Burry’s polar opposite, the astute but far more emotional Baum initially refuses to believe the numbers he and his advisors are seeing are actually true and correct. Something of an oddball moralist, Baum simply cannot believe that financial fraud has been consistently committed on such a massive, unprecedented scale. Yet his team won’t back down, and their research is somewhat furtively confirmed by a rogue Deutsche Bank official portrayed by Ryan Gosling.
When he’s finally convinced of the truth, Baum’s moral outrage and righteous fury know no bounds, leading him to massively commit his firm to a short-selling search-and-destroy operation despite considerable outside opposition. Carell grasps, almost miraculously, the essence of his brooding character’s mercurial personality. In the process, his star continues to rise in Hollywood.
The mortgage and investing landscape proves a similar shocker for young garage-startup investing wunderkinds Geller and Shipley. They, too, are coming up with the same kind of numbers that Burry and Baum have uncovered. Unknown on Wall Street, making no headway with their investment case and still wet behind the ears, they desperately want to short the companies and securities involved, but can’t raise the capital. So they enlist the aid of Brad Pitt’s Ben Rickert, a successfully retired financial genius who lives nearby but who no longer wants any part in the world of finance.
Skilled, aggressive but taciturn, Rickert takes a look at what these crazy kids have come up with. Somewhat shocked (but not) to find their reasoning sound, he decides to help them get in the game if they play by his rules. His quirky portrayal of the enigmatic Rickert reveals deep, character-driven side to Brad Pitt’s craft we’ve not always seen or expected, making his performance here all the more compelling.
Slowly, inexorably, and almost entirely independent of one another, these key players and their teams (save for loner, Michael Burry) build their massive short bets. They almost lose the ranch, their friends and their investors before the financial truth they’ve long suspected is finally outed, crashing market after market and destroying large firms with alarming rapidity.
In the end, our heroes win a satisfying financial victory on their over-the-top market bets, more or less. Burry’s suddenly grateful clients make perhaps the most of all—almost 490% by the time Burry has closed all his remaining short positions.
Notably, “The Big Short” largely glosses over The Big Flaw embedded in Michael Lewis’ otherwise admirable narrative: the largely antiquated social justice warrior (SJW) tic that helped both him and his book cop the improbably-named Robert F. Kennedy Center for Justice and Human Rights 2011 Book Award.
Lewis ultimately blames the Great Recession on what President Eisenhower once famously termed “the military-industrial complex.” It’s today’s mega-rich, super-left Wall Street and Silicon Valley Robber Barons–nearly all of them Democrats like Kennedy and Lewis–who continue to destroy the American economy while covering up for those directly involved in our ongoing economic catastrophe.
Near its end, the film does pay brief lip service to Lewis’ shallow liberal moralizing. Perhaps director McKay even buys in to Lewis’ blame game. But if so, he’s smart enough not to layer it on, leaving us to come to our own conclusions as we leave the movie theater.
“The Big Short” tells a complicated, epic story, tells it briskly and well in spite of the complexities involved and offers a cautionary tale for anyone who habitually believes in the inherent truth of the “news” that appears in newspapers, on TV or on the many Internet new sites. The film deserves a 2016 Oscar for its superb acting, storytelling and direction.
Yet each year, Oscar lets slip that there’s not much intelligence left in the entertainment universe by politically skewing certain awards. We’ll find out soon if Hollywood really cares about inconvenient truths.
Rating: **** (4 out of 4 stars)