The Big Short, a movie about the cause of the Global Meltdown

I watched the movie "The Big Short" and then I came to ATS to see if there was a thread about it and found this thread about it where you would expect in the Movie reviews section. I thought that while that thread is fine for the movie review another thread should be in the section created to discuss the result of the actions dramatized in the movie. This is to facilitate review not of the movie but the technical issues and legal issues raised in this dramatization of these very real events.

Number 1 is the Collateralized debt obligation or CDO.
Number 2 is the credit default swaps
Number 3 is the Credit derivative

These are the most important devices needed to understand the global meltdown and why the economy is still on the mat and is not getting up. I loved the movie "The Big Short" I laughed until I cried remembering how much I lost along with most everyone in that period. I was not directly exposed as I knew what was happening but like chicken little I could not get my friends or clients to listen to me and took a blood bath anyway. I want to use this thread to discuss the technical issues as well as to discuss the crony capitalist that are clearly still entrenched in the global financial system.

I am very curious as to why you enjoyed the film...

It was a real struggle for me to watch because of the fact that I suspected that it was nothing more than a huge propaganda piece.

After doing some reading, my suspicions were confirmed.

I can't imagine any reason why Hollywood would want to let the cat out of the bag on this story knowing full well that the entire debacle was a deliberate scam.

I hate to give any attention to Michael Lewis’ The Big Short, since the wildly popular book told a fundamentally misleading story of the crisis which sadly has become conventional wisdom. And it wasn’t just harmlessly inaccurate; it directed public and even lawmaker attention away from the real drivers of this debacle.

It’s almost too bad the book’s so readable, because a lot of people will mistake readability for accuracy... Whether for his own profit or by accident, Lewis has denied the public the truth.

Debunking “The Big Short”: How Michael Lewis Turned the Real Villains of the Crisis into Heros

Read “Griftopia” by Matt Taibii, pay particular attention to chapter 3 specifically pages 115 - 119. I had an inkling that the movie 'Big Short' might be propaganda. Just the fact that they were using top name actors and making them out to be rebel hero's in one of the biggest swindles of all time , gave me pause to think.

The movie the “Big Short” is propaganda, it wasn’t the 99% the brought about the collapse of the mortgage industry, but Llyod Blankfein of Goldman Sachs and him alone

Yves Smith wonderfully explains why this book is a complete crock. The major problem with books by Michael Lewis [and yes, they are mighty dangerous], is that the reader may walk with with the fantasy that they really learned something. What Lewis skillfully avoids is ever demonstrating how so much was by design; wilful financial fraud and manipulation, instead Lewis reads as if stuff happens by accident. It was rigged throughout and from the get-go; John Paulson was a professional thief, as was Magnetar Capital and Goldman Sachs and so many others. Read Dean Baker, read Erin Arvedlund and Matt Taibbi and Nomi Prins, but avoid Lewis if the truth is what you are after. [After reading a Lewis book, you won't know it was by design; you still won't know who owns anything!

sfpl.bibliocommons.com...

Some of the reviews of the book confirm this as well:

Finish this "sexy" book, written on the level of gossip, and you will know LESS causes of the crash than you did when you began. When you finish "The Big Short," you will have been thoroughly entertained by risque dialogue, fiction-ish anecdotes, suspense, and delightful little scandalous facts about individuals. But you will know LESS than when you began about the origins of the first financial crash in 100 years (since 1907),

Amazon.com: Customer Reviews: The Big Short

From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression -- and they're about to do it again. They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage.

Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet.

www.rollingstone.com...

Something quite HUGE is happening on Goldman’s radar! There is no question that Goldman Sachs engineered the collapse of Lehman Brothers in September of 2008.

Every Major Stock Market Crash Begins with a Trigger Event AKA a Controlled Demolition

Let me start this piece out by stating that the current economic depression that we are currently in was meticulously orchestrated and skillfully engineered. If you haven't come to this conclusion on your own yet, perhaps you are not paying close enough attention to the cold hard facts that have come forth from this economic nightmare.

The Current Depression Was Carefully Engineered

a reply to: Murgatroid

The movie makes it painfully clear that lyingcheatingstealing theives at the highest levels of banking perpetuate a house of cards. How can anyone miss that message? The characters may have been glorified, but the message is obvious (the system is a scam, peasants lose) throughout the flick, imo.

I like how they gave the stock tip to invest in water at the end..

a reply to: Murgatroid

I am very curious as to why you enjoyed the film.

I enjoyed the film because it had good writing and acting. It was a good story. It was a story not the facts exactly. This thread as I stated in the OP is for the purpose to discussion of the mechanics of the situation that caused a global meltdown. The debt instruments that were fashioned and executed that caused this crash are not very well understood so with the movie "The Big Short" as a backdrop lets discuss these horrible devices of the financial collapse and their modern day equivalents.

a reply to: Murgatroid

I wonder if the people critiquing the movie has actually seen it.

Hollywood let the cat out of the bag because the cat has been out since 2008.

The film makers in no way lionize the traders who saw the housing market collapse. I certainly didn't understand them to be heros or even heroic in what they did.

For me, then tenor of the film clearly lays blame on the big banks who pushed the sub prime loans in order to artificially inflate the arcane financial instruments that underlied the market capitalization. The scene with Steve Carrel talking to the stripper is a good example of this. He is not admonishing. He is astonished and enraged that the banks would let this go on.

He is not a hero. He hates the big banks because of their arrogance and blindness to what they do. But he has no qualms cashing in on this.

I have not read the book so I can't say if Lewis paints these men as heros, but the movie certainly does not.

a reply to: machineintelligence

In 2007 in the town I live in, I noticed that houses were being built with the prices in the $400,000. Now, these are not homes in areas where people would not bat an eye but, rather, in a poor area where $10 wage was considered good. And no one was rushing in to move here.

Who could afford these homes?? Well, I soon found out about home loans from young home buyers in the area. They were being put into loans they could not afford!! Some were interest only loans!!

I had bought my first house 30 years before, and those loans were unheard of. Or if certain types were hinted at, buyers were told to run the other way. I then realized that something was wrong with the economy. Something big had to happen to offset this scheme. Then 2008 hit.

So, yeah, with all the loan debt still around, there still must be out there those three things you mentioned. Too bad the mathematicians who came up with all those schemes weren't put to better use. And too bad those who sold crap loans and such weren't put in jail.