The Big Short: The film, the book, the idea

The Big Short

The recent film The Big Short reworks the ideas of the book of the same name.  It deals with important issues of financial practices and their consequences

 The Big Short is a comedy about what otherwise is no laughing matter, the dubious practices of financial fraudsters during the period of the global economic crisis. It has opened to generally positive reviews.  The ones I came across have whetted my appetite to make the film next for a visit to my local cinema, hopefully if I understand the advert with a mate and a date (same person).

Not a book or film review

 I might have waited before blogging until after that postponed pleasure.   However, there are a few other posts in revision in the pipeline for LWD, so this is more of a mention and a heads up for LWD subscribers like myself who are no friends of home viewing.  In it, I have tried to avoid spoiling any subscriber’s future enjoyment by passing on too much plot detail.

The film is based on the well-received book of the same name by Michael Lewis.   The big short  refers to buying ‘short’ , a financial strategy involving risks but promising great rewards.  In this case (you could say case study) the financial instruments are derivatives, or ‘gambles on gambles’. Specifically, the film and book concentrate on borrowing, then selling and buying back at a profit of Mortgage Default Insurance Options. The film ducks explaining the financial details , beyond making the point that the speculators are gambling on whether a catastrophic slump is coming in the housing sector.

I found the most enlightening review of the film was the one in The Wall Street Journal.

The film deals with the practices and their consequences of financial dealers contributing to the economic crash of 2008. The topic sounds arcane.  It is arcane.  But it has the advantages of drastic tension as mega-fortunes are made and lost, alongside personal triumphs and tragedies.  We are here in the same territory of the Wall Street morality tales, but (according to the WSJ review) mostly entertaining rather than preachy.

 Villains or heroes

You can, of course argue as did the WSJ that the speculative group of financial entrepreneurs are heroes of capitalism lancing the poison from the bubble so that the markets can return (eventually) to conditions of rationality and equitable trading.

The previews suggest that the film wraps all this up as a tense and enjoyable viewing experience.  I can’t wait to see it.

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