A review of The Big Short, the film based on the best-seller of the same name by Michael Lewis.

A film that is deservedly winning plaudits is The Big Short, a film about events leading up to the 2008 financial crisis and based on the Michael Lewis book (2011) of the same title. I read the book a few years’ ago and was swept up in its tale of how misfits and renegade finance geeks saw the US sub-prime market as the disaster it proved to be.

The movie manages to explain such concepts as collateralised debt obligations (CDOs), “tranches”, credit default swaps and mortgage-backed securities, and do it all at the pace and level that a Hollywood audience will demand. That’s some feat. One of the clever touches is when an actor turns to the camera and explains direct to camera what is about to happen or what just happened. The film has its very funny moments. As a journalist, I can relate to a scene where one of the protagonists grills a banker about default rates in front of a crowded room. There is pathos too. While there are clearly strong morals to be drawn from this film (as in other Michael Lewis tales such as Liar’s Poker) the movie, like the book, isn’t too preachy or holier than thou. The cast is excellent: I give particularly high marks to Steve Carell, who plays Mark Baum. Adam McKay wrote the screenplay and directed the film, and his guidance is steady and well-paced. 

There are some scenes designed to drive home the sleaziness of what the director sees as the mortgage/debt markets of the mid-noughties, such as when Baum goes to a strip-joint (this film has a 15 age certificate) to be told by one of the dancers she has several mortgages on houses; and the impression we are meant to go away with is how deluded and fraudulent part of the banking system was. What perhaps is harder to pull off in a narrative like this is to explain why the housing bubble was what it was, and what its origins are. Your reviewer thinks that a large slice of blame attaches to the Federal Reserve for a period of very low interest rates and to various Democrat and Republican administrations for tolerating such monstrosities as Freddie Mac and Fannie Mae – about half of the mortgage market in the US is backed, ultimately, by the taxpayer. The moral hazards involved were and are huge. It is easy to blame “deregulation” and "greedy bankers", but worth noting that the reinstatement of the Glass-Steagall split of investment banking from retail banking would not have, for example, stopped the risk-taking of Countrywide, or in the UK, the demise of the Northern Rock bank, or the hubris of lenders in Iceland. Arguably, it wasn’t capitalism that failed, but a sort of hybrid of crony corporatism and special-interest politics, with a strong dose of banker hubris in the mix.

Films that entertain aren’t always the best ways to explain a complex set of forces, but The Big Short is a rollicking good tale. It is in the same bracket, in my view, as Margin Call (2011), a film starring Kevin Spacey and Jeremy Irons. The Big Short doesn’t have an out-and-out villain like Gordon Gekko of Wall Street and is actually all the better for it. For in the end, what we learn is that this is an all-too-human story of hubris, greed, and along the way, a bit of moral courage thrown in the mix. 

Highly recommended.