The Big Short

A movie hailing.

The Big Short is worthwhile to watch. The movie entertainingly condenses the issues around the financial meltdown of 2007. You can watch it without having a fucking clue about markets. Necessary terms are illustrated; see it just for those, and if you didn’t know them already, they’ll be worth the ticket on their own (though HAIL INTERNET you can find the info for free).

The scene on how derivatives work is first class. The story is told in terms of CDO, CDS, and point changes in the market; it uses real terms from the real world, not gobbledygook. This means, you can also watch the movie if you have some clue about markets. (Don’t know how it is if you’re an expert.)

Literary freedom is applied, of course, but for character sharpening, suspense, some minor political coloring, and in-movie explanations, but not for dumbing down. You can watch the movie for the emotional suspense, the critique against the greedy outbursts of capitalism and political involvement, but also for every single scene in itself.

In one scene, the risk managers (who are painted to think that the housing market is stable) are told to piss off. At that point, that feels so right (they are the messengers of the incarnation of naiveté of some bank departments; but it shows the dysfunctional risk management).

When, within the movie, it is said that the derivatives market is 20 times bigger than the market on the underlying assets. Craziness. But it also leads to the question, who are all those institutions are who trade in the derivatives of all those CDOs?

When a CDO “diversifies” risks, but the contained mortgages are all in the same suburban area, and most of them are for sale or empty, how diverse is it?

Are you part of the system if you work it?

The market is hungry for triple-A investments, especially conservative ones. Pension funds are explicitly mentioned. Why are pension funds so hungry for triple-A investements? Note that volatility and risk are intertwined, but depending on your time horizon they are not the same.

How much money do you need to play?

These small little issues paint a picture, and the movie takes its time to expose them.

Note to self: Learn how to write a review.