Adam McKay | The Big Short

playing in the killing fields

by Douglas Messerli

Adam McKay and Charles Randolph (screenplay, based on the book by Michael Lewis), Adam McKay (director) The Big Short / 2015

The so-called “heroes” of Adam McKay’s The Big Short, are not so very different from the film’s villains: all desire just one thing, a big profit in the markets—a “killing” as it is often and perhaps correctly described, since it often means the destruction of so many others’ lives.

       The only difference, in the case, is that Dr. Michael Burry (Christian Bale), who works as the head of hedge fund from Scion Capital, realizes that the usually safe housing market, rated AAA in quality since most people pay their mortgages before paying other bills, is about to bust. We all remember how, in the latter years of this century’s first decade bankers and organizations such as Fannie Mae provided mortgages to millions of individuals who would never be able to earn enough to pay for them, which combined with a fall in stocks and other commodities nearly destroyed the American economy (you can get a crash course on these issues from Ramin Bahrani recent film 99 Homes [see my essay in My Year 2015] and J. C. Chandor’s 2011 film Margin Call [My Year 2014])? This man, suffering from Aspberger’s Syndrome and sporting one artificial eye, saw it all coming. 

      Since the book on which this film is based used real figures to tell its story, I will recount it as a series of historical facts, even though the character names have been changed.

       Visiting numerous banks—who maintained their faith, against serious bad signs, that the housing market was secure—Burry bet against the housing market, buying up credit defaults. Although his clients, realizing how he had invested their money, soon begin threatening him about leaving his fund, Burry bravely declared a moratorium on withdrawals, and soldiered forward, ultimately winning 489% profits for his investors.

       Somewhat coincidentally, Deutsche Bank trader Jared Vennett (Ryan Gosling), hearing of Burry’s actions, checked the figures, only to discover that Burry was right, and determined to put his own money into the credit default swap market, even though many such credits were secured by his own bank. 

      By accident Mark Baum (Steve Carell), head of a smaller hedge fund, (FrontPoint Capital) , got wind of Vennett’s actions, and soon after was approached by Vennett to join him in the investment. 

     The two, along with Baum’s partners discerned that the impending market collapse was being further perpetuated by the sale of collateralized debt obligations (CDOs), groups of poor loans that were packaged together and incorrectly given AAA ratings due to the conflicts of self-interest and dishonesty of the system. 

     When Baum attends the American Securitization Forum in Las Vegas, he interviewed a businessman who has created synthetic CDOs, making what he described as a chain of increasingly large bets on the faulty loans; Baum realized, much to his horror, that the scale of the fraud will cause a complete collapse of the economy.

      These two and Baum’s assistants (Hamish Linklater, Rafe Spall, Jeremy Strong, and Adepero Oduye) further discovered that the housing market was in even more trouble than Burry might have suspected, given the fact that the poor loans are often packaged together and given AAA ratings due to the bank cover-ups and the outright dishonestly of rating agencies such as Standard and Poors. 

      Attending a American Securitization Forum in Las Vegas, Baum interviewed a wealthy businessman, who explained that he has created synthetic CDO’s, which he describes as a chain of large bets on faulty loans, leading Baum and his associates to perceive that the fraud would likely cause a complete collapse of the economy. Baum, one of the strongest voices of morality in this film, hesitated on betting against the American economy, but was convinced by his partners to join in with Vennett. Baum is the last to collect on his winnings.

      Finally, a group of eager younger investors, led by Charle Geller (John Maagaro) and Jaime Shipley (Finn Wittrock), who, because of low capital, were not even able to trade in this market, discovered Vennett’s scheme, and decided for themselves, after interviewing several real estate agents in Miami, to also get involved in the default swaps. They called in a retired banker Ben Rickert (Brad Pitt) to help them with the investment. Eager and excited to finally be able to enter into high stake trading, they were absolutely delighted when Rickert agreed to help, but he (the most serious moral force in this work) upbraided them, reminding them that their success would mean the destruction of thousands of US families and perhaps a crisis that would utterly destroy American’s economy.

        Still innocents, they attempted to alert the press, friends, and family members about the impending disaster, but were mocked for their efforts. One of the most devastating moments in this moving film is after having made their “killing” in the market, they wander into the offices of the now destroyed and emptied Lehman Brothers offices, their confidence in the system now totally destroyed.

        The wonderful thing about The Big Short and its recounting of these various men’s actions is the ensemble acting by the three sets of investors upon which it centers, each tangentially connected, coming together, without direct contact, only at the Las Vegas convention. Nearly every actor in this film is nearly perfect in his or her role.

        The often seemingly inexplicable vagaries of investment activities and its terminology are explained, in a more comic vein than the rest of the story and with theatrical flair, through interruptive lectures by celebrities such as food author Anthony Bourdain, Margot Robbie, Selena Gomez, and Richard Thaler.      

         Ultimately, it is the giddy sense of greed combined with the realization of the economy’s impending doom, and the tragedy it brings to so many millions of Americans that makes McKay’s serious drama so engaging. Even as we learn how the banks, loan organizations, and even those designated to oversee them are in cohorts, working against the average American citizen, we recognize that both the true cynics and the more likeable pragmatists of this tale are not so very different in their determination to capture their piece used to be called the American Dream, which might now better be described as the American Nightmare. 

       In real life, most of the “winners” in this story, retired in disgust from the economic sector, attempting to use their ill-begotten monies for better causes. But, of course, they could afford to, while so many other American citizens are still suffering from the loss of jobs and income in that unnecessary collapse.

Los Angeles, February 2, 2016