Saturday, January 16, 2016

The Big Short

The Big Short is a sharply acted, informative and entertaining movie about the events that lead up to the 2008 financial crisis.  Frequently the movie breaks the 4th wall while using humorous sequences to teach the audience about complex financial matters.  There is nothing better to catch our attention than a pretty lady in a bubble bath explaining how financial instruments work.

So what is there not to like?  What seems like an informative docudrama, and a clear cut indictment of corporate and personal greed, fails to tell the most important part of the story.  People who watch this move will think that they understand what happened, but they will be sadly misinformed.  Instead this movie has a political agenda that only presents one side.

Like the article "‘The Big Short’ is a lot of Hollywood bull about the 2008 financial crisis" points out, government policies were driving the housing bubble that lead to the decline of the world economy.

Let me put this another way:  If you are a bank, and you are lending your own money, then you are going be very careful about who you lend the money to, because if the loans you make go bad, then your bank loses money.  The same can be said about lending your depositor's money, because if you lose money on loans then you aren't going to be in the banking business very long.  But if Government Sponsored Entities are buying all your loans at a profit to you, then there is no risk to you and the only incentive you have is to make as many loans as possible.  Likewise, when the government actually requires you to make loans to people who aren't otherwise creditworthy, then there is going to be a higher rate of loans going bad.  When the Government Sponsored Entities take the bad loans and sell them to investors everywhere as presumably safe investments, then we have a recipe for disaster, which is why the whole financial system collapsed.

Yet this movie never mentions the government being involved.  So the movie is a one sided political message that happens to be somewhat informative, but also very entertaining.  The film is getting a great deal of praise and has been nominated for Best Picture.

Rating:  * * * .5

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