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The Big Short(2015)
Paramount Pictures Dec 11, 2015 | Wide
In 2006-2007 a group of investors bet against the United States mortgage market. In their research, they discover how flawed and corrupt the market is.
Releases
Original Release | Dec 11, 2015
- Dec 23, 2015 | Wide
Box Office
Results
$705,527
$70,259,870
$63,181,000
$133,440,870
Director & Top Cast
Technical Specifications
Sound Mix: Dolby Digital,Datasat
Aspect Ratio: 2.35 : 1
Other Details
Country of Origin: United States
Language: English
Summaries
Plot Summary
- Mortgage-backed securities made their debut in the banking system in the 1990's. Till then large pension funds could only invest in t bills as by law they were required to invest in AAA rated instruments only. And since Mortgages were considered safe, consequentially MBS were AAA rated as well. The MBS market was several times over the actual Mortgage market itself.In 2005, eccentric hedge fund manager Michael Burry (Christian Bale) discovers that the U.S. housing market is extremely unstable, being based on subprime loans that are high risk and providing fewer and fewer returns. Predicting that the market will collapse sometime in the second quarter of 2007, he realizes that he can profit from this situation by creating a credit default swap market, allowing him to bet against the housing market. He does his research by actually looking at the individual mortgages inside of each of the top 20 selling mortgage bonds & finds that they have adjustable sub-prime mortgage rates, which will go to their real rates in 2007 and will begin to fail. If the fail rate goes above 15%, the bond is worthless.He visits numerous banks with this idea, and the banks, believing that the housing market is secure, accept his proposal. This earns the ire of Burry's clients who believe that he is wasting their money and demand that he stops his activities, but he refuses. As the predicted time of the collapse approaches, his investors lose their confidence and consider pulling their money out, but Burry puts a moratorium on withdrawals, much to his investors' anger. However, the market collapses just as he predicted, and he produces 489% profits from the plan.Trader Jared Vennett (Ryan Gosling) hears of Burry's actions from one of the bankers he dealt with, and soon realizes that Burry's predictions are true. He decides to put his own stake in the credit default swap market. A misplaced phone call alerts hedge fund manager Mark Baum (Steve Carell) to his plans, and Baum is convinced to join Vennett. The two discover that the impending market collapse is being further perpetuated by the sale of Collateralized Debt Obligations (CDOs), groups of poor loans that are packaged together and incorrectly given AAA ratings due to the conflicts of interest and dishonesty of the rating agencies.CDOs are basically Mortgage bonds that don't sell. So, bankers pile them up, until the pile gets become enough, so the rating agencies consider them diversified and give them 95% AAA rating. So basically, CDOs are dog feces covered in cat feces.When Baum attends the American Securitization Forum in Las Vegas, he interviews a businessman who has created synthetic CDOs, making what is described as a chain of increasingly large bets on the faulty loans; Baum realizes, much to his horror, that the scale of the fraud will cause a complete collapse of the economy. Baum's business partners convince him to go through with the credit default swaps, profiting from the situation at the banks' expense.Eager young investors Charlie Geller (John Magaro) and Jamie Shipley (Finn Wittrock) accidentally discover a paper by Vennett and also decide to become involved in the credit default swaps. Since they are under the required capital for an ISDA needed to pull off the trades necessary to profit from the situation, they enlist the aid of retired banker Ben Rickert (Brad Pitt). The three visit the mortgage securities forum in Las Vegas, where they manage to successfully make the deals.BBy Jan 2007, Mortgage default rates start going up, but the value of subprime mortgage securities go up, instead of crashing. Mark Baum visits a rating agency & find out that they are in the business of selling the rating for a fee, as if they don't give the rating, their competitor will. So, basically even the rating agencies don't know what is actually inside the mortgage securities that they are rating.Shipley and Geller are initially ecstatic, but Rickert is disgusted by their essentially celebrating an impending economic collapse and soon-to-be-lost lives. The two are horrified and take a much more emotional stake in the collapse by trying to tip off the press and their families about the upcoming disaster. Ultimately, they profit immensely, but are left with their faith in the system broken.Burry semi-retires and invests only in water, Baum refuses to say "I told you so" to the world and continues his career, Rickert returns to his retirement, and Shipley and Geller unsuccessfully attempt to sue the ratings companies with one of them electing to move to Charlotte to raise a family. Almost nobody involved in the creation of the CDO bubble is arrested, and Bespoke CDOs are soon sold again. The film refers to "bespoke opportunity tranches," though in reality, they are usually referred to as a "Bespoke CDO" or "Single-tranche CDO."
Storyline
- Three separate but parallel stories of the U.S mortgage housing crisis of 2005 are told. Michael Burry, an eccentric ex-physician turned one-eyed Scion Capital hedge fund manager, has traded traditional office attire for shorts, bare feet and a Supercuts haircut. He believes that the US housing market is built on a bubble that will burst within the next few years. Autonomy within the company allows Burry to do largely as he pleases, so Burry proceeds to bet against the housing market with the banks, who are more than happy to accept his proposal for something that has never happened in American history. The banks believe that Burry is a crackpot and therefore are confident in that they will win the deal. Jared Vennett with Deutschebank gets wind of what Burry is doing and, as an investor believes he too can cash in on Burry's beliefs. An errant telephone call to FrontPoint Partners gets this information into the hands of Mark Baum, an idealist who is fed up with the corruption in the financial industry. Baum and his associates, who work at an arms length under Morgan Stanley, decide to join forces with Vennett despite not totally trusting him. In addition to Burry's information, they further believe that most of the mortgages are overrated by the bond agencies, with the banks collating all the sub-prime mortgages under AAA packages. Charlie Geller and Jamie Shipley, who are minor players in a $30 million start-up garage company called Brownfield, get a hold of Vennett's prospectus on the matter. Wanting in on the action but not having the official clout to play, they decide to call an old "friend", retired investment banker Ben Rickert, to help out. All three of these groups work on the premise that the banks are stupid and don't know what's going on, while for them to win, the general economy has to lose, which means the suffering of the general investor who trusts the financial institutions. That latter aspect may not sit well with Baum. Some of these assumptions may be incorrect and may be far more manipulative than they could have ever imagined, which in turn may throw curves into the process. — Huggo Based on the book by Michael Lewis (writer of Moneyball, Liar's Poker and Flash Boys, among others), the true story of a handful of investors who bet against the US mortgage market in 2006-7. Through their own research they discovered that the US mortgage backed securities market was a bubble about to burst, and they invested accordingly. What they didn't initially know was how structurally flawed the MBS system was, the level of corruption in the market...and the impact on the average person when the bubble burst. — grantss In 2008, Wall Street guru Michael Burry realizes that a number of subprime home loans are in danger of defaulting. Burry bets against the housing market by throwing more than $1 billion of his investors' money into credit default swaps. His actions attract the attention of banker Jared Vennett, hedge-fund specialist Mark Baum and other greedy opportunists. Together, these men make a fortune by taking full advantage of the impending economic collapse in America. — Jwelch5742 In 2008, a group of savvy financiers sensed the looming threat of a subprime mortgage crisis concealed in the subtle warning signs of the mortgage-backed real estate market. Despite the risk, these investors took a bold step and bet against the housing market, reaping immense profits. However, no one could have foreseen the magnitude of the housing bubble and its catastrophic impact on the economy. The aftermath of this global financial crisis left millions of people jobless and homeless--an unprecedented disaster that caught the world off guard. — Nick Riganas 1 more All
