The Big Short Movie Research Paper

Historical Film Research Paper Draft - The Big Short

In lieu of the United States’ 2008 economic recession, Adam McKay’s 2015 film The Big Short encompasses popularized beliefs condemning Wall Street of corruption, deceit, and greed in relation to an innocent middle class. Released after seven years of economic resilience, socioeconomic stratification, and bailouts, the film hit the box office during the build-up to a polarized presidential election year. Amidst such an emotionally charged political climate, The Big Short reaffirms the populist audience’s predisposed mistrust of Wall Street and private banking practices. The movie targets the history and heritage myths of the 2008 housing market crash. Put simply, The Big Short follows the

On the other hand, The Big Short nails most of the historical context in a short two hours, given an academic consensus of the Great Recession’s hard data. What the major characters figured out that people writing housing bubble stories didn’t was how the rot from bad mortgage loans that helped fuel the housing bubble had come to permeate supposedly safe securities. There were billions of dollars of highly rated bonds floating around that were in fact worthless, or at least worth far less than advertised. The key transmission mechanism that turned a simple correction in the housing market into a global financial crisis were those bonds. Global banks had loaded up on these supposedly safe securities, and were at risk of becoming insolvent when their true value became known. Some banks blew up; others were bailed out. Either way the global credit system froze. But even if you were clever enough in 2005 to see all of this coming, you wouldn’t necessarily have been able to cash in as successfully as the characters in The Big Short. Figuring out exactly what securities to bet against - and how and when - mattered as much as the basic insight. The movie captures this well, as the characters face a crisis of confidence when foreclosures begin to rise and their big bets against mortgage-backed securities aren’t yet paying off. (“I may have been early, but I’m not wrong,” says one character, the hedge fund manager Michael Burry as portrayed by Christian Bale. “It’s the same thing,” a skeptical investor retorts.) Indeed, the movie has a glancing reference to how hard it is to translate the basic insight about mortgage securities into profits. We hear of a Morgan Stanley trader who had the insight that B-rated mortgage securities were at major risk, but believed that AA-rated securities would be fine, and so offset his bet against the former with a bet for the latter. It cost the firm billions. One simple lesson of this is kind of obvious: It is hard to make a boatload of