What We Can All Learn from Watching The Big Short
– Momentum Public Relations –
In 2010, author Michael Lewis published The Big Short. This New York Times best-seller focused on the build-up of the US credit and housing bubble. At the end of 2015, a film with the same title was released. Starring Christian Bale, Steve Carell, Ryan Gosling and Brad Pitt, the film takes the topic of finance and turns it into a story that’s entertaining, informative and true. The film has already won ten awards and has been nominated for over a dozen more.
Key Characters and Plot Points from The Big Short
Most people know about the 2008 financial crisis. The main reason is people from all walks of life were directly impacted by this event. Whether it was losing their job, going upside down in their mortgage or having their retirement savings wiped out, 2008 is considered the worst financial crisis since the Great Depression.
While countless people in the United States and the rest of the world were impacted by this event, the majority of the population doesn’t really know what caused this massive financial meltdown. That’s the story The Big Short tells in such a compelling way. The film starts by focusing on Bale’s character, Michael Burry. Burry is a hedge fund manager with a reputation for being quite eccentric.
In 2005, Burry came to the realization that subprime loans were eroding the stability of the US housing market. Based on the data he was analyzing, he believed that the market would collapse in the 2nd quarter of 2007. Burry made the decision to bet over a billion dollars against the housing market in the form of credit default swaps.
As Burry began shopping his deal around, Gosling’s character Jared Vennett caught wind of the deal. He accidentally got in touch with Carell’s character Steve Baum, and they ended up deciding to move forward with placing their own bet. During their research, Vennett and Baum discovered that the housing market was becoming even more volatile as a result of collateralized debt obligations (CDOs).
This information continued to trickle down the financial food chain and caught the attention of two very young traders. Although these traders had already made millions through their two-man operation, they were considered cockroaches by the financial industry. That’s why they had to seek assistance from retired industry veteran Ben Rickert, who’s played by Brad Pitt.
Although the movie is over two hours long and dives into some very complex topics, its pace and excellent acting will keep you on the edge of your seat as you wonder whether these guys are going to pull off the trades of their lifetimes or end up losing every cent to their names.
Is the Economy Heading Towards Another Crisis?
The 2008 financial crisis resulted in trillions of US dollars being wiped out. What’s truly scary is despite the fact that this event took place less than a decade ago, it seems many people are already forgetting the key lessons of the crash. According to financial experts like billionaire George Soros, recent signs in the market indicate that the global financial markets may once again be seized by a crisis.
As explained by Soros, turmoil in the Chinese economy is the lead indicator of potential distress. While China has been viewed as a massive success over the last three decades, numerous analysts are losing favor with this country’s economy.
Part of this stems from actions taken by Chinese market regulators. Even though the regulators’ actions have been taken in an attempt to stabilize the market, plenty of experts outside the country believe that those actions are shortsighted and will only contribute to the turmoil within the Chinese economy.