Jun 19, 2016

Do you know about the terrifying background to the financial crisis of 2008 and its vast effects on your life?

The drama documentary The Big Short does not only expose the fraud of the financial system. The Big Short demonstrates that an exposed fraud can go on – as long as the fraud is protected by the elite of the system: a system that they say is a Democracy based on so called Science.

And this is not only an American problem. It is the big problem of the West.

From the film:

Jared Vennet: “The big banks were clueless. (…) And you're surprised?”
Mark Baum: “That's not stupidity, that's fraud.”
Jared Vennet: “Tell me the difference between stupid and illegal and I'll have my wife's brother arrested. I guess you just don't realize how clueless the system really is. Yes, there's some shady shit going down. But trust me, it's fueled by stupidity!”

The title of this highly acclaimed movie refers to the true story of when a few individuals understood something that no one else did, which made them able to profit big when the whole rest of the world fell down into the financial crisis of 2008. It's an important movie and a horror movie, says the actor Steve Carell. The film is based on the book of the same name by Michael Lewis.

Oh no! Not Economy...

“Mortgage backed securities, sub-prime loans, tranches… It's pretty confusing, right?
Does it make you feel bored, or stupid? Well, it's supposed to. Wall street loves to use confusing terms to make you think only they can do what they do. Or even better, for you to just leave them the fuck alone.”
-Ryan Gosling's character Jared Vennet, also the speaker voice trying to both entertain and explain the cryptic terms and relations within banking throughout the movie.

For how interesting can it be for the non-banker to watch a movie mainly taking place within the closed group of investors and bankers?

The truth is this movie says more about our world than what might appear at a first glance and is both interesting, funny, horrifying and engaging on many levels. It is a good reflection of what is going on in the world right now, and that on a much larger scale than in the field of economy.

Mark Baum (Steve Carell) is a character that is as pissed off with “the kind of crap people are pulling” as the fact that everyone seems to pretend that everything is fine. Him and Michael Burry, played by Christian Bale, are two of the characters telling the real story of how a few individuals managed to predict the stock market crash that caused the economic meltdown now eight years ago.

The film follows the story of how these individuals became so sure of their discoveries that they bet millions of dollars against everyone else in both their own companies and the whole world of banking.

The System as a Glue

If you have seen the film you probably remember Georgia, the lady with the strange spectacles, played by Melissa Leo. Her company's, Standard and Poor's, business is to evaluate mortgages from the banks.

What they do is to put a value on the likelihood of whether people will be able to pay back their loans. And then in the next phase the banks are able to ask the financial market, such as other banks and investors, to buy or speculate on these loans. In brief, it is profitable for the banks to get high ratings on bad loans.

The highlight of the conversation from the film where Mark Baum and his college, Vinnie Daniel meet Georgia:

Georgia: If we don't give them the ratings they go to Moody’s, right down the block. If we don't work with them they will go to our competitors. This is not our fault. It is simply the way the world works.
Mark: Oh shit!
Georgia: Now you see, and I never said that.

You can read about the basics on this Wikipedia page: Credit rating agencies and the subprime crisis.

So, the core of the bubble is that it is possible for the banks to profit big on lies, and that there within this arrangement is no possibility to do anything about that.

The banks keep buying themselves free from having to change anything and instead adjust the world around them to their conventional ideals.

The system is such that it protects its own immobility with fraud and stupidity. The inevitable factor is that people's ideas and dreams are made insignificant.

We are Trained to not Bother

To sum it up the current stupidity is allowed to go on as there is not enough pressure to change the system, and that depends on that the voters are trained to not bother.

The author of The Debt Generation, David Malone, summaries the current situation on his blog in September 2015:

"... they can work for the greater good and help change the old system into a new one better fit to the new challenges, or they can ignore the problems, forget the reason they and the system were created in the first place, and instead seek merely to get as much as they can from the failing system before it implodes."

In a way The Big Short exposes the same fraud as The Light Bulb Conspiracy.

Carell: I didn't know the depth of it

“... I think that's part of the reason [this movie is] so important. (…) People have kind of a cursory knowledge about what happened in 2008 but when you start peeling away the layers of fraud and duplicity it's incredibly terrifying. I wasn't terrified in 2008. It was a news report and it was affecting a lot of people, but I didn't know the depth of it.”

McKay: Why we don't hear about things like this in our mainstream culture

“It's a really hard, uncomfortable position to be against the mainstream" says director Adam McKay, also making a note on what mainstream is by having pop icons in the movie to tell facts about how the financial market works. McKay says:

“We kept talking about why doesn't our (…) mainstream culture tell us this stuff, why aren't we learning about this on the news, why aren't we learning about it through documentaries, why aren't we hearing people talk about it, why isn't it discussed in debates (…) and what are we hearing about instead.”

Gosling: Probably meant to just make you feel stupid so that you don't ask questions

“... the position that it takes, this idea that it's intentionally alienating is like a liberating idea, or certainly was for me, you know, it sort of takes some of the pressure off and it allows you, you know, I think that they're both assuming the best of you and that you can understand this and that, you know, by just sort of breaking it down in a way that they have it's sort of, it really shows you that it's true that it is something that is probably meant to just make you feel stupid so that you don't ask questions.”

Because what can happen if we start asking questions and do not simply accept that what they say to us? Gosling continues:

“I think that the book and the film leave me feeling optimistic just in a sense that it's information that feels like it's in the process of being disseminated to the masses and the code is being broken. (…) I think that might be the way to start the dialogue.”

Watch it online: The Big Short

Next financial crash is coming – and before we've fixed flaws from last one, Heather Stewart, The Guardian, Oct 7, 2015

5 Things You Should Know Before You See “The Big Short”, Ethan Wolff-Mann, TIME Magazine, Dec 10, 2015

Other Perspectives on Money that Opens Up

Money for Nothing?

BBC, Newshour Extra, Mar 5, 2016

Listen online

"What if governments paid all their citizens a basic income? Whether rich or poor, you would receive the same amount of money, and you would keep it whether you went out to work and received a salary or not. It is an idea that has been around for centuries, but one that has been gaining traction in recent times as welfare payments become ever more complex and expensive to administer. Proponents also argue that it would remove the 'poverty trap' where people are dissuaded from seeking work because they would lose their benefits if they did so. There is also the issue of machines taking over many of the jobs that we all do to earn a living - not just basic manual tasks, but increasingly 'intelligent' work that will in the future be carried out by robots. Join Owen Bennett Jones and his panel of expert guests as they discuss the future of work and how we pay for it. Should we give free money to everyone and let robots take the strain?




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