Explain the protagonists' angst in "The Big Short"
August 8, 2016 8:36 PM Subscribe
In the film The Big Short, the three central characters - (Steve Carell's) Mark Baum, (Christian Bale's) Dr. Michael Burry, (Brad Pitt's) Ben Rickert - are shown as profiting tremendously by betting against the housing crash, yet all are shown as being pissed off about it to greater or lesser degrees. I have a hard time buying into this. If you spend all this energy playing the game and making a massive profit off it, can you really be said to be opposed to the game?
The only characters shown to actually be joyful about all the money they are making are the two young upstarts being advised by Rickert (and why is he helping them anyway, if he's done with the evil system)?
To me all the moralizing by the characters - laid on especially thick by Steve Carell as Mark Baum - seems hokey and fake. I can see being disgusted by evil while making out nicely at the same time, but I can't see the level of moral outrage he seems to project. What's the deal?
The movie (like the book) is supposedly based on real-life characters.
The only characters shown to actually be joyful about all the money they are making are the two young upstarts being advised by Rickert (and why is he helping them anyway, if he's done with the evil system)?
To me all the moralizing by the characters - laid on especially thick by Steve Carell as Mark Baum - seems hokey and fake. I can see being disgusted by evil while making out nicely at the same time, but I can't see the level of moral outrage he seems to project. What's the deal?
The movie (like the book) is supposedly based on real-life characters.
Best answer: The psychology of shorting often involves being really angry at (what you think) are management's badness or the market's dumbness. It's also important to make a show of it to at least your degree of sincere conviction to win over everyone else, because bubbles only pop when the majority stops believing in them.
posted by MattD at 8:54 PM on August 8, 2016 [11 favorites]
posted by MattD at 8:54 PM on August 8, 2016 [11 favorites]
Came in to talk about the psychological aspect of shorting... And beaten to it in the time I hit preview.
Some of is played up, but i thought it did a really good job of showing how so much of finance is not just finding a position you have conviction in, but also the right timing; and then the disbelief that all these seemingly intelligent folks are making such a bad decision. And that in the end you are making money not because of crazy financial wizardry, but because enough people believe in something or are behaving like they do and you just happen to time being contrary right.
posted by larthegreat at 9:01 PM on August 8, 2016 [2 favorites]
Some of is played up, but i thought it did a really good job of showing how so much of finance is not just finding a position you have conviction in, but also the right timing; and then the disbelief that all these seemingly intelligent folks are making such a bad decision. And that in the end you are making money not because of crazy financial wizardry, but because enough people believe in something or are behaving like they do and you just happen to time being contrary right.
posted by larthegreat at 9:01 PM on August 8, 2016 [2 favorites]
I think in general if you spend a lot of time and energy playing a game, you like to be able to convince yourself that the game is fair, and people win because they're really, really good at it. But discovering that the game is in fact super unfair, and people win because they're well-connected white guys who play it a certain (often unethical) way, could be really upsetting. These were guys who wanted to believe in the market and got massively disillusioned.
posted by town of cats at 9:34 PM on August 8, 2016 [3 favorites]
posted by town of cats at 9:34 PM on August 8, 2016 [3 favorites]
It's also worth noting that the crash was going to happen anyway. The only issue was whether they were going to make bank off it.
At the same time, you're not wrong to spot the "they wept, but they took" aspect of the situation. People who think that movie had actual heroes weren't paying sufficient attention.
posted by praemunire at 9:55 PM on August 8, 2016 [5 favorites]
At the same time, you're not wrong to spot the "they wept, but they took" aspect of the situation. People who think that movie had actual heroes weren't paying sufficient attention.
posted by praemunire at 9:55 PM on August 8, 2016 [5 favorites]
They were all really hanging out there financially at one point in the movie and other entities were illegally/ artificially propping up the market and denying them their payout. They didn't know if they would go broke paying the fees on their loans in the meantime.
Also the level of stupidity and greed shown in that movie would make any rational person a bit nuts I think.
posted by fshgrl at 10:30 PM on August 8, 2016 [5 favorites]
Also the level of stupidity and greed shown in that movie would make any rational person a bit nuts I think.
posted by fshgrl at 10:30 PM on August 8, 2016 [5 favorites]
Shorting is a gladiatorial, chip-on-shoulder activity you must do if you want to be taken seriously two years later when everyone claims to have "totally called it."
posted by michaelh at 10:52 PM on August 8, 2016
posted by michaelh at 10:52 PM on August 8, 2016
Maybe if you think about it in analogical terms, imagine an activity you are really invested in, maybe a sport, or Dungeons and Dragons, or some online video game, some religious activity or whatever, if you take that thing seriously then see people acting foolishly, irresponsibly, or otherwise against your values, would you want to let them control the activity/win the game or would you be even more determined to beat them because they're acting like idiots? It's the seriousness with which the characters take the stock market which makes them angry to see other people screwing around with something they believe is so important.
As a narrative function within the film, it builds a sense of conflict which the characters can win, while also making it so we aren't rooting for the market to crash since that would be cheering for something that harmed us. It leaves the viewer free to question the attitudes of the lead characters in relationship to the market as well as the market itself, but also allows for people to follow the story along the more usual good guys versus bad guys manner. Hollywood isn't big on committing too strongly to any point of view that might harm box office after all.
posted by gusottertrout at 11:52 PM on August 8, 2016 [4 favorites]
As a narrative function within the film, it builds a sense of conflict which the characters can win, while also making it so we aren't rooting for the market to crash since that would be cheering for something that harmed us. It leaves the viewer free to question the attitudes of the lead characters in relationship to the market as well as the market itself, but also allows for people to follow the story along the more usual good guys versus bad guys manner. Hollywood isn't big on committing too strongly to any point of view that might harm box office after all.
posted by gusottertrout at 11:52 PM on August 8, 2016 [4 favorites]
Yeah, imagine you spent your whole life mastering the rules of a game and when you turn pro it turns out that the referees just make shit up all the time. What do you do with all of that knowledge? This would be especially significant in an ego-driven industry.
posted by rhizome at 12:21 AM on August 9, 2016 [6 favorites]
posted by rhizome at 12:21 AM on August 9, 2016 [6 favorites]
It also may have been partly an attempt by the filmmakers to humanize the protagonists.
posted by sammyo at 5:00 AM on August 9, 2016 [2 favorites]
posted by sammyo at 5:00 AM on August 9, 2016 [2 favorites]
It's entirely possible, in fact frequently the case, for an investor who's shorting a company/trade to genuinely loathe the thing they're shorting and think it a scam. That's precisely what gives them the courage to short, often when they're losing money hand over fist for moths or weeks while waiting for their bet to pay off. If there's a chance that they're wrong, and the thing they're betting against is legit, they lose. Many many many people are betting it is legit; you have to be certain it's not to take the other side.
For a current, real life example, check out Bill Ackman's crusade against Herbalife. Ackman is not a nice guy, and made his fund a huge amount amount of money betting on a pharma company whose whole business model was buying drug startups, firing their R&D departments, and jacking up the prices on their drugs 10x. But he seems to genuinely hate Herbalife and think it's a pyramid scheme that ought to be shut down by the FDA.
posted by maggiepolitt at 5:50 AM on August 9, 2016 [3 favorites]
For a current, real life example, check out Bill Ackman's crusade against Herbalife. Ackman is not a nice guy, and made his fund a huge amount amount of money betting on a pharma company whose whole business model was buying drug startups, firing their R&D departments, and jacking up the prices on their drugs 10x. But he seems to genuinely hate Herbalife and think it's a pyramid scheme that ought to be shut down by the FDA.
posted by maggiepolitt at 5:50 AM on August 9, 2016 [3 favorites]
I don't know if you read the book, but a recurring theme in it is more or less exactly this---the protagonists' angry incomprehension of how every single institution they went to saying "this is gonna crash, and crash hard" patted them on the head and said they'd look into it. Deciding to turn a fabulous profit on their willful ignorance was to no small extent motivated by spite.
posted by jackbishop at 6:52 AM on August 9, 2016 [3 favorites]
posted by jackbishop at 6:52 AM on August 9, 2016 [3 favorites]
For a period, the securities contracts bought by Burry and Baum failed to reflect the increased risk of the underlying bonds as the market caught on to risks in housing. The mortgage bonds were going down, but the insurance contracts Baum and Burry held weren't increasing in value. This was in part because the banks who had sold them weren't willing to change the price they were offering. (They were pretty obscure contracts, so you can't just sell them on Craigslist.) Baum and Burry were concerned that there was some clause in the contract which meant that they didn't own what they thought they did, hence the rage at Ryan Gosling's character, who had sold Baum the contract. They also speculated that the banks were using this period to sell all the risky bonds they could to other investors, which would have been more difficult if they looked like they were about to default. So there was anger at the banks for potentially manipulating the value of the contracts Bury and Baum held.
Additionally, Baum had been on the research trip to Florida to see how the real estate market was doing. He could tell that the bubble popping was going to put many people out of their homes, and out of work. His anger was partly directed at the participants in the financial system, like the banks and lenders who made it all happen. Of course, he didn't try to help any of the victims, so I see where your confusion is coming from. (Though, he understood the scale of the problem, so there wasn't much he could do, given his resources.) He did want to punish the perpetrators, and buying the contracts he did made the eventual losses more painful for the banks and investors who were part of the problem.
In general, shorting does seem to be an angry investor's game. Look at Bill Ackman and his campaign against Herbalife. He's calling out a scam, asking for regulators to get involved, speaking to the press, etc. Shorting has to be loud and public. But some of this is obviously an act.
One thing the movie has trouble capturing in 2 hours is how long and difficult the battle was over this stuff. It took more than a year for these deals to pay off for Burry and Baum, and each had to deal with the possibility of losing in a big way, and calls from their own investors to give up. They faced bigger opponents who may not have been playing fair. By the end, they seemed more exhausted and relieved. You don't have much energy for dancing after winning a marathon.
posted by thenormshow at 8:08 AM on August 9, 2016 [5 favorites]
Additionally, Baum had been on the research trip to Florida to see how the real estate market was doing. He could tell that the bubble popping was going to put many people out of their homes, and out of work. His anger was partly directed at the participants in the financial system, like the banks and lenders who made it all happen. Of course, he didn't try to help any of the victims, so I see where your confusion is coming from. (Though, he understood the scale of the problem, so there wasn't much he could do, given his resources.) He did want to punish the perpetrators, and buying the contracts he did made the eventual losses more painful for the banks and investors who were part of the problem.
In general, shorting does seem to be an angry investor's game. Look at Bill Ackman and his campaign against Herbalife. He's calling out a scam, asking for regulators to get involved, speaking to the press, etc. Shorting has to be loud and public. But some of this is obviously an act.
One thing the movie has trouble capturing in 2 hours is how long and difficult the battle was over this stuff. It took more than a year for these deals to pay off for Burry and Baum, and each had to deal with the possibility of losing in a big way, and calls from their own investors to give up. They faced bigger opponents who may not have been playing fair. By the end, they seemed more exhausted and relieved. You don't have much energy for dancing after winning a marathon.
posted by thenormshow at 8:08 AM on August 9, 2016 [5 favorites]
Baum is based on Steve Eisman, who has tried to alert regulatory agencies to the instabilities in regulated systems that (1) have the capacity to impact quite a lot of people, directly and indirectly and (2) are not scrutinized or audited soundly. He was once (maybe still is) a pretty active force against the for-profit college model--here's a link to some of his Senate testimony on that.
Is that the sort of response you're interested in?
posted by late afternoon dreaming hotel at 9:04 AM on August 9, 2016 [2 favorites]
Is that the sort of response you're interested in?
posted by late afternoon dreaming hotel at 9:04 AM on August 9, 2016 [2 favorites]
What Sammyo said: If the protagonists were rubbing their hands together with glee as they profited off of the financial plight of others, they wouldn't be sympathetic characters.
posted by cleverevans at 9:44 AM on August 9, 2016
posted by cleverevans at 9:44 AM on August 9, 2016
I have a hard time buying into this. If you spend all this energy playing the game and making a massive profit off it, can you really be said to be opposed to the game?
Ultimately, yes. Things are separable, not everything gets rolled into one big moral sum.
This is hardly the only time where money has had separate interests to 'doing the right thing'. To be clear, I mean 'separate', not 'opposite'. Look at other situations with distinct ethical and financial motives: What about finding a lost dog and accepting the reward money? A doctor charging a patient for saving a life? A doctor charging for a surgery that killed the patient? An insurance company denying or approving a claim based on a legitimate technicality?
I think it's a little facile to declare any of those things 'wrong', or endorsed by one of the parties just because there's a financial interest. Similarly, I think taking a financial position opposite willing participants is not the same as a total endorsement of the market's machinations.
posted by so fucking future at 12:58 PM on August 9, 2016
Ultimately, yes. Things are separable, not everything gets rolled into one big moral sum.
This is hardly the only time where money has had separate interests to 'doing the right thing'. To be clear, I mean 'separate', not 'opposite'. Look at other situations with distinct ethical and financial motives: What about finding a lost dog and accepting the reward money? A doctor charging a patient for saving a life? A doctor charging for a surgery that killed the patient? An insurance company denying or approving a claim based on a legitimate technicality?
I think it's a little facile to declare any of those things 'wrong', or endorsed by one of the parties just because there's a financial interest. Similarly, I think taking a financial position opposite willing participants is not the same as a total endorsement of the market's machinations.
posted by so fucking future at 12:58 PM on August 9, 2016
There's also that you're witnessing your own country burn itself down, and for the very dumbest of reasons.
posted by -harlequin- at 2:26 PM on August 9, 2016 [3 favorites]
posted by -harlequin- at 2:26 PM on August 9, 2016 [3 favorites]
I think it's a little facile to declare any of those things 'wrong', or endorsed by one of the parties just because there's a financial interest. Similarly, I think taking a financial position opposite willing participants is not the same as a total endorsement of the market's machinations.
It's a little more complicated than that, though. I know I said above that the protagonists' bets didn't cause the collapse, which would have happened anyway--but, in fact, the existence of the CDS market, because of both its sheer magnitude and its opacity, is what served to vastly amplify the effects of the bond downgrades and defaults and thus make the full-bore crisis. What took down AIG, for example, was not the bond downgrades themselves, but swaps written against those downgrades. By participating in that market, the protagonists, in fact, served to amplify and worsen the effects of the collapse, to their own profit.
posted by praemunire at 3:06 PM on August 9, 2016
It's a little more complicated than that, though. I know I said above that the protagonists' bets didn't cause the collapse, which would have happened anyway--but, in fact, the existence of the CDS market, because of both its sheer magnitude and its opacity, is what served to vastly amplify the effects of the bond downgrades and defaults and thus make the full-bore crisis. What took down AIG, for example, was not the bond downgrades themselves, but swaps written against those downgrades. By participating in that market, the protagonists, in fact, served to amplify and worsen the effects of the collapse, to their own profit.
posted by praemunire at 3:06 PM on August 9, 2016
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If there's an invisible hand it's guided by a lobotomized blind man.
In a culture where success is proof positive of demonstrated exceptionalism how does one show their superiority when it is rigorously provable that success is not an indicator of skill, talent, ability or worth. If you can't justify your results how do you command the fees, chase the wall street dream?
I would think that the willful stupidity on display in the movie and the book would have been devastatingly damaging to everyone who valued the game enough to play it hard.
posted by mce at 8:53 PM on August 8, 2016 [6 favorites]