Install our The Big Short is a 2015 American biographical comedy-drama film directed by Adam McKay, based on the 2010 book of the same name by Michael Lewis. The movie tells the story of the 2008 financial crisis and the few individuals who predicted and profited from it.
What was The Big Short?
The Big Short refers to a period in 2007-2008 when several large investment banks, including Lehman Brothers, issued massive amounts of mortgage-backed securities (MBS) that were then sold to investors around the world. These MBS were packaged into complex financial instruments and given high credit ratings, making them appear safer than they actually were.
How did the financial crisis unfold?
The housing market bubble in the US began to burst in 2007, causing a sharp decline in housing prices and a subsequent increase in defaults on mortgage loans. This led to a crisis in the subprime mortgage market, where many of these MBS were issued.
Who predicted the financial crisis?
A small group of investors, including Mark Baum (played by Steve Carell), Charlie Geller (played by Ryan Gosling) and Jamie Shipley (played by John Magaro), recognized that the housing market was unsustainable and that the MBS were a ticking time bomb. They took a contrarian view, betting against the banks and the MBS.
How did they profit from their bets?
The investors, along with others like hedge fund manager Michael Burry (played by Christian Bale), used various strategies to short sell the MBS, including creating their own credit default swaps (CDS). They profited handsomely as the housing market continued to decline and the banks were left holding massive amounts of worthless MBS.
What was the impact of The Big Short?
The movie highlights the regulatory failures that led to the financial crisis. It also shows how a small group of individuals with the right knowledge and courage could make a significant profit from their bets.
How was The Big Short portrayed in popular culture?
The film received widespread critical acclaim, with many praising its unique storytelling style and performances. The movie won several awards, including five Academy Awards.