The Big Short Reflection
- Clay Taylor
- Apr 12, 2023
- 3 min read
When watching the film called The Big Short, the film portrayed aspects of the financial industry, where I got to learn about a few people who predicted the collapse of the housing market. I learned more about the housing crisis dilemma that arose in 2008 and who came out as some people may deem a "winner". Most importantly, this movie taught me more about ethical values and how they can differ among everyone. Lastly, before I dive in, the movie had a subtle quote after Steve Eisman and his team came back to talk about the banker that pitches them to invest in this shortage because he wanted to make money by charging them for shorting it. During the team’s talk, they were wondering if what the banker said was true and Steve Eisman realized the good deal mentioning that he wants to check into it due to him having a higher morality. Later, he is urged to sell and does but mentions the quote "Just because it's legal doesn't mean it's right." He did after realizing the severity of Wall Street shutting down and talking to the person that told him about how Synthetic CDO are made.
The Big Short did well showing that throughout the characters in the movie. In addition, it would have paused to help explain everything that wall street and big banks were doing that helped cause this crisis. It showed me that each individual that was involved in the housing market was in it to make a profit but each character had a slightly different moral reasoning to get that profit each wanted. For example, Michael Burry predicted this way before in anyone else caught wind of the housing market bubble. He got all his investors mad at him because he invested very early before it happened, and the Big Banks laughed him out of all the offices when taking his money for investing millions to shorten the housing market.
When reflecting on the incentives of all the people in the film and seeing that most were unaware of the moral/ ethical concerns that followed. You may say the investors were more ethical regarding morality. However, they were not! Michael Burry’s investors were made because they believed that they would not be making money by shortening the housing market. This showed an imbalance in having a profit motive, which is essential for a capitalistic society (United States), and moral/ethical concerns regarding to the United States. Michael Burry was right, which resulted in him and the fund he managed to do well. However, I believe the Big Banks knew about this but never thought it would have been possible to happen. Hints, the movie shows Michael Burry walking out of all the bank’s meeting rooms with a cup and all the bankers laughing and celebrating. However, he realized that everyone still hated him due to the impact of his being right resulted in.
This movie showed me that one person’s greed can result in another’s downfall. When thinking about the question of, “Is it OK that there are winners and, inevitably, losers?” I would say it is ok as long as it doesn’t put someone out of work or become homeless. Furthering, I would say it can be ok based on how each society functions. However, I learned a lot from this movie about how banks are designed to make money. Furthering, I watched a PBS documentary on YouTube about the federal reserve and how they coordinate with banks. Essentially, they did exactly what they did for banks after the housing crisis. The Federal Reserve bailed out the banks during the housing crisis with good intentions to help the American Economy just as they did in other crises such as the pandemic, which put us in a rising crisis of inflation. I encourage everyone that reads this blog in their free time to watch this documentary as it was very helpful for me to learn more about investing and how the government regulates economic crises. This documentary is on YouTube and I have labeled it with the link below.
- PBS Documentary "Age of Easy Money (full documentary) | FRONTLINE"
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