Archive for January 2nd, 2016

Adam McKay explains how the end of the world got monetized in ‘The Big Short,’ his surprisingly entertaining tale of real-life financial shenanigans

January 2, 2016

By Matthew E. Milliken
MEMwrites.wordpress.com
Jan. 2, 2015

The Big Short is a strangely entertaining and extremely timely movie about a wholly unlikely subject: A handful of investors who anticipated, and got rich because of, the collapse of the American housing market.

Director Adam McKay’s feature is based on Michael Lewis’s 2010 nonfiction book, The Big Short: Inside the Doomsday Machine. Lewis also wrote Liar’s PokerMoneyball and The Blind Side, among other books; the first of these drew on Lewis’s experiences on Wall Street, while the latter two became enormously successful sports movies. The latest Lewis-inspired outing was translated to screen by thriller screenwriter Charles Randolph and McKay, the director of such excellent comedies as Anchorman: The Legend of Ron Burgundy and Talladega Nights: The Ballad of Ricky Bobby.

The Big Short tracks three sets of characters in their quest to make a bundle of money while betting against conventional wisdom. One of the men at the heart of the story is Michael Burry, a one-eyed possibly autistic medical doctor who runs a Silicon Valley investment firm. As played by Christian Bale, Burry is an oddball who loves to play heavy metal rock music at eardrum-piercing volumes and who regularly shows up at the office dressed as if he were about to spend a day cleaning his garage. Burry wears the shirt throughout the film, which takes place over the course of about three years.

Burry, who’s capable of prolonged bouts of concentration, finds that an alarming percentage of housing mortgage bonds are based on poorly secured subprime loans. A single bond consists of thousands of individual mortgages, each of which represents the debt owed by a home buyer to a lender; investors buy the bonds in order to receive a share of the monthly mortgage payments.

For decades, such bonds were a rock-solid investment. What Burry discovers — contrary to the assertions of virtually every economist in the known universe — is that many of home loans being made were incredibly risky. As a result, the mortgage bond market is highly overvalued and therefore due for a correction, otherwise be known as a crash.

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The Cardinal rules, 45-16, in a Rose Bowl romp

January 2, 2016

By Matthew E. Milliken
MEMwrites.wordpress.com
Jan. 2, 2016

One of the greatest seasons in Stanford football history ended on Jan. 1, 2016, with a resounding victory in the most hallowed of all college football venues — the Rose Bowl in Pasadena.

The Cardinal demolished the Big Ten’s runner-up, the Iowa Hawkeyes, with a 45-16 steamrolling of the type that most Pac-12 teams came to know well in 2015. During the game, Christian McCaffrey set several Rose Bowl records and made a significant fraction of Hawkeyes defenders and Heisman Trophy voters look foolish.

The night before the Rose Bowl, Heisman winner Derrick Henry finished Alabama’s 38-0 embarrassment of the Big Ten champion Michigan State Spartans with 20 rushes for 75 yards (3.8 yards per carry) and one catch for minus-two yards.

McCaffrey outdid Henry with his first touch of the game. On the 102nd Rose Bowl’s initial play from scrimmage, Cardinal quarterback Kevin Hogan threw McCaffrey a short pass in the flat that the super sophomore took to the house for a 75-yard touchdown reception. McCaffrey went on to amass 172 yards on 18 carries (9.6 yards per cary) and 105 yards receiving on four catches.

McCaffrey also got two opportunities on special teams — a 28-yard kickoff return and a 63-yard punt return for a touchdown that put the Cardinal ahead, 28-0, early in the second quarter. Add it all up and the 2015 Heisman Trophy runner-up finished the day with 368 all-purpose yards. Not only was that good for a Rose Bowl record, it made for the fourth-highest total of any bowl game in the history of college football.

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