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

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 Poker, Moneyball 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.

Begging the question: Obama and Libya

Last night I finished reading “Obama’s Way,” a lengthy feature on Barack Obama, the Libyan military intervention and the president’s decision-making process. Michael Lewis’ article has a publication date of Oct. 5 of this year, so I am definitely behind the curve on this; Vanity Fair’s nearly 14,000-word opus was meant to make a big pre-election splash.

I don’t think Lewis breaks any major news in his story. Rather, he fills in some details. Based on news accounts as well as Mark Bowden’s book The Finish (which ironically was published after Lewis’ piece), I’ve always considered Obama to be a very deliberate, cool and calculating decision-maker, despite the many forces that frequently put competing claims on the president.

That’s just what Lewis portrays. And he adds numerous colorful details, some pulled from one or more flights aboard Air Force One, others from at least one visit to Obama’s favored work and living spaces at the White House, and still more from one of the president’s nigh-legendary hard-fought, sharp-elbowed recreational basketball games.

One of the most fascinating things in the article comes around the two-thirds point, as Lewis gives a comprehensive (and incredibly divergent) account of two March 15, 2011, meetings between Obama and his security team. Both gatherings concerned the Libyan civil war and how, if at all, the United States should respond to it.

Early on, the first meeting went off track. The two options on the table were establishing a no-fly zone over Libya and doing nothing.