This critical and commercial hit focusses on the lead-up to the 2005 financial crisis and the Wall Street money-men who saw it all coming. And if you don’t think credit default swaps and collateralized debt obligations make for scintillating cinema, The Big Short might just change your mind.

Director: Adam McKay

Screenwriters: Charles Randolph and Adam McKay

Screenplay: Script Slug

Based on: The non-fiction book, The Big Short: Inside the Doomsday Machine, by Michael Lewis.

Synopsis:

*Spoilers* 2005. A US housing bubble is forming, with the market resting on high-risk, unstable ‘sub-prime’ residential mortgages.

The first person to suss out the opportunity brewing in the housing market is the brilliant but eccentric Dr Michael Burry (Christian Bale), a trained medical doctor with a glass eye and social anxiety, who runs an investment fund on his own terms.

While the US housing market is seen by everyone else as a safe bet and mortgage bonds (i.e. tranches of mortgages grouped together and sold as a single ‘investment’) as rock solid, Burry smells a sh**-storm approaching.

He realises that the uber-safe mortgage bonds are actually made up of a few ‘good’ mortgages and a whole lot of bad ones. These ‘bad’ mortgages were issued to homebuyers who couldn’t afford to repay them and many are close to reaching the end of a period of low interest – meaning the monthly payments are about to skyrocket.

Burry figures out that it wouldn’t take much for the number of people defaulting on these bad mortgages to reach a level that would make the mortgage bonds next-to-worthless. So, he gets some banks to whip up a brand new investment vehicle – the infamous credit default swap (CDS). This is essentially insurance Burry takes out on the mortgage bonds. If the bonds tank, Burry (and his investors) cash in.

A flashy Deutsche Bank trader, Jared Vennett (Ryan Gosling), gets wind of Burry’s scheme to make money and decides to get in on the act. He persuades a brilliant but unstable fund manager connected to Morgan Stanley, Mark Baum (Steve Carell), and his associates to jump on board and buy CDSs.

Baum finds out that most of the dodgy mortgages are being packaged by the banks into ‘new’ investments (called collateralized debt obligations (CDOs)) that the rating agencies are giving the top AAA rating, even though they are ‘junk’.

Two minor investors looking to make their name on Wall Street, Charlie Geller (John Magaro) and Jamie Shipley (Finn Wittrock), get a hold of Vennett’s prospectus and rope in retired trader, Ben Rickert (Brad Pitt), to help them get a seat at the ‘big boy table’ and profit from the CDSs.

Baum discovers that synthetic CDOs are being created, essentially forming a chain of increasingly large bets on the faulty loans. He realises that the scale of the fraud will cause a complete collapse of the economy. Baum’s business partners convince him to stick with the CDSs and profit from the situation, even though he’s increasingly uncomfortable with what’s going on.

Burry’s prediction comes true and the housing market collapse starts – taking mortgage firms and investment banks down with it – leaving Vennett, Baum, Shipley and Geller very rich: but at what cost to the world’s economy?

Analysis:

*Spoilers* The big achievement of The Big Short is that it takes a story about CDOs and CDSs and wraps it into a package that’s cooler than the Fonz. In doing so, it manages to unravel some financial hanky-panky that Wall Street went to great lengths to keep indecipherable.

It also introduces us to some colourful characters, each of whom played a pivotal part in the ‘financial Armageddon’ that began with some dodgy mortgages sold to aspiring homeowners, who wanted a piece of the ‘American dream’ but who were who were ill-equipped to afford it over the long term.

The film has been almost unanimously acclaimed by critics and showered with awards’ recognition (including five Oscar nominations).

Indeed, the adaptation of Michael Lewis’ wonderful book is inspired and the fast-paced direction means that even if you don’t catch every piece of financial jargon flung at you, it really doesn’t matter because you’re quickly whisked off elsewhere. The story is pretty easy to follow, even for financial virgins, and the true human fallout from the crisis is made abundantly clear.

But that doesn’t mean the film is an unmitigated success.

The innovative ways in which writers Adam McKay (who also directed) and Charles Randolph chose to explain the ‘boring financial stuff’ are hit and miss – ranging from the clever and amusing (Anthony Bourdain’s fish stew) to the silly and patronising (some girl in a bath).

There are also places in which the story does get a bit bogged down in the very ‘boring financial stuff’ it tries so hard to avoid; this is especially true when the brown stuff really starts to hit the fan and we wade into the world of synthetic CDOs.

There’s no denying that this is a clever film, but it does occasionally stray into ‘too clever for its own good’ territory and the constant ‘winks to camera’ get a little wearing.

Of course, the film scores big acting-wise. While Bale is receiving many of the plaudits for his oddball turn, the best performances are actually to be found elsewhere. Carell is terrific as the uptight Baum. Gosling is wonderful as the tanned and slick Vennett. Pitt does his ‘worldly outsider’ bit to good effect. The other supporting players are also excellent. As Baum’s underlings, Jeremy Strong, Hamish Linklater and Rafe Spall are fine foils. Magaro and Wittrock make a good double act as a couple of wannabe Wall Street hotshots from Colorado.

Not surprisingly, the females are a little thin on the ground – if you don’t count strippers and bath bimbos, that is – but the film does benefit from Marissa Tomei (as Carell’s wife) and Melissa Leo (as a credit ratings agent) in support.

Given the vitriol that has been directed at the banking industry since the financial crisis hit, it’s quite an achievement to make guys who were not only at the very heart of the rotten system, but who aimed to profit from the whole mess the film’s heroes, but somehow it works. This comes down to the characterisation – presenting these guys as flawed and (partly, at least) morally-redeemable makes them sympathetic, to a point.

We also get to see the real villains through their eyes. This is especially apparent in the nauseating, but very funny, scenes with some mortgage-selling clowns and one downright oleaginous CDO manager. While our guys are rich, cynical and looking to profit from others’ misfortune, there are some things even they find repellent.

Overall, this is a film that wants us to:

a.) understand the financial crisis

b.) understand why it happened

c.) be shocked and appalled by it

Juxtaposing levity with misery and corruption with whimsy, The Big Short is what a narrative film by polarising documentarian, Michael Moore, would look like.

While we can chuckle at the way the material is presented, the fact that the end result of the crisis was that ‘average, hard-working people’ lost everything because of this breathtakingly fraudulent activity is never far away.

What can screenwriters take from The Big Short?

Mostly that you don’t have to be afraid of stories that have the potential to be dry, boring or technically complex – you just need to find a creative way to make your screen story none of those things! Oh, and awesome, emotive and topical source material helps too.

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Take a look at the trailer: