Wednesday, December 30, 2015

More Movie Ramblings: The Big Short

After going for what seems like years without seeing a movie in a proper movie theater, we've now seen three nearly in a row. First there was Star Wars. Then The Big Short and then last night Spotlight. I don't feel all that bad as both the Big Short and Spotlight were based on real events, and their educational value is at least as important as their entertainment value.

At some point, I may be inspired to write something about Spotlight, but for this post, I'm going to focus my energy on The Big Short.

The Big Short was about the housing/banking crisis of the mid-2000's and is masterfully done. How you make a movie on banking watchable, much less entertaining, takes real skill. It's another win for Michael Lewis, and count me in for his next movie (whatever that is). And the timing of the movie is great: just long enough after the crisis that we've basically put it behind us, but not so long after that it's Just History.

OK, enough praise. You get the point, it was a fine movie. Here's two thoughts that have stuck with me since watching the movie:

First, we're supposed to walk out of the movie theater angry at bankers. I get that. But I walked out with a fresh anger towards a new group of people: the raters. See, as far as I can tell, people, bankers included, are always going to game the system. There will always be those who will try to make big sums of money off of risky propositions. And in may respects, that's OK.

Every time you walk into a casino, you're signing up for just this arrangement. Sure, you may walk out with big bucks, but statistics say, if you play long enough, you'll lose. So if banker's want to go with risky bets, there's a time and place for that. What I'm dumbfounded by is that the people who rated the loans and other instruments (look at me, one movie and I'm an expert!), could rate them seemingly however they wish.

Just saying something is a good bet, doesn't make it a good bet. Risky bets are OK. Safe bets are OK. Making what you think to be a safe bet, when it's really risky, is not OK. And that, from my 130 minutes of movie education, seems like one of core problems in the crisis.

How could giving such ridiculous ratings not be illegal? How could the people who rated these things be in business? Heck, how could being a rater even *be* a business in the first place? It's like playing football and having the coaches be the refs. Shouldn't the referee be completely outside the game? (Whoo, sports metaphor! Nailed it.)

The big question: can I take my outrage and use it to go the next step to figure out how this works in the non-movie universe? Oy, probably not. Though I did just mail my Senator on the topic, so let's see what he has to say.

My second take away from the movie is a sort of wish. In the movie, genius Dr. Michael Burry, does the unthinkable: he slogs through hundreds and hundreds of loans to come up with the notion that what's being rated as a good bet, is in fact, anything but. When he tells another character in the movie that he's done this, they act as though he's performed the unthinkable. Sort of like actually reading the terms and conditions *before* signing up for Facebook, or some other fine-print feat.

My wish is this: that kids watching this movie will want to turn to their parents (or, hopefully date) and ask the obvious question: why didn't he write a program to do this? In the movie, Burry is seen noting how many days overdue various loans are, compiling them into a spreadsheet. While I'm sure in actuality there was a lot more going on, this sort of thing is exactly why we have computers.

In my world, we're only one program away from finding and hopefully addressing the next crisis, whatever that may be.

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