UMKC's Bill Black reviews the highlights and holes of the film The Big Short - February 8, 2016

[Jefferson23]

White collar criminologist and former financial regulator, Professor Bill K Black.


Runs in two parts, a little over 9 minutes total. No transcript available at this time.

[Spitfire of ATJ]

1. Part 2...

[Jefferson23]

2. Hey, thanks..the second part did not load up from the first video for you? No matter, I appreciate

your post so people see it.

[Spitfire of ATJ]

5. Your link broke on my computer....

These people should have been JAILED for what they did.

This is going to go down in history as the biggest scam ever done. The banks got people who already owned their homes into taking out loans to remodel their kitchen with granite countertops only to have the bank kick them out and list their homes at a hyper-inflated price to someone who didn't qualify just to bundle the mortgage into a separate security instrument that was given a AAA rating. Then they bet the whole thing would collapse.

I like the part where the real estate salesmen showed they didn't CARE about anything but making money. The one talked about "ninja" loans which I'd heard of in the news back then but forgot about. It's insider jargon for "no income - no job". He left the income section blank and nobody up the chain cared. Instant approval. The dumber the buyer the better. They'd sign anything. They preyed on the dreams of families who wanted a home instead of an apartment.

Keep in mind Fanny and Freddy were not involved in the fraud. The government actually required those loans to have income verification.

To this day the Reich Wing claims the mortgage crisis was caused by the government forcing the poor innocent banks to accept loans from minorities so they could force integration upon white neighborhoods.

[Jefferson23]

6. All calculated out...unprecedented theft..yep. n/t

[longship]

3. The book is awesome.

I have the flick in my NetFlicks queue. It releases in March. I have heard from a friend (who is a professor emeritus in economics) that the film is very good. He is also the one who turned me on to the book. We have both read the book multiple times and have discussed the issues equally multiple times.

R&K for the discussion alone, sight unseen.
Any discussion about The Big Short is good.

[Jefferson23]

4. I would like very much to see it, have not been able to yet.

Maybe the book would be even better.

[longship]

7. Okay. I have some problems with Black's argument.

First, Lewis is a story teller; he weaves a narrative. He is not an economist. The narrative he tells in the Big Short is not about what should be but about what happened. That he weaves it around a select group of people who saw the collapse coming is just part of the narrative. That they profited by it is secondary as Lewis makes abundantly clear by both Michael Burry and Steve Eisman in the book (played as Burry and Baum, respectively, in the film). The scene in the book with Eisman and his two compatriots sitting on the steps of St. Patricks cathedral near the end of the book with the worldwide economic system collapsing before their eyes, they take absolutely no joy in their triumph, or their financial gain. It is central -- as is Eisman -- to the moral of the story. The fact that Black doesn't see this important element is crucial to his not understanding Lewis' narrative.

And Burry, after making his investors millions, similarly takes no joy in it. His investors despise him. He bales out of the business. Again, Lewis is weaving a narrative which Professor Black some how does not get.

Third, there is no way that anybody could interpret that Michael Lewis in any way blamed those buying the no doc mortgages. He clearly blames the mortgage originators who forgot due diligence in order to provide more product to the big banks who bundled them into bonds, and then reproduced them using credit default swaps on the same bonds in order to disguise shitty bonds as AAA bonds when replicated into synthetic CDOs.

That is how Lewis portrays his narrative in the book. I have yet to see the film. I am glad that Prof. Black liked the film and I hope to enjoy it, too. But his characterization is very wrong. Lewis would tell him so. As am I.

No way does Lewis blame the dancer.

[Jefferson23]

8. I can't say since I haven't seen it, but it appears Bill Black is saying there is

not enough emphasis on the whistleblowers..that was my take on it.