Big problems with The Big Short

An narcissistic corporate-type bragging about his net worth and guessing others net worth? That seems pretty grounded in reality

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>>84400983
and these fucking emmy award winners, there is no fucking way this happened. These people are too evil. How do they even exist? They're like cartoon characters.

give me the basic gestalt on what the fuck actually caused the 2007 recession

>>84401250
Everybody invests in home mortgages, because they're super stable.
The government wants poor people to be able to afford homes, so they penalize banks who don't give enough loans to the poor
These loans are obviously risky, so the government compromises by saying they'd buy any failed ones, passing them on to a pair of technically independent but government funded organizations
The banks, who now have no reason to fear risky loans, make tons of them
Suddenly a shit load of people default on their loans, so many that the system can't handle it and the entire thing crashes

It's in the book and they were sued over it

Tldr it probably happened

>>84401350
t. Goldman Sachs

Real version: Making normal mortgage loans isn't profitable enough. Banks create a derivatives market to make more money off mortgages. Banks run out of low risk mortgages, begin grouping high risk mortgages with low risk mortgages, sell the new derivative as if it was a low risk product. Continue doing this because it's hugely profitable. High risk loans begin to default causing the derivative market to tank which takes down the banks in the process because they were over leveraged as fuck. (Leverage is ratio of money loaned out vs assetts, in many cases banks had 300 to 1 leverage ratios, meaning they lost 300 dollars when they only had one dollar in cash).

>>84401829
The mechanics of what you're saying is true, but the high risk mortgages wouldn't have existed in high enough numbers to cause a problem without the Community Reinvestment Act. I'll also note that a genuinely bad actor in all of this are the bond rating companies, who outright lied about how risky the derivatives were.

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>>84401250
"lets(Banks) pass off these low ratings as high ratings(Fraud) and make even more money(Greed), then blame the people we are frauding(home buyers circa 2003-2007) and not pay a single cent for it because we have all of the fucking money and nobody can touch us(what ended up happening circa 2008 onward)"

I'm not saying pic related is the most stable person around, but his homestead-y, live on a 10 acres spread you paid like $20,000 for and grow a garden with a wife and 10 kids living in a house you just fucking built yourself in a cutesy french town-deal doesn't seem that bad of an idea anymore, especially if you lived through this garbage.

>>84401911
the CRA is banker dinduism, multiple economists have explained it had a negligible impact and nothing in the text of the law could explain the truly egregious shit like NINJA loans

>>84400983
.t flyover state cuck

>>84402367
Just as many economists have argued the opposite, if not more. We can talk about more complex causes and ways we could have prevented it, but ultimately if the banks had been on the hook for their own risks, they would have been much more risk averse.

>>84402429
Well, as an aside, the CRA does not take banks off the hook for making bad loans, banks are still liable if the CRA loans fail

>>84402851
True, Fannie Mae and Freddie Mac are responsible for that.

>>84401179
>>84401075

They do exist. You just don't live in their bubble. That's a blessing for you my friend. They live an isolated ecosystem constructed from the ground up from greed and a distinct lack morality.

>>84403144
It's anti-semitic to talk about Israel that way

>>84400983
I've heard worse things in my work.
>>84401179
They aren't evil, they're stupid. And sellers in rl are a mix between a snake oil seller and a mtv anchor so...

>>84402367
>dinduism
I love you for this

>>84401911
The problem wasn't the banks handing out loans to people who couldnt afford them, it was the people packaging and selling the mortgage backed assets as much higher quality then they actually were.
The fault for that lays in the rating agencies that knowingly gave AAA status to shit product.
It's like if do the right thing for economics. It happened because everyone was being to lazy and greedy to see the cliff they were running off at full speed.

>>84402429
Remember credit default swaps. Insurance against being on the hook for the bad loans certainly was a good idea.

Until one realizes that insurance, any insurance, is at heart a ponzi scheme.

>>84404110
>Until one realizes that insurance, any insurance, is at heart a ponzi scheme.
Unless you've got an inside line. If you buy fire insurance, and your house burns down the day after your policy goes in effect then you won.
The big shorts were people who saw the smoke. The defaults weren't a question of IF but WHEN. When bateman gets chewed out for the swaps he admits he might have gotten in too soon (meaning he was paying a huge premium in the mean time, which is why the banks were happy to take the swaps).
But the important distinction is that they were betting on a mathematical certainty, while most people take out insurance for possibilities.

>>84400983
Have you never met finance people?

That's EXACTLY what they're like

>>84403144
t.commie

>>84404005
Both were a problem. The crash literally could not have happened without the high risk loans being made.

>>84406396
The crash couldn't have happened without a shitload of things happening. That was the point of the movie, everyone was complicit because of their greed and willful ignorance. No one cared where this money came from as long as they got a taste.
And it wasn't poor people buying houses that fucked those mortgages, it was the people "flipping houses" that drove real estate speculation through the fucking roof. Banks didn't care because they could bundle the debt and sell the shit out of it before the ink was dry. The people screaming at the top of their lungs about consequences were called chicken littles and debbie downers.

>>84407973
No rational individual blames the poor for wanting to buy a house, but the banks aren't at fault either. They're literally penalized if they don't make those loans happen.

I want to watch this movie but
>tfw brainlet

>>84408083
It's made for your kind

>>84408083

youre literally the target audience. enjoy

and remember

the dude in op pic did nothing wrong

>>84401179
>>84400983
Because these people exist, the whole crisis happened. That was the entire point of the movie.

>>84405623
You just quoted like 3 different lines from the movie. Please kill yourself kid.

>>84403843
>>reddit

>>84401829
the real redpill is to blame the greedy motherfuckers who took out loans they couldn't afford and the cocksucking govt who bailed out the banks that loaned them with taxpayer dollars

everyone who took out a loan they couldn't afford or didn't properly understand should have defaulted and filed bankruptcy. every bank that made a risky loans or held them on their books should have taken the losses and filed bankruptcy is necessary. rating agencies should have been massively fined and prosecuted for fraud.

america is founded on personal responsibility and accepting consequences for misdeeds due to greed like a man. thanks to liberal degeneration, that's no longer the case

>>84410609
The reason people took out loans they couldn't afford is a combination of greed and the belief that they could refinance as many times as they want over their mortgage. They just got suckered in by mortgage brokers who told them that it was no problem that they didn't have a job or no income because they could just refinance their mortgage whenever.

Also, what's the government supposed to do in that situation after the ratings industries start taking bribes and the shit hits the fan? If they don't bail out the banks, the crisis would've been even worse than it was. It would've been the second great depression instead of being moderately contained. Also if you think that conservatives are any more responsible than liberals are you need to wise up and look at how they're fucking you. Reaganomics and cutting taxes for "job creators" is bullshit and doesn't work because the guys at the top just pocket whatever they get.

>>84410609
truth

>>84411300
fuck that. i could afford a house in a great depression

>>84410609
as if both groups aren't garbage

>>84410609
I'd like to do this but realistically, letting the banks fail would have permanently ruined America's economy and the recession would have been 20 years long instead of 2

you have to think of practicality, not just pure idealism