[Film] The Big Short - a fine telling of the financial crisis story

[wakeytom]

I was working on contract at RBS at the time of the ABN AMRO acquisition. Seems to me there was minimal due diligence because RBS were engaged in a full-on willy-waving contest with Barclays over the acquisition of that toxic debt-ridden bank. All sense went out the window right there.

There was recently a documentary on the BBC about RBS and the downfall (in part focusing on the Barclays contest) if you get a chance to watch, worth a viewing

 

[cunning fergus]

Think this sums it up. Labour following Tory party to get into power. The policies followed to get into power opened us up to the full pain. Lucky we had Tory light rather than the full fat capitalism version at that time or it could have been much worse. The 90s version was very painful.

Sent from my SM-G950F using Tapatalk

Economically speaking I think the difference between Blair/Brown and their Tory equivalents was wafer thin, they were all for free markets, consumerism and privatisation. So I don’t think there would have been a material difference in consequence.

The nineties were painful for some, but then so were the 70s, 80s etc. dependent on your circumstances.

It’s a fact that many many thousands of people are still saddled with levels of debt that they cannot afford, they may have not been booted out their houses but their futures and lives are bleak. This hasn’t changed in 10 years, and sadly it is unlikely to in the future. And yes, they are still being screwed for profit.

Plus ca change.

 

[cunning fergus]

Which is all I said.

The rest is straw man because [MENTION=12825]cunning fergus[/MENTION] makes an argument out of something I hadn't posted. Which is fine, but it is what it is.

I will add, that in my lifetime that no UK government would have regulated sufficiently to have protected us from the crash. The Tories actually tried to block Labour's inadequate attempts at regulation in opposition. They had deregulated through much of the 80s. So bascially, we were f**ked. Perhaps the only chance we had of avoiding it was if John Smith hadn't sadly died and we didn't see the birth of New Labour, and the UK elected a Labour government on a more socialist regulatory approach that didn't look to appease the centre ground. That though still seems unlikely even now.

Hmm, I think you are being evasive.

If you did really genuinely want to clear Labour from blame for the CAUSE of the 2008 crisis, who did you think was arguing different?

It’s like someone starting a thread having watched the World at War box set and stating that anyone who thought the Albanians started WW2 may as well not bother watching it.

I am a natural cynic though.

 

[Badger]

 

[Guy Fawkes]

Currently on Amazon Prime. Some great performances, and a reasonable telling of sub prime loans, securities, CDOs etc. Cracking film as well, an impressive cast.

If you still think Labour were responsible for the financial crash and the bank bail outs in 2008, it's probably not for you.

Saw it at the Cinema, well worth a watch

(And maybe Labour should have saved for a rainy day like this rather than emptying the coffers when in power )

 

[cunning fergus]

Neither... Both...

It is the continued failure of governments to have enough clever people to understand what everyone else in the economy is actually doing.

If the SEC, FCA et al actually *understood* CDOs, they would have regulated against them. Take some debts you *know* will default, wrap them in a nice, pretty package, give them a fancy name, sell them to people who know they are toxic but also know they can sell them on. Start a merry-go-round of selling the bad debts on, freeing up your balance sheet to lend money to more people who will default, selling it on, lending more, selling it on... Then you have moronic politicians who just see the financial service sector "making money" without understanding the reality of the timebomb, positively encouraging it, reducing interest rates so more and more sub-prime loans can be made, just to keep the merry-go-round going.

Big f**k off game of pass the parcel and as long as the music keeps playing, everyone is fine. But the music stops and the whole charade collapses. Governments were not to blame for the crisis... but they were f**king complicit in their incompetence.

The Tories are supposed to know better as the party of capitalism.
Labour are the party of borrow now, pay later, so just blindly jumped on the band wagon.

Both wrong for different reasons, but both equally to blame.

Hmm I think you need to throw in the influence of global capitalism and it’s accompanying hand maidens.

If you take Goldman Sachs by way of example just how much chaos does that organisation cause, and then profit from. An organisation that is joined at the hip to global business and governments. This was the organisation that cooked the books so that Greece joined the euro.

I recently had a meeting with people from one of the large independent services companies, and in light of my cynicism relating to making financial markets more ethical they sent me the prospectus of a EU wide initiative from global businesses which is seeking to restore the public’s faith in capitalism.

On the second page I noted that the chair was none other than a certain Lady Rothschild. I stopped reading at that point, laughed out loud heartily and threw it straight in the bin.

 

[Hampster Gull]

Lots of retrospection. But let’s no forget, Labour were in power from 1997 to 2010. The crisis was 2007/2008. Any guessing on whether someone else may or may not have done better is irrelevant. Labour did it again, as they always have, left the U.K. with no money. Remember the note that said there was no more money left. F.u.c.kwits

 

[SUA Seagull]

The ratings agencies role in the whole cluster**** is massively underplayed. They gave AAA ratings to billions and billions of £ "worth" of utter junk and that's what allowed the merry go round to continue for so long and become so damaging. Plus it wasn't incompetence, they were complicit.

It still surprises me that anyone listens to them nowadays, about anything.

Excellent point, well made. At the time of the crash I was working in an international bank’s export finance department, arranging loans for UK exporters and importers. Proper banking as we called it! Some of my acquaintances worked in investment banking, on CDOs, CDSs and other highly structured products. I had (and still have) a strong interest in financial mathematics and so I would quiz my investment banking colleagues on the mechanics of their market.

It quickly became clear to me that few of them really seemed to understand exactly what it was they were packaging and selling (mostly to gullible buyers). I always saw it as a form of pyramid selling, a modern-day Ponzi scheme; parcelling up risk, selling it, repackaging it, and selling it again. There seemed to be few “checks and balances” in place in terms of any due diligence and risk evaluation (which was pretty much outsourced to the rating agencies) and I fully agree that the rating agencies’ “turning a blind eye” exacerbated the crisis, by offering AAA-rated status to elements of transactions (tranches) that turned out to be “junk”.

I recall attending an internal meeting at the time and predicting it would all end in tears because – in my simple, commercial lender's eyes – I saw no underlying export or import or manufactured item that was being financed, merely obligations moving around in circles “until the music stopped” and liabilities were crystallised. And that the US real estate market (against which most notes were collateralised) would not meet the investment bankers’ and rating agencies’ (hugely negligent) baseline assumption that properties would continue to rise in value forever.

On flagging my concerns, I was roundly ridiculed by my “smarter” investment bank colleagues at the time but, as it turns out, my pessimism was well founded. One would like to think that today’s more regulated environment would prevent such a crisis from occurring in the future but history is littered with economic bubbles bursting and, sadly, I’m sure we haven’t seen the last of them.

 

[Weststander]

Irrespective of [MENTION=12825]cunning fergus[/MENTION]' knowledge of such things, New Labour were just continuing a regulatory policy introduced by Thatcher and that Osborne didn't do anything substantial to amend thereafter (and you've been a vocal supporter of Osborne on here), and Hammond is too distracted by other silly stuff to do anything about it, even if he had the inclination to do so. At least McDonnell is finally developing a radical policy framework that will re-direct the economy away from its over-reliance on finance and related services, and developing a comprehensive economic policy framework that looks the most valid so far proposed by a leading UK politician during the twenty-first century. And I say this as someone that's never voted Labour in my life and am not interested in Marxist economic analysis.

Conveniently brushing over the 13 years of New Labour’s management. Labour and Tories, with soft touch regulation, were both equally at fault. Blair, Brown and all the rest were highly intelligent and savvy politicians who made a very clear, strategic decision to allow The City to do as it liked. Entirely independently of what went on before (pretty much the same).

 

[LlcoolJ]

Lots of retrospection. But let’s no forget, Labour were in power from 1997 to 2010. The crisis was 2007/2008. Any guessing on whether someone else may or may not have done better is irrelevant. Labour did it again, as they always have, left the U.K. with no money. Remember the note that said there was no more money left. F.u.c.kwits

Lots of well informed, interesting stuff on this thread.

And also this post.

 

[Hampster Gull]

Lots of well informed, interesting stuff on this thread.

And also this post.

Nice

 

[LlcoolJ]

Nice

Sorry if you felt that was harsh.

But anyone bringing up that stupid joke note (that Dickhead Cameron carried around with him) and quoting it is talking complete bollocks.

It was a joke. A really bad one that was used by the Tories to fool gullible people. Everyone knows that now and yet still......

So I was just going with Roy.

 

[Hampster Gull]

Sorry if you felt that was harsh.

But anyone bringing up that stupid joke note (that Dickhead Cameron carried around with him) and quoting it is talking complete bollocks.

It was a joke. A really bad one that was used by the Tories to fool gullible people. Everyone knows that now and yet still......

So I was just going with Roy.

Don’t agree I was talking complete bollocks but whatever

 

[Stat Brother]

The Big Short is also on BBC I-Player for a few days.

As is Young Frankenstein

 

[Bold Seagull]

Hmm, I think you are being evasive.

If you did really genuinely want to clear Labour from blame for the CAUSE of the 2008 crisis, who did you think was arguing different?

It’s like someone starting a thread having watched the World at War box set and stating that anyone who thought the Albanians started WW2 may as well not bother watching it.

I am a natural cynic though.

There are people on these very boards who genuinely hold Labour to account as the cause of the financial crisis. I've seen it said. To be fair, I've not disagreed with much else you've said.

Cynic, you, surely not!?

 

[Bold Seagull]

And maybe Labour should have saved for a rainy day like this rather than emptying the coffers when in power

A rainy day.

That's a bit like saying you should have had arm bands on when a Tsunami hits.

 

[Machiavelli]

Conveniently brushing over the 13 years of New Labour’s management. Labour and Tories, with soft touch regulation, were both equally at fault. Blair, Brown and all the rest were highly intelligent and savvy politicians who made a very clear, strategic decision to allow The City to do as it liked. Entirely independently of what went on before (pretty much the same).

I'm a little lost. Are you saying that I'm brushing over New Labour's management?

 

[Neville's Breakfast]

There are people on these very boards who genuinely hold Labour to account as the cause of the financial crisis. I've seen it said. To be fair, I've not disagreed with much else you've said.

Cynic, you, surely not!?

Western Governments (including the Blair/Brown one) presided over a credit induced bubble designed to artificially inflate growth and keep them in power. 'The Big Short' deals extensively with this in its description of the light regulation of ratings agencies and borrowers. It was a party that nobody wanted to leave and the real economy suffered for it in the end.The Tories would likely have done exactly the same but to say Labour did not is simply untrue and a misunderstanding of the film.

 

[Machiavelli]

Excellent point, well made. At the time of the crash I was working in an international bank’s export finance department, arranging loans for UK exporters and importers. Proper banking as we called it! Some of my acquaintances worked in investment banking, on CDOs, CDSs and other highly structured products. I had (and still have) a strong interest in financial mathematics and so I would quiz my investment banking colleagues on the mechanics of their market.

It quickly became clear to me that few of them really seemed to understand exactly what it was they were packaging and selling (mostly to gullible buyers). I always saw it as a form of pyramid selling, a modern-day Ponzi scheme; parcelling up risk, selling it, repackaging it, and selling it again. There seemed to be few “checks and balances” in place in terms of any due diligence and risk evaluation (which was pretty much outsourced to the rating agencies) and I fully agree that the rating agencies’ “turning a blind eye” exacerbated the crisis, by offering AAA-rated status to elements of transactions (tranches) that turned out to be “junk”.

I recall attending an internal meeting at the time and predicting it would all end in tears because – in my simple, commercial lender's eyes – I saw no underlying export or import or manufactured item that was being financed, merely obligations moving around in circles “until the music stopped” and liabilities were crystallised. And that the US real estate market (against which most notes were collateralised) would not meet the investment bankers’ and rating agencies’ (hugely negligent) baseline assumption that properties would continue to rise in value forever.

On flagging my concerns, I was roundly ridiculed by my “smarter” investment bank colleagues at the time but, as it turns out, my pessimism was well founded. One would like to think that today’s more regulated environment would prevent such a crisis from occurring in the future but history is littered with economic bubbles bursting and, sadly, I’m sure we haven’t seen the last of them.

Interesting anecdote. Thanks

 

[dazzer6666]

Excellent point, well made. At the time of the crash I was working in an international bank’s export finance department, arranging loans for UK exporters and importers. Proper banking as we called it! Some of my acquaintances worked in investment banking, on CDOs, CDSs and other highly structured products. I had (and still have) a strong interest in financial mathematics and so I would quiz my investment banking colleagues on the mechanics of their market.

It quickly became clear to me that few of them really seemed to understand exactly what it was they were packaging and selling (mostly to gullible buyers). I always saw it as a form of pyramid selling, a modern-day Ponzi scheme; parcelling up risk, selling it, repackaging it, and selling it again. There seemed to be few “checks and balances” in place in terms of any due diligence and risk evaluation (which was pretty much outsourced to the rating agencies) and I fully agree that the rating agencies’ “turning a blind eye” exacerbated the crisis, by offering AAA-rated status to elements of transactions (tranches) that turned out to be “junk”.

I recall attending an internal meeting at the time and predicting it would all end in tears because – in my simple, commercial lender's eyes – I saw no underlying export or import or manufactured item that was being financed, merely obligations moving around in circles “until the music stopped” and liabilities were crystallised. And that the US real estate market (against which most notes were collateralised) would not meet the investment bankers’ and rating agencies’ (hugely negligent) baseline assumption that properties would continue to rise in value forever.

On flagging my concerns, I was roundly ridiculed by my “smarter” investment bank colleagues at the time but, as it turns out, my pessimism was well founded. One would like to think that today’s more regulated environment would prevent such a crisis from occurring in the future but history is littered with economic bubbles bursting and, sadly, I’m sure we haven’t seen the last of them.

They weren’t smarter, they were operating on commission, driven by their bosses, risk managers, financial controllers , compliance officers and everyone else whose bonuses were driven by the same numbers..........