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

[Bold Seagull]

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.

What the film deals with is that a very select few people actually knew the extent to which this had happened. It is pretty clear that even those at the heart of the film didn't realise it was happening, I certainly wouldn't credit the UK government as having a part in the 'design'. Could they have regulated better, yes. Did they cause the crash, no.

 

[Neville's Breakfast]

What the film deals with is that a very select few people actually knew the extent to which this had happened. It is pretty clear that even those at the heart of the film didn't realise it was happening, I certainly wouldn't credit the UK government as having a part in the 'design'. Could they have regulated better, yes. Did they cause the crash, no.

The Government contributed to the crash by failing to regulate credit markets properly. 'See no evil hear no evil' is no defence to the charge that they looked away when they should have been doing their job. Risk was being mis-priced and this could only happen with lax regulation. Our Government (like others) profited from the unsustainable credit bubble by winning elections. This was Tory economics (securitization and light regulation) and the fact that it was a so-called Labour Government acting in this way does not make it better. Ask yourself this; if the Tories had been in charge and following exactly the same policies, would you have been trying to justify it for them eleven years later ?


BTW have a look at the article below. There were people who predicted the financial crash and yet Governments chose to ignore their warnings.

https://www.intheblack.com/articles...-and-why-we-should-listen-to-them-from-now-on

 

[Stat Brother]

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

As is Young Frankenstein

Frankenstein's monster is played by Ray's father in Everybody Loves Raymond.

 

[beorhthelm]

BTW have a look at the article below. There were people who predicted the financial crash and yet Governments chose to ignore their warnings.

https://www.intheblack.com/articles...-and-why-we-should-listen-to-them-from-now-on

they predicted a crash based on over-inflated housing, which any contrarian could have seen, and there was a degree of crying wolf. the scale of the crash wasnt just due to house prices fall (which recoverd remarkably quickly in US and UK - aren't we still in a bubble?), it was sudden constraint on credit and liquidity. banks wouldnt loan to banks out of fear they had unknown liabilities and would imminently collapse. business wouldnt spend for similar fear of near future or because they couldnt borrow. no one predicted this, because no one really knew before what was going on with the debt obligations and swap markets. we found out that regulators didnt understand the markets they policed, and most in the banks probably didnt either. lesson would be better regulation and methods to view and track assets.

 

[Lower West Stander]

The Government contributed to the crash by failing to regulate credit markets properly. 'See no evil hear no evil' is no defence to the charge that they looked away when they should have been doing their job. Risk was being mis-priced and this could only happen with lax regulation. Our Government (like others) profited from the unsustainable credit bubble by winning elections. This was Tory economics (securitization and light regulation) and the fact that it was a so-called Labour Government acting in this way does not make it better. Ask yourself this; if the Tories had been in charge and following exactly the same policies, would you have been trying to justify it for them eleven years later ?


BTW have a look at the article below. There were people who predicted the financial crash and yet Governments chose to ignore their warnings.

https://www.intheblack.com/articles...-and-why-we-should-listen-to-them-from-now-on

Ok - but the crash was not political and I would argue that securitisations are not Tory economics. They are just debt instruments repackaged into bankruptcy remote vehicles.

I absolutely agree, the big problem was a lack of regulation but this had nothing to do with politics. It was just easier to not do anything while everyone was making so much money. I was right in the middle of it.

There are always people out there who are contrarian and take the opposite view, but this is more to do with talking the market down so they can short it rather than having the actual belief. You have to look a the rent a quote hedge fund managers of today talking down stocks. Why? Because they have big short positions on.


Sent from my iPad using Tapatalk

 

[Weststander]

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.

 

[Neville's Breakfast]

they predicted a crash based on over-inflated housing, which any contrarian could have seen, and there was a degree of crying wolf. the scale of the crash wasnt just due to house prices fall (which recoverd remarkably quickly in US and UK - aren't we still in a bubble?), it was sudden constraint on credit and liquidity. banks wouldnt loan to banks out of fear they had unknown liabilities and would imminently collapse. business wouldnt spend for similar fear of near future or because they couldnt borrow. no one predicted this, because no one really knew before what was going on with the debt obligations and swap markets. we found out that regulators didnt understand the markets they policed, and most in the banks probably didnt either. lesson would be better regulation and methods to view and track assets.

which bears out my point that the Government conveniently looked away rather than regulate.

Ok - but the crash was not political and I would argue that securitisations are not Tory economics. They are just debt instruments repackaged into bankruptcy remote vehicles.

I absolutely agree, the big problem was a lack of regulation but this had nothing to do with politics. It was just easier to not do anything while everyone was making so much money. I was right in the middle of it.

There are always people out there who are contrarian and take the opposite view, but this is more to do with talking the market down so they can short it rather than having the actual belief. You have to look a the rent a quote hedge fund managers of today talking down stocks. Why? Because they have big short positions on.


Sent from my iPad using Tapatalk

Yes, I could have expressed that better. I meant that securitization (as a shorthand for creating complex financial derivatives, often with the intention of disguising the true risk to society) combined with light touch regulation is a part of an economic and political philosophy that believes that the markets should be free to decide on the allocation of capital. It was apolitical in the sense that all the main parties subscribed to this right wing approach but there is another way ie by the Government protecting the public by ensuring that risk is correctly valued and understood. It would have meant lower economic growth in the UK but as you say many people were making too much money to allow that to happen. The Government's interests aligned nicely with the those of the money makers.

 

[Tom Hark Preston Park]

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.

Anybody who enjoyed the film and/or the book could do a whole lot worse than check out Michael Lewis' 2011 follow-up 'Boomerang: Travels in the New Third World' where the author travels through Europe in the aftermath of the financial crash investigating how various countries (Iceland, Greece, Ireland, even Germany to a certain extent) up-furked in quite distinct ways that reflected their national character. As always with Lewis' books, its full of insight, incredulity and humour.

 

[beorhthelm]

which bears out my point that the Government conveniently looked away rather than regulate.

how do you regulate something unknown, unless taking a hard regulatory line where nothing new is allowed (so stifle innovation)? what governement and others in power failed to do was ask why everything was peachy for so long, instead believed their own hype it was their policies.

 

[Bold Seagull]

how do you regulate something unknown, unless taking a hard regulatory line where nothing new is allowed (so stifle innovation)? what governement and others in power failed to do was ask why everything was peachy for so long, instead believed their own hype it was their policies.

I agree, it is easy to say should have regulated, but what exactly, and how does a single country regulate against multi national banking corporations that are effectively operating in anarchy given they are outside any single governments control. Also agree, that it was all too much patting on the back, aren't we clever, no more boom and bust etc. even though we were heading for the biggest global bust in 70 years.