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The Big Short
Old 12-24-2015, 06:11 PM   #1
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The Big Short

Saw it at a matinee today and even DW enjoy it. I think most of the nerds here would enjoy it. By the way, I say the word "nerd" as a term of endearment.

The movie did a pretty good job explaining; mortgage backed securities, credit default swaps, CDOs, synthetic CDOs, etc. and really demonstrated the house of cards some financial products/companies are built on.

I give it two thumbs up.
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Old 12-24-2015, 07:24 PM   #2
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Thanks Frayne. DW asked me if I wanted to go yesterday but put it off and will go next week. I enjoyed the book and am glad that they were able to get a good cast together to make it a movie as well. Merry Christmas.
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Old 12-24-2015, 08:00 PM   #3
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I am going next week . I loved the book .
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Old 12-24-2015, 08:51 PM   #4
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I loved the book too. My DD is in venture capital in the silicon valley so I asked her about the guy in the book who lives in her 'neighborhood'. She said that he is brilliant but his personality/skillset isn't a good fit for VC partnerships. There are a couple of other venture capitalists in the 'hood' who fit that profile, she wishes them the best.
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Old 12-25-2015, 05:38 AM   #5
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I saw it. Very good. It made a lot of the same points as the movie *Inside Job*. It left out a couple things, though, like the fact that *some* financial reporters did see the trainwreck about to happen, and were screaming it from the rooftops, on certain talk shows, but were simply not taken seriously.
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Old 12-25-2015, 07:38 AM   #6
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We are planning to see it this weekend, so good to hear some positive reviews from our expert critics.
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Old 12-25-2015, 08:46 AM   #7
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Thought it was great. Will probably pick up the book with my new Amazon gift card!
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Old 12-25-2015, 08:54 AM   #8
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Going to the 1:00 showing today.
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Old 12-25-2015, 09:57 AM   #9
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Looking forward to seeing the movie.

I thought the book was great. Made me really angry that lots of people didn't go to jail for fraud on both the borrowing and lending side.
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Old 12-25-2015, 10:39 AM   #10
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Looking forward to seeing the movie.



I thought the book was great. Made me really angry that lots of people didn't go to jail for fraud on both the borrowing and lending side.

I noticed a rather successful counter campaign that has convinced a significant portion of the masses that the government forced the banks to grant loans to poor people that they could not afford to pay, thus all blameless except federal government.


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Old 12-25-2015, 10:50 AM   #11
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I noticed a rather successful counter campaign that has convinced a significant portion of the masses that the government forced the banks to grant loans to poor people that they could not afford to pay, thus all blameless except federal government.


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I think in that case, a counter to the counter could be made that there was something called due diligence that was slightly overlooked.

My take away from the movie was, actually, very little has changed.
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Old 12-25-2015, 10:55 AM   #12
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I noticed a rather successful counter campaign that has convinced a significant portion of the masses that the government forced the banks to grant loans to poor people that they could not afford to pay, thus all blameless except federal government.


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"Encouraged"... :-P

Certainly Congress, and several administrations, supported policies that encouraged, and facilitated, an increase of "home ownership". Heh heh... And regulators were either complicit, or asleep, or both.

As with any bubble, the few who remained sane were outnumbered...

Though some were smart enough, ballsy enough, and well-positioned enough to short their way to riches!
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Old 12-25-2015, 01:21 PM   #13
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I noticed a rather successful counter campaign that has convinced a significant portion of the masses that the government forced the banks to grant loans to poor people that they could not afford to pay, thus all blameless except federal government.


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The government certainly created some dumb incentives to originate subprime loans, but what happened from there was fraud.

No one told Wall Street to invent CDOs that took one pile of bad loans and sliced/diced them around the world as supposedly safe debt for pension funds. No one told AIG and the banks to create endless speculative "insurance" swaps so that they could load up their balance sheets with loans they wrote with willful blindness and convinced themselves they were "hedged." These people can't be brilliant in one breath but so blind in the next. As an outsider I can understand how it was all a house of cards built on interlinked BS CDS's, so the folks doing it sure as heck knew.

No one told the ratings agencies to put "AAA" ratings on debt instruments that were so complex they had to ask the issuers themselves to build the ratings models.

No one told the banks that they should continue accepting "low doc" loans that everyone in the industry brazenly called "liar loans."

And no one told the borrowers who were lying on those loans they had to do so.

The fraud was systemic and well known. Bad judgement (getting in over your head on a loan or writing a sub-prime loan that goes bad) is one thing. Lying repeatedly on loan docs, knowingly issuing 6 mortgages to a nanny, or telling telling shareholders/regulators that you've bought loan insurance to protect your balance sheet while at the same time selling loan insurance on the same piles of crap back to the other bank is fraud.

Government regulators being asleep at the switch -- and in a revolving door with Wall Street -- was the icing on the cake.

As Jimmy Buffett reflected in "A lot to Drink About":

Repeat after me, it's so easy to see
We're just talking 'bout simple greed

(Yes, I'm still really PO'd about all this )
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Old 12-25-2015, 02:04 PM   #14
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Sadly the factors that made it happen are still there. Can mortgage originators still sell the mortgage paper? That was the root cause...
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Old 12-25-2015, 02:15 PM   #15
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What krotoole said...

When people are willing to take risks to get financial rewards, they must be made to bear the consequences if it does not work out. One cannot have heaven without hell. When one books the gains but passes on the losses to the gummint or the tax payer, a child can predict the results.

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Sadly the factors that made it happen are still there. Can mortgage originators still sell the mortgage paper? That was the root cause...
Let the buyer beware. If it is his own money at stake, he will evaluate the merchandise very carefully. If he does not, he will soon run out of money, and the problem self-terminates.
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Old 12-25-2015, 03:31 PM   #16
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I am looking forward to seeing the movie, I loved all Micheal Lewis books including the Big Short.

Krotoole is right, but I think it extends even further. I've said before virtually nobody is blameless.

Every liar loan even if was pushed by a greedy mortgage broker to average American, required that same average America to sign a piece of paper which said, generally in 24 point type and red letters.

"I certified under penalty of perjury that all the information on this loan application is true."

Nobody made me chase yield by buy banking stocks with high dividends or some of the exotic debt instruments linked to the stock prices of various companies, that I bought during this time.

The same thing is true of the various cities, town, and counties treasuries who bought these higher-yielding securities without understanding them.

Gordon Gekko isn't always right, greed isn't good, at times it can be disastrous
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Old 12-25-2015, 04:20 PM   #17
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The government certainly created some dumb incentives to originate subprime loans, but what happened from there was fraud.

My thinking is that the story that " the government made us do it" was successful to the point that there was no public demand for prosecution.


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Old 12-25-2015, 09:13 PM   #18
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My thinking is that the story that " the government made us do it" was successful to the point that there was no public demand for prosecution.


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That was certainly true on the borrower side -- tho it was some version of "the evil bank made me borrow the money."

On the lender side, I think most folks just not understand what the lenders did well enough to demand prosecution.

Pure speculation on my part, but I wonder if there weren't some behind the scenes exchanges of immunity for cooperation. Though nauseating, these bank execs had to agree to take the government's money in a short timeframe to prevent financial hell in the form of mass bank defaults. If they hadn't taken it, they likely would have later been subject to charges of violating their fiduciary responsibility for letting the banks go under, but that would have been after the economy imploded. In the moment, I wonder if a number of them didn't say "Sure, I'll take the money but I want blanket immunity for myself and senior staff." Bernanke and Paulson tell Bush his choice is immunity and non-disclosure agreements or depression v2.0. Who knows what conflicts and skeletons Paulsen and other members of the administration had in these same structures anyway.

I'm not a conspiracy theorist, but the complete absence of any indictments -- even if they had to leverage the RICO laws -- baffles me.
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Old 12-26-2015, 08:55 AM   #19
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They made a B type movie a few years ago in which an average Joe loses everything in the crash, finds out it was all fraud, and goes Berzerk on the the Wall Street s**mbags. I enjoyed it. Lots of slow mo violence. Can't remember the title.
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Old 12-26-2015, 11:45 AM   #20
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When I lived in Washington my computer tech guy's SO was the VP of Mortgage for a leading bank. I called him for service one day and he said that there was a huge fight at the bank's executive level the day before, his SO resigned and they were moving to FL. That was my first hint of problems in mortgage lending. At least one mortgage executive had ethics.
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