The Big Short

[Lisa99]

Why someone would take on a mortgage they had no hope of paying I'll never understand.

I think back in the hey day (pre 2008) people were buying with the idea of speculating/flipping when real estate was going up and up.

YEP! We have acquaintances who together made less than $75k/year. During the run up they bought SIX houses with zero down in Phoenix over a period of 2 years and had renters in them. When their adjustable rate mortgages started going up they started defaulting. Nothing but whining on their part about how unfair it all was (losing their rentals and the primary house). DUMBDUMBDUMB

 

[Markola]

Good movie and I also read the book. Who would not like a naked lady in a tub explaining tranches? Pure art. Also, pure greed. The idea that all those jerks got bailed out and no one consequential went to prison just means it will happen again. The thing is, would it have been worse for the rest of us if they hadn't been bailed out and some basic confidence in the financial system restored? Injecting a trillion dollars and more out of thin air might have been less expensive than justice and market destruction. Fortunately, we'll never know. That remains the central dilemma.


Sent from my iPad using Early Retirement Forum

 

[jfn111]

Went to the movie today and thought it was great. I also know several people that lost their homes during the downturn and each of them had over extended and thought the good times would last forever.

 

[GravitySucks]

I'm not a conspiracy theorist, but the complete absence of any indictments -- even if they had to leverage the RICO laws -- baffles me.

My current conspiracy theory on this is that S&P downgraded the US bond back then as a show of force to make sure the government didn't go after them.

 

[Souschef]

Rayin Penn, you echo my sentiments. I am appalled by the the abject stupidity of people who think they can handle a debt above their means, and have no sympathy for them.
I have a cousin, whose dad died at a young age, was told by her family that she should not exert herself.
Well she has sat on her fat a## for years, blew through 2 inheritances, and cannot cover her expenses.
I have absolutely NO sympathy for her.

 

[pb4uski]

Sadly the factors that made it happen are still there. Can mortgage originators still sell the mortgage paper? That was the root cause...

+1. I was hoping that one of the reforms from the great recession would be that originating banks would be forced to have skin in the game and would share in any credit losses so they would pay attention to underwriting. As it is, they just push loans through and collect their commission.

 

[6miths]

Saw it tonight. Very scary and sad. I remember at the time that we were quite insulated from much of the fallout here in Canada but remember a grim couple of years for various friends in South Florida. I'll have to reread the book. Sadly, it doesn't seem like much happened in terms of reform or re-instituting some of the safeguards that were removed in the 80s and early 90s.

 

[kcowan]

Part of the problem is that the guilty got off scot-free. Of course it will repeat itself. Enjoy the MBS ride but be prepared to bail early.

 

[John Galt III]

My current conspiracy theory on this is that S&P downgraded the US bond back then as a show of force to make sure the government didn't go after them.

Another conspiracy theory, heard on talk radio: Wall Street is helping Washington DC to implement *economic warfare* against certain other countries, and is taking significant losses, at times, to do so, the payoff being that they can do whatever they want, generally, with just a few token indictments to make things look better to the average Joe Citizen.

 

[LOL!]

Part of the problem is that the guilty got off scot-free. Of course it will repeat itself. Enjoy the MBS ride but be prepared to bail early.

Who are the guilty? The mortgage brokers? The people who signed their names to [-]fraudulent[/-] incorrectly filled out mortgage applications? The Federal government for requiring a higher percentage of subprime loans? The Wall Street folks who took advantage of opportunities? All taxpayers for not voting the bums out of office? All taxpayers for voting the bums in office in the first place? The employees of Lehmann, BearStearns, Wachovia, AIG, CountryWide, et al. that all lost their jobs at least temporarily?

 

[Koogie]

I'll add my name to the chorus of people who liked it. Watched it online last night and it was sufficiently entertaining that DW liked it as well. And her eyes glaze over when finances are mentioned.

 

[kcowan]

The Wall Street folks who took advantage of opportunities?

The wall street firms that coerced the rating companies to give the **** a AAA rating so they could sell it far and wide to unsuspecting victims. If the stuff had been rated properly, it would not have sold.

 

[travelover]

The wall street firms that coerced the rating companies to give the **** a AAA rating so they could sell it far and wide to unsuspecting victims. If the stuff had been rated properly, it would not have sold.

+1 Trying to equate a waitress who borrows more than she can afford to the systemic, blatant and intentional false rating of an investment strikes me as silly if not disingenuous.

 

[powerplay]

I saw the movie today and really enjoyed it. Think I may go back and read the book again.

 

[SJ1_]

Went to the movie today and thought it was great. I also know several people that lost their homes during the downturn and each of them had over extended and thought the good times would last forever.

Just saw it the other night. We loved it too. Thought Steve Carell was
amazing

 

[jazz4cash]

Margin Call ( The Movie)

I am looking forward to The Big Short but will probably have to go alone. In the meantime, I stumbled on this movie from 2011 (I think) with Kevin Spacey and Demi Moore which is making the rounds on HBO. It deals with the crisis from a totally different angle, apparently. I only watched half of it so far and it's pretty good.

Edit: Ok, the middle and end of this movie were disappointing. I will probably watch it again but I am now more anxious to see The Big Short.

 

[Moemg]

Saw the movie tonight & I thought they did an amazing job .It was better than the book.

 

[NW-Bound]

I read the book a while back, and will see the movie when it's available in DVD at the local library.

Book readers will also enjoy Michael Lewis' subsequent book, Boomerang: Travels in the New Third World (2011), where he visited Iceland, Ireland, and Greece and described how these countries dug their own financial grave without having to import the CDO/CDS mess from the US.

 

[marko]

I always felt bad for all those people with no jobs and no money who were dragged into banks and forced to sign for mortgages they knew they couldn't afford.

So sad.

 

[Lucantes]

I always felt bad for all those people with no jobs and no money who were dragged into banks and forced to sign for mortgages they knew they couldn't afford.
So sad.

+1
I mean you would have thought that it would be illegal or something? Kidnapping at the very least right?

 

[marko]

+1
I mean you would have thought that it would be illegal or something? Kidnapping at the very least right?

Right! Sign here or we kill your dog!

 

[travelover]

I always felt bad for all those people with no jobs and no money who were dragged into banks and forced to sign for mortgages they knew they couldn't afford.

So sad.

I get your point, but I'd suggest that there was more collusion on the part of those that packaged these loans into worthless securities than among the ne'er do wells that signed up for the loans.

I'd also suggest that when it was all over, one group did a lot better than the other.

 

[HFWR]

I always felt bad for all those people with no jobs and no money who were dragged into banks and forced to sign for mortgages they knew they couldn't afford.

So sad.

Not sure of the percentage who did this, but, at least according to David Faber's reporting, mortgage brokers were blowing smoke to unsophisticated buyers about how housing always goes up, and how they could do cash-out refis...

The bankers were supposed to be the adults in the room, but they got theirs upfront, then sold off the crappy mortgages to Wall Street, who hid the junk inside MBSs...

 

[marko]

Not sure of the percentage who did this, but, at least according to David Faber's reporting, mortgage brokers were blowing smoke to unsophisticated buyers about how housing always goes up, and how they could do cash-out refis...
.

Could be, but I know for certain of two separate people who knew exactly what they were doing. Their plan was to just live in a $1M house, stiff the bankers and run when things got hot.

 

[Brat]

If those loan packages were honestly rated the lenders incentives to write stinky mortgages would have been seriously reduced. What did the lender care? The loan would be packaged and sold, no risk for them.