A few months ago, a real event struck me as having the potential for a good story. However, the story did not have a happy ending. The “hero” was very flawed and perhaps would be more accurately called the “protagonist.” A flawed hero, an unhappy ending – of course there’s a classic literary form which can accommodate those elements. It’s called tragedy, and it’s been around a long time.

Then it hit me. We don’t watch tragedy anymore. I’m not sure we read it that much either. We have “drama” and we have “melodrama,” but we don’t do sad endings, and our heroes are only flawed in the most superficial ways. They’re not deeply, morally flawed in a way that causes their downfall, like in classic tragedy, or even in serious dramas of the past.

I wonder what that says about our culture.

“The Big Short” is an interesting movie in this context. Considered purely as entertainment, it works remarkably well. The story follows three groups of underdogs in the run up to the housing crash and subsequent destruction of the economy in 2008. The three groups are unrelated. The first group is an independent subdivision within the large investment banking firm of Morgan Stanley. Although within the larger Wall Street institution, the film establishes this group, lead by the character of Mark Baum, played delightfully by Steve Carell, as somehow different from the rest of the firm. The second group, mainly one person in this case, is a smaller investment firm, Scion Capital, located in California and run by a numbers obsessed physician, Michael Burry, played by Christian Bale. The third group is two young men, Geller and Shipley who are attempting to start their own hedge fund. What all these groups have in common is that they not only recognize that there is a bubble in the housing market but they figure out how to profit wildly off of it. As a story about outsiders who succeed for exactly the same sort of reasons that they are outsiders in the first place, it works remarkably well. Moreover, it is extremely funny. As pure entertainment, it’s great.

However, it is a movie with a point and a moral, and that is where it gets a little bit into trouble. It’s produced by Brad Pitt’s production company, Plan B. I haven’t had time to read the book by Michael Lewis on which the movie is based, so I don’t know if the morality play comes from the book or was imposed on the story by the people who chose to produce this book. As I’ve said before, my ideal way of doing this would be to see the movie, form an impression, make some preliminary notes, do research, then see the movie again. When a movie is based on a true story there are really two things to review, the movie as entertainment and the movie as reportage.

As entertainment, “The Big Short” works wonderfully. It’s much funnier than you might expect. Actors turn and speak to the camera quite a bit, which worked for me, although people who never like it will still be annoyed. Despite this technique, which I assume was necessary for communicating the large amount of information needed to understand the story, the movie tries to follow the dictum, “show, don’t tell,” as far as that is possible. Again, your tolerance for contrivance will be tested. Gillian B. White, who writes for The Atlantic, said:

…I was annoyed by the premise of someone actually bringing a Jenga set into a meeting (and in fact, all the finance people in my theatre audibly groaned along with me), I did think that the use of the structure was probably a visual tool. Essentially, Gosling uses a Jenga tower to show how tranches work: that even top-rated securities couldn’t withstand the failure of lower-rated securities, on which the tower and many CDOs were built.

No one groaned when I saw it. If you’re too sophisticated to enjoy a movie, then I guess it won’t work for you. At one point the group from Morgan Stanley takes a trip to Florida to see a new development of virtually uninhabited McMansions that were bought with the easy credit. Walking around one empty house, the characters get a cute little symbolism of the danger when an alligator emerges from the water of a swimming pool and snaps at them. That probably wasn’t how it happened either, but it was an amusing moment. Also, when they talk to someone who is holding several properties bought with adjustable rate loans, that someone is a stripper. The someone in real life I knew like that was a social worker, but that doesn’t make for a fun visual and also doesn’t emphasize that the loans were being bought by people who couldn’t pay them. Ironically, White had no problem with that particular contrivance.

I also thought that the Florida trip did the best job of showing the human side of the crisis, which was sorely needed. When Carell heads to a strip club to talk to a dancer who has bought a house (or five!) he explains to her that her adjustable-rate mortgage payment could increase by 200 percent once her teaser rate ends. And because her home hadn’t increased in value, there was no equity and she couldn’t refinance like she’d been promised. She promptly (and appropriately) freaks out.

There were less provocative scenes that were important too: A family renting a home that an owner had put under his dog’s name, a tenant finding out that his landlord took their rent money and didn’t pay the mortgage on the house they’ve been renting—leaving them out on the street. And immigrants who were duped into signing mortgages that they couldn’t possibly stay current on. It was heartbreaking, and that is the reality of the crisis: actual devastation to people’s lives and livelihoods.

It’s not really apropos to the movie review, but I find it telling about our current society that the elites who write for our national publications are too sophisticated to go with the flow over a Jenga set, but thought that the Florida trip was “sorely needed.” Most of us need the Jenga set and we already know people who were affected in a negative way by the crisis. In fact, I saw the overweight, tattooed renter and the stripper as exemplifying the way our elites negatively stereotype the working class they rule over. Still, although it was a cartoonish, and unsympathetic, illustration of what was happening to ordinary people at the time, it was done with a light tough and was basically amusing.

There were three celebrity asides to explain the financial instruments involved. Again, quoting the Atlantic discussion, this time from Bourée Lam:

I found the cutaway explainers less strong: the Margot Robbie bubble-bath scene where she explains mortgage-backed securities was funny, but ultimately a bit confusing. The Anthony Bourdain scene about fish stew and collateralized debt obligation sort of worked. And I never thought I’d see behavioral economist Richard Thaler and Selena Gomez in the same room, but I actually thought they explained synthetic CDOs pretty well.

Actually, the bubble-bath scene was just stupid and irritated the feminist side of me in the way I usually try to not mention so I don’t feed the notion that feminist are all a bunch of prudish jerks. (Strangely, the stripper scene bothered me more due to the assumptions about class than due to the use of a little t and a to decorate an almost exclusively male movie. Shortly after the crash I remember having a dinner with a man in finance who referred to the bubble being created by lowlifes who were buying plasma televisions on credit. The notion that the crash was somehow caused by the undeserving lumpenproletariat is an important part of how our financial elites emotionally justify their anti-social behavior.) Unlike Lam, I don’t think the fish stew explanation worked. Again, and I know I’m going off on a tangent, I think it shows the writer’s distance from the average person. Taking your leftovers and using them in another dish the next day is just a normal person’s notion of household economy. Sure, it might be a rip-off if you’re in a fancy restaurant and they charge you a lot of money for it, but I kind of like fish stew, it’s part of a normal person’s behavior and, most importantly, it won’t hurt you. So the fish stew analogy only makes sense to the class of people who throw away perfectly edible food. The Selena Gomez bit worked well.

Neil Irwin in The New York Times wrote an article called, conveniently, “What ‘The Big Short’ Gets Right, and Wrong, About the Housing Bubble.”

“The Big Short” makes a big deal of its protagonists realizing that there was a giant housing bubble in the middle of the last decade at a time no one else could see it. But that’s not quite right. When no-money-down home loans were commonplace and home prices were soaring, there was widespread discussion of the possibility that the United States was experiencing a housing bubble.

I remember that time period well and I can second Irwin’s statement. For me, it was when I found out that one of my mother’s social worker friends with a disabled husband was buying property in Florida. Shortly afterward, I went to visit a friend in New Hampshire and a couple of other New Yorkers who had similar anecdotes were there and I distinctly remember a conversation worrying about this. This would probably have been the summer of 2007, although it could have been 2006. However, none of us made a ton of money. As Irwin correctly notes, “there’s a big difference between identifying at the macro level that something is going on, and understanding the financial plumbing that would allow a person to profit from that insight.”

Irwin continues:

What the characters portrayed in “The Big Short” figured out… was how the rot from bad mortgage loans that helped fuel the housing bubble had come to permeate supposedly safe securities. There were billions of dollars of highly rated bonds floating around that were in fact worthless….

The key transmission mechanism that turned a simple correction in the housing market into a global financial crisis were those bonds. Global banks had loaded up on these supposedly safe securities, and were at risk of becoming insolvent when their true value became known.

That “transmission mechanism” brings us to Yves Smith’s evaluation of the movie, which is essentially a reposting of her opinion of the book, which she called “fundamentally misleading.” She writes:

Absent the actions of the subprime shorts that Lewis lionized, the US would have suffered a S&L-level housing crisis (which at the time was seen as a serious blow to the banking system and the economy), not a global financial crisis that came perilously close to taking down systemically important capital markets firms around the world.

She criticizes Lewis, the author of the original book, for focusing on personalities and having a Manichean worldview with good guys and bad guys. The movie’s main character, Mark Baum, is based on the real life person Steve Eisman.

The anchor is Steve Eisman, a blunt, unintentionally abrasive curmudgeon and money manager, who in his former life as an analyst put sell ratings on all the Gen One subprime lenders of the 1990s. Not only does most of the description of market chicanery and cluelessness come through him, but Eisman also serves as the main vehicle for depicting the shorts as noble opponents to a feckless industry.

Eisman’s realization that the industry he once covered, consumer finance, was out to “fuck the poor”, led a boyhood Republican to become, per Lewis, “Wall Street’s first socialist.”

Smith adds an important point:

Lewis completely ignores the most vital player, the one who was on the other side of the subprime short bets. The notion that “it’s a CDO” is daunting enough to stop the non-financial reader in his tracks. The author is remarkably uncurious about who the end investors were for CDOs.”

She quotes from Lewis’ book “German banks, Taiwanese insurance companies, Japanese farmer’s unions, European pension funds, and in general, entities more or less required to invest in AAA rated bonds” and summarizes this as “the international equivalent of widows and orphans.” (She adds a gratuitous, and I believe inaccurate, aside that “because they are exotic, presumably elicit less sympathy.” I haven’t noticed our elites displaying any sympathy for domestic widows and orphans lately.)

So what does Eisman do, our hero, vocal advocate of the poor and exploited, who now (along with Lewis) indisputably knows that he is an integral part of the problem?

“Whatever that guy is buying, I want to short it.” Lippman took it as a joke, but Eisman was completely serious. “Greg, I want to short his paper. Sight unseen.”

“Eisman recognizes that the subprime market is a disaster waiting to happen, a monstrous fire hazard that, once lit, will engulf the housing market and financial firms. Yet he continues to throw Molotov cocktails at it. Eisman is no noble outsider. He is a willing, knowing co-conspirator. Even worse, he and the other shorts Lewis lionizes didn’t simply set off the global debt conflagration, they made the severity of the crisis vastly worse.”

The movie does not entirely ignore Irwin’s and Smith’s points. Irwin himself notes that one of the central figures, Murray, the doctor in California, has difficulty retaining his investors. As Irwin recounts the episode in the movie:

“I may have been early, but I’m not wrong,” says one character, the hedge fund manager Michael Burry as portrayed by Christian Bale. “It’s the same thing,” a skeptical investor retorts.

Regarding the morality of profiting from other people’s misery, at one point, Baum/Eisman’s wife, played by Marissa Tomei, says, “You’re not a saint. Saints don’t live on Park Avenue.” And as the two young characters towards the end start dancing around happy to have made money, Brad Pitt’s character, an insufferable prig, gives them a lecture about how every time the unemployement rate goes up x number of people die, reminding them of the larger societal consequences. In the wake of the movie, the Financial Times quoted Brad Pitt as saying, “I get enraged when people start telling other people how to live their lives.” Unfortunately, the character he plays has no such reticence.

Still, these are just lines and the overall emotional effect leaves the viewer walking away feeling that these guys are somehow heroes, in the vernacular, not literary, sense of the term.

So, while I highly recommend the movie- the performances are all solid with a couple of notable ones, it moves more quickly than you’d expect, it’s funny, lively and gives you a sense of what happened during the economic crash of 2008- take the story with a very large grain of salt. As Paul Krugman has said, “economics is not a morality play.”

It’s not a happy story in which virtue is rewarded and vice punished. The market economy is a system for organizing activity — a pretty good system most of the time, though not always — with no special moral significance. The rich don’t necessarily deserve their wealth, and the poor certainly don’t deserve their poverty; nonetheless, we accept a system with considerable inequality because systems without any inequality don’t work.

Lately, I’ve started to grow annoyed with the way everything in the world has been not only politicized, but politicized by people who think they’re battling evil. In that context, which is related, I suspect, to our current disinterest in tragedy, I’m not entirely comfortable with the message of this movie. If Brad Pitt wants to improve the world by telling stories, I would suggest that he tell stories that are more complicated in their morality.

Update: I owe an apology to Brad Pitt. My sister, who is planning on seeing “The Big Short” tonight, asked me what the last morally movie I saw with a morally flawed protagonist. I said, “True Story.” It turns out that Brad Pitt was one of the producers. It’s also worth noting some of the other things I said to my sister about that movie. I mentioned that while it was very interesting and well-acted, it was not emotionally satisfying. The true crime drama is perhaps a little too true. Real life doesn’t come in neat little packages and moral lessons are not always clear. Because it was so unsatisfying, it can’t really recommend it, but I appreciate the fact that the actors, director, and others, including the producers, made the effort and I’m glad that I chose to watch it.

We like to disdain “Hollywood endings,” but Hollywood endings and classic formulas are popular for a reason. They provide an emotional jolt which is one of the reasons we like stories in the first place. If we reach out beyond tried and true formulas, we will fail sometimes, but it is a noble failure.