How 'The Big Short' Made Me Question Everything
The Big Short is both a book written by Michael Lewis and a movie directed by Adam McKay starring Ryan Gosling, Steve Carrell, Brad Pitt, Christian Bale, Hamish Linklater, and a bunch of other actors about a few of the people who predicated the financial crises of 2008. It's the story of how a bunch of idiotic bond brokers, who didn't understand the bets they had made in the subprime mortgage bonds game, caused the entire US economy to falter, stumble, and nearly topple, taking down a few large Wall Street firms with it along the way. Not exactly the most thrilling subject matter you would think, but the entire story ends up being one of the most fascinating pieces of non-fiction I have ever read. Why? Because it makes you realize just how fucked up the entire system we live by is.
This post is not a book review. Nor is it a film review. It's a reflection on how much of a lie society is and how it's crafted by the powerful. The 2008 financial crash was caused by a culture that didn't fully understand the monster it had created (see Howie Hubler), and was resolved by a government who not only saved this institutional way of thinking by offloading the debts of the banks and companies involved onto the American taxpayer but also failed to prosecute the individuals responsible for the creation and propagation of said culture. Ratings agencies were being essentially bribed to inflate ratings and dub securities as riskless when they were fundamentally pieces of garbage. The price and worth of these securities was being determined by people who had a stake in the price and worth of these securities. You would think that a conflict of interest flag would have been raised somewhere along the way, but that never happened.
The crisis was the result of a bet, in which both sides made money. Those who were right, obviously, but even those who were wrong. The traders who were long subprime mortgage bonds were not gambling with their own money. They were gambling with someone else's and so at the end of the day, when that someone else had to pay up, they were allowed to quietly disappear with the millions of dollars they made in bonuses for originating those bets. And on top of it all, the people who were right somehow still suffered. They had predicted the greatest crash in the American financial market since the Great Depression and somehow their investors still didn't trust them. They were still the crazy people. They were right, but no one really wanted them to be.
It's infuriating. Reading this book, watching this movie, I was pissed. Can you feel the injustice of it all? Does it make you question everything that our civilization is founded on? Who gets to make these rules? Who gets to decide how much a company is worth? How is it possible that a corporation that takes in no revenue can be valued at millions of dollars? How does a CEO of one of the most powerful investment firms in the country not see what is going on right under his nose? How can the agencies in charge of regulating participants in its market be bullied and considered second tier to those participants? The rules are arbitrary, founded on nothing solid, created by people driven by greed. Our governmental and financial institutions are so convoluted it's very likely that no one operating inside them fully grasps the reality of the situation. And yet they continue to operate, self-sustaining in some incomprehensible way, deterred by no one.
But maybe because no one can actually deter it. In the end, is it really important? Does it really matter? Objectively of course it does. This revelation makes me realize that our modern society is a lie. The way we live, the rules we are governed by can be destroyed at any moment by enough people deciding they are irrelevant since they are spun out of thin air. And yet we still live by them. Why? Because at the end of the day that's not what's important. The government and banks and corporations keep the world running so we can keep living in it. The people on Wall Street making that kind of money will never be content with the money they make. Life will never be truly fair, but to have a job, food on the table, clothes on your back, a roof over your head, it's hard not to think that things aren't really that bad. And we're humans, we make mistakes. In 50 years we'll probably make the same mistakes we did in 2008. History has this tendency to repeat itself. Just look at 80s fashion, it's really making a comeback these days.
If I could enact change somehow, I would, but a part of me truly believes that unless we tear down everything our society is built upon and start over, there's no way to undue the years of learning that has been so ingrained in us from our founding fathers. What we've created here is so out of control, so out of our hands, it has a life of its own. It's so complicated that there's almost no hope for anyone to really comprehend what we've built. Our government, our economy, our financial institutions, this entire system... it's like the Internet. We acknowledge its presence, we coexist and use it, but it's just this ethereal place constructed by a few people to be a foundation for our lives despite having no physical presence. So what is there really to do about it? Besides educating everyone about the lie we live in, I'm not sure there is much.
So here I am doing my part. Go read this book. Or if you don't like reading, watch this brilliantly put together movie with superb acting and storytelling. Hold your breath while you wait for the financial market to crash. Root for the people who made money predicting the end of the world as we know it. And when it's all over, think really hard about what this means in regards to everything American capitalism represents. Then stop thinking about it and continue living your life as if nothing had happened because if you think about it too much, you might not be able to live your life at all.
This post is not a book review. Nor is it a film review. It's a reflection on how much of a lie society is and how it's crafted by the powerful. The 2008 financial crash was caused by a culture that didn't fully understand the monster it had created (see Howie Hubler), and was resolved by a government who not only saved this institutional way of thinking by offloading the debts of the banks and companies involved onto the American taxpayer but also failed to prosecute the individuals responsible for the creation and propagation of said culture. Ratings agencies were being essentially bribed to inflate ratings and dub securities as riskless when they were fundamentally pieces of garbage. The price and worth of these securities was being determined by people who had a stake in the price and worth of these securities. You would think that a conflict of interest flag would have been raised somewhere along the way, but that never happened.
The crisis was the result of a bet, in which both sides made money. Those who were right, obviously, but even those who were wrong. The traders who were long subprime mortgage bonds were not gambling with their own money. They were gambling with someone else's and so at the end of the day, when that someone else had to pay up, they were allowed to quietly disappear with the millions of dollars they made in bonuses for originating those bets. And on top of it all, the people who were right somehow still suffered. They had predicted the greatest crash in the American financial market since the Great Depression and somehow their investors still didn't trust them. They were still the crazy people. They were right, but no one really wanted them to be.
It's infuriating. Reading this book, watching this movie, I was pissed. Can you feel the injustice of it all? Does it make you question everything that our civilization is founded on? Who gets to make these rules? Who gets to decide how much a company is worth? How is it possible that a corporation that takes in no revenue can be valued at millions of dollars? How does a CEO of one of the most powerful investment firms in the country not see what is going on right under his nose? How can the agencies in charge of regulating participants in its market be bullied and considered second tier to those participants? The rules are arbitrary, founded on nothing solid, created by people driven by greed. Our governmental and financial institutions are so convoluted it's very likely that no one operating inside them fully grasps the reality of the situation. And yet they continue to operate, self-sustaining in some incomprehensible way, deterred by no one.
But maybe because no one can actually deter it. In the end, is it really important? Does it really matter? Objectively of course it does. This revelation makes me realize that our modern society is a lie. The way we live, the rules we are governed by can be destroyed at any moment by enough people deciding they are irrelevant since they are spun out of thin air. And yet we still live by them. Why? Because at the end of the day that's not what's important. The government and banks and corporations keep the world running so we can keep living in it. The people on Wall Street making that kind of money will never be content with the money they make. Life will never be truly fair, but to have a job, food on the table, clothes on your back, a roof over your head, it's hard not to think that things aren't really that bad. And we're humans, we make mistakes. In 50 years we'll probably make the same mistakes we did in 2008. History has this tendency to repeat itself. Just look at 80s fashion, it's really making a comeback these days.
If I could enact change somehow, I would, but a part of me truly believes that unless we tear down everything our society is built upon and start over, there's no way to undue the years of learning that has been so ingrained in us from our founding fathers. What we've created here is so out of control, so out of our hands, it has a life of its own. It's so complicated that there's almost no hope for anyone to really comprehend what we've built. Our government, our economy, our financial institutions, this entire system... it's like the Internet. We acknowledge its presence, we coexist and use it, but it's just this ethereal place constructed by a few people to be a foundation for our lives despite having no physical presence. So what is there really to do about it? Besides educating everyone about the lie we live in, I'm not sure there is much.
So here I am doing my part. Go read this book. Or if you don't like reading, watch this brilliantly put together movie with superb acting and storytelling. Hold your breath while you wait for the financial market to crash. Root for the people who made money predicting the end of the world as we know it. And when it's all over, think really hard about what this means in regards to everything American capitalism represents. Then stop thinking about it and continue living your life as if nothing had happened because if you think about it too much, you might not be able to live your life at all.
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