I really enjoyed The Big Short. It’s totally entertaining, and captures some hard to explain and very interesting dynamics in the lead-up to the housing crisis and the eventual bursting of the bubble. That said, the movie had some significant issues. For example, it overstates how few people saw the crash coming. Many people were aware of the housing bubble, but only a few were able to figure out how to make money off of it – and just had bad it was going to get. Michael Grunwald has a new piece that does a nice job pointing to three other problems: the movie overstates the importance of complex derivatives, understates the role of stupidity vs. evil, and downplays the significance of post-crisis reforms.
These are all good points, though not completely without controversy. I think an economic sociology class that spent several weeks on the crisis could usefully watch this movie and read some of the criticisms and have a very healthy discussion of crises, responsibility, and how we narrate the past (and maybe maybe throw in a discussion of sexism in both the financial industry and in Hollywood).
All of that’s really just setup though, to my biggest pet peeve about the movie. The Big Short opens with an epigraph:
It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. – Mark Twain
Here’s the thing: there’s no evidence Mark Twain ever said or wrote those words. The Quote Investigator tackled variations on this quote and determined that the modern version comes from an encyclopedia of humor by Josh Billings written in 1874. The first attribution to Twain comes as early as 1899, but again, there’s no evidence that Twain actually said or wrote those words. Normally, a little Twain misattribution wouldn’t bug me but the quote is literally about the dangers of thinking you know something that actually isn’t true. What delicious irony!
Edit: I should probably say what my most serious criticism of the film was, since it’s not in Grunwald. What the movie misses is that the “shorts” didn’t just profit off the crisis, they actively made it worse. Here’s one version of that argument, via Naked Capitalism: “The subprime market would have died a much earlier, much less costly death absent the actions of the men Lewis celebrates. They didn’t simply keep the market going well past its sell-by date, they were the moving force behind otherwise inexplicable, superheated demand for the very worst sort of mortgages.” In the movie, a few of the actors are conflicted, but only over the morality of making money off of someone else’s economic woes – there is no sense that their actions actually worsened the crisis. But that seems to have been the case.