The other day, I watched the 5-time Oscar nominated movie The Big Short. Based on a nonfiction book, The Big Short revolves around the events leading up to the American housing crisis in 2008, and follows a number of characters as they bet against a portion of the American economy.
I’ll briefly explain the general plot of the movie as simply as possible, because to be completely honest, I lost it about half an hour in. In a nutshell, banks had begun lending out loans (mortgages) to people who couldn’t actually afford them. The banks knew this, but to keep investors investing, they needed to convince them that these loans were safe. The loans consisted of B’s, Double B’s, Triple B’s, A’s, Double A’s and Triple A’s. Triple A’s were the safest, meaning it was certain the buyers would be able to pay back the loans. What the banks had begun to do was put random loans of different safety levels together. The characters (a band of misfits, they’re shrewdly called) we follow are the little group of people who saw this flaw and inevitably break in the system. They realized all these people were going to default around the same time, and it would all collapse in on itself. So they created their own investment.
Image Source: Go Into The Story
Now, believe me when I say this; I didn’t really understand any of this originally. I had read a bunch of articles on “The Big Short, Explained” just to outline what the 2008 crisis was. But when I did understand it, I was kind of disgusted.
These main characters are based off of real people, which means there were real people who were cashing in money in hopes of gaining millions in return. Their bet was against the economy, against people losing their houses, jobs and financial stability. The Big Short seemed to understand this issue of greed, but only with the exclamation from Brad Pitt’s character, who reminded everybody that their coming wealth was the money of those who didn’t have enough to pay their mortgage. His last freeze-framed line was simple, “you guys said you wanted to get rich. Now you’re rich.” These real life people made millions off of millions of people who were practically tricked into buying their loans.
So who was really at fault? The banks? The band of misfits? To me, it seems like both. The band of misfits chose profit over people, and the crisis that ensued may have bankrupted the banks, but the band of misfits still benefitted. They were so completely blinded by this prospect of extreme wealth that not only till the film’s end did they realize the repercussions of their bet. And still, the obliviousness of some didn’t make up for the fact that they knew what was going to happen. Instead of stopping this massive crisis that put millions out of work and without homes, they turned to greed.
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The Financial Post and The Globe And Mail have both recently stated that Toronto is bordering on housing crisis levels. This was (and still is) seen in Vancouver, where people from foreign countries are buying houses and not living in them, raising the property worth and making it almost impossible to afford a house. As of 2016, 1.8% of real-estate in Vancouver was bought by foreign buyers, which is not as high as it used to be. But as of 2017, the number has increased once again.
In fact, this real-estate bubble has expanded to practically all of Canada. While there are no people we can directly link to this, it can’t be said that there are specific people pulling the strings or matching the activities and acts portrayed in The Big Short. Admittedly, Canada’s housing crisis may not be due to the same reasons as America’s was, and it may be unfair to compare the two. On the other hand, you don’t really need specific people and exactly the same reasons and motives to call a financial issue “greed”. It’s corruption, and to see the banks in the United States still as big, if not more than before 2008, is scarily unsurprising. As said in the Huffington Post, this movie “also may tell a nightmarish vision of the future.”