The bundling of bad loans didn't crush the economy... It was the synthetic c d o's which could be bought by anybody, Even though she didn't own the bonds
I was working at a webcasting company called TalkPoint Communications and we were the ones who webcast the American Subprime Lenders Association summit, and the Eisman-Miller debate definitely happened--across my desk. There were raised voices, and I had a semi-circle of colleagues standing around me asking why a guy was yelling. BearStearns was also one of our biggest clients, as was AIG and GoldmanSachs. We webcast the end of the world, and I nearly SHIT MYSELF when I saw this scene in The Big Short because I lived it in realtime.
@@JCJW101 There was shouting that drew colleagues to my desk... but honestly I cannot remember if that was also the day BS collapsed. Bear was *also* a client and all of this stuff happened in the back half of '08.
Wait till people find out that Banks print money out of thin air to loan for the purchase of your home and then when you default on something they never gave you they get to come in and take the real asset, the home....
I got a girlfriend ,one could call sub model quality , I was very drunk , in the morning I was retching my guts for a whole bunch of reasons poor girl , I wish her well at least it didn't cost me more than some drinks
"A real engineer builds bridges, a financial engineer builds, builds dreams. And when those dreams turn out to be nightmares, other people pay for it." - Andrew Sheng
Financial engineers can also find ways to structure products that bridge people’s time and risk preference to allow more physical bridges to get financed.
@@ManforSomeMarkets Sure... But that is not the point. When they took risks the US gov bailed them out. Millions lost everything and the banks came out just fine. Remember that part?
@@doresearchstopwhining “They” (Lenders, originators, servicers, insurers, GSE’s, the institutions that bought/traded MBS’s and even the borrowers themselves) took risk in housing and mortgages because general housing prices almost never fell between 1975 to 2006. Agency MBS’s were perceived almost as safe as government debt because people tended to pay, they are collateralized by the property and guaranteed by GSE’s (implicitly the government itself). An implicit guarantee that got more extreme when Freddie and Fannie began buying large amounts of Alt-A and non-agency Subprime to maintain their mandate of affordable housing. The US was/is obsessed with home ownership and investors were/are obsessed with higher yielding products. Combining policy and demand gave perverse incentives to each part of the mortgage value chain. Besides Lehman’s death and the fall of BS/WaMu, there were plenty of banks who never returned to their prior glory (DB, Citi, CS). Fannie and Freddie are still in conservatorship today. Maybe more executives should have went to jail for fraudulent lending practices, but it would be disingenuous to say that banks faced no punishment. And as a reminder the government bailout wasn’t just aimed at banks. Two of the Big 3 auto manufacturers went bankrupt at the time and there was a general loss of confidence in just doing business. Even regular repo and money markets froze. The government not intervening would have been more politically insane than the intervention itself. And no, TH-cam comments are unfortunately not transferable college credits. But thanks if you do read and consider my comment. I recommend the Brookings write up on the housing market as well as books like “All the Devils are here” for a glimpse of the GFC, because any analysis of it is an autopsy of Rasputin.
It is interesting to see it come together but having to find the connections is mind breaking stuff and most cases end incomplete because they end up settling before the full extent of the crime can be discovered
Yeah it's almost as dangerous as being a journalist covering the story of a dictator. They will find a way to get you and all you'll be is just an obit in the newspaper for a week or two. There's so many cases of financial investigators being disappeared
I knew something was up when, in 1998, my wife and I applied for a mortgage of $159,000 and they said we actually qualified for a mortgage of $250,000. They said "You could completely furnish the house or even buy a bigger house and furnish that one". We said "No Thanks" and walked away with our smaller mortgage, and I told my wife at the time that something bad is going to happen with this whole mortgage thing, but I was an unsophisticated with money at the time and didn't know how to act on my instinct.
It happened all over just like this. The banks were and are as crooked as hell. Everyone wanted to blame the mortgage holders, but the BANKS were just giving money away and fomenting the crisis.
It get's worse. I was given the name of a reputable banker from Stifel Bank, here in St. Louis..and old money brick and mortar bank. Hell..they have their bank's name on the St. Louis Cardinals' baseball uniform. Anyway, I applied for a loan, and here's the phone conversation. Him..."How much do you want?" Me..."3". Him..."I'll give you 7." Ummm...NOPE. The loan was for $289,500.00. There is no way in hell I could ever have managed a five thousand dollar a month loan. Well..maybe...but I would have been house-poor.
It`s the same now. We can borrow with our current income up to 300 000 pounds. Bought a bouse for 125 000. Deposit 32 500. Nice house somewhere in Wales. Bought based on a single salary so that we can still live like we do now if one of us loses income, separate or whatever. The mortgage guy just kept pushing that 300 000 mark. Big fucking finger.
I'm a big fan of the Big Short and knowing what went on, but you presented a lot of stuff I didn't know and I appreciate it because it really put some of the stuff that I understood, but didn't see the foundational pieces together.
Please, please read the book. It’s very, very interesting. It goes into the Hubler trade in detail and it’s crazy, it’s the chapter “A Death of Interest”.
I lived in NYC back then, working in a completely different field. My neighbor was a banker, great parties, interesting (not always nice...) guests. Weird group dynamics. I usually was one of the only non-bankers. After having witnessed them (middle management) I didn't feel comfy with my investment and sold 90% of my stocks in winter 2006/2007. Best decision ever. Then bought my apartment when the prices were low.
You're so lucky to have gained that insight by being so close to the problem or at least exposed to the social circles. I can't tell you how many times I wished I'd had the foresight to exit the market in the fall of 2007 (basically trade my stock funds for treasury bonds), and then trade back for all the stock funds in the spring of 2009. Had I done that then I'd probably be retired today (I'm 46). The silver lining (I guess) is that I never traded or sold off my shares while everything plummeted 35%, I just left everything alone and had gained my value back by 2011-2012. Hindsight is always 20/20 and I didn't have a crystal ball, but I'm happy to hear you made smart moves at the right time because you listened to what was going on around you, great job.
@@SteelDoesMyWill Yes, a crystal ball would be something. I just was lucky. It was more a feeling after I saw those bankers than a rational decision. Plus I moved to Europe at that time and thought buying an apartment there might be a good idea as the prices were low. Which it was in hindsight. Back then others made fun of me. I lucked out.
Beautiful thing about finance guys is that they call "poisoning the water supply" as offloading which is equivalent to terrorist attack with chemical wepon
It sounds like what is happening today. I have friends who have, but they have a lot of student loan debt and consumer debt. The reason they didn't feel like living paycheck to paycheck was because of the low-interest rates. It's happening all over again. A lot of people are one job lose away from their assets being seized.
When I saw the title, I thought this video was going to be about Phil Falcone... now there's a fascinating Wall Street story no has really told yet... guy was one of the biggest winners on the short housing bet... guy was a legit billionaire, he even owned part of the Minnesota Wild, but 10 years later he was flat broke
To be honest why would someone continue trading that aggressively with a billion dollars? He and his offsprings could live indefinitely from it and have whatever they want to have.......
Nobody ever talks about the US Congressional Banking committee politicians like Barney Frank who set the whole system up, told the banks the govt would backstop them and convinced them that they would be required to lend to subprime buyers or get shut out of the whole system. Not Michael Lewis, not the players, nobody ever brings this up.
It's not talked about much, because it was a much smaller piece of the puzzle. Blaming Congress is designed to deflect from the greed that largely caused the crisis. I worked for one of the firms at the center of it and we used to half-joke with one of the C-level executives that "I hope you look good in orange". Everybody was making boat loads of money.
@@SecondPlaceInTheGeneticLottery Are you sure it's a small part of the puzzle? It was the Clinton Administration who used the Community and Reinvestment act of the Carter Administration to convince the banks and investment firms to allocate assets into the sub-prime segment. The trade off protrayed in the book (or one of the books I read) stated that Clinton's Admin told the banks that if they wanted to continue their orgy of consolodation, they would have to lend to lower credit segments of the market. Indeed, greed played a large role, but as usual the negative externalities of an idea to promote "fairness" was met with ugly consequences. Perhaps greedy businesses and stupid politicians would be apropos.
He said the credit agencies gave high ratings because if not the bank would go to another agency. That's not true. They gave high ratings because they had no obligation to be honest. And they still don't.
@@alibizzle2010well that's a certainly a way of saying you're missing the point. Them firing or going to another bank is literally the same effect...loss of revenue. And my point, which still applies, is that the rating agencies had no obligation to be honest. Officers of a company have a fiduciary responsibility, lawyers have a legal obligation to represent to the best of their abilities, ratings agencies, whose products impact millions, have a responsibility only to businesses in their ecosystem.
@@alibizzle2010 Banks being able to threaten them with replacement is a symptom not a disease. The real issue is they they are under no obligation to actually rate things honestly..
They only proved 7 million was fraud money, so thats what they got. For other millions, they did not have proof or time to find it all. Beurocracy got killed by beurocracy....
Synthetic CDO’s are exactly what they sound like, selling insurance on a CDO tranche is economically the same as owning the CDO tranche outright….biggest difference is the CDO tranche has finite dollar size, but I can sell ‘infinite’ insurance on it….which is why the synthetic CDO market was 20x larger than the cash CDO market
I've watched this movie sooo many times, it is one of my favorites. But I could never make sense of the scene where Eismann sits in his boss' office and has this revelation about the outfit he works for. I just moved past it, thinking it has no real relevance. Thank you for laying this out for us and putting the scene into context. As many times as I have watched this movie, I find out new angles that I hadn't known existed.
There is a problem among financial academics and practicers not understanding inherent risks that aren’t factored into their mathematical models…not knowing what they don’t know and their risk exposure is open tailed…just because it hasn’t happened recently doesn’t mean it’s never going to happen.
I studied Finance and what you talk about has always fascinated me. Pricing and risk management used to be more subjective, but with all the mathematical models we have now, it gives pricing and risk management an air of objectivity. But like you said, this ´objective´ way of looking at things favours certain risks while ignoring others. So in a way it is subjective, but it´s a subjectivity that we like to copy of of each other. This is dangerous because if everyone is wrong in the same way, then when shit hits the fan and the assumptions of the models aren´t holding up, then it goes bad for everyone at the same time, and the impact is magnified. In practice not everyone will use the exact same models, but there is significant overlap. Maybe we should shift to a more bayesian model of risk and pricing where expert opinions are also factored in. This would allow more diversity in pricing and risk assessments.
2006. The company I worked for went belly up. My 401(k) money was about 100k at that time. I parked it in CD's, for two years. It was the highest yield at the time. From the time I moved it over, to when I put money back INTO the markets, the stock market went from 14k to 8k. I didn't lose a dime, and in fact, made about 12k. My money then doubled, and then doubled again, by the time I retired. Thank you housing bubble! I got very, very lucky.
The problem is a CDS is an insurance policy regulated not as an insurance policy but as a security. First, you don't need an "insurable interest". You can't buy insurance on someone else's property or life, but you can buy a swap against securities you don't own. This means the swap and related markets can be several times the size of the assets they are securing, which they in fact were. When an asset-tracking investment class becomes several times larger than the asset class it's supposedly tracking, it's tulip time. Second, an insurance policy can't be traded up and down an investment chain; a CDS and related instruments can. Which means your "insurance policy" is worth only as much as the ability to pay of the weakest link in that investment chain, regardless of any repo agreements.
So the guy who had the $9b loss was shorting the sub-prime assets did everything right. It’s just that he didn’t know that the amount of fraud going on with the sub-prime mortgages being inside the “better quality” bundles basically.
The first meeting with Vennet and Baum where Baum is told the default rate of mortgages is already close to wiping out the bonds in 2006 should have been 5 alarm fire territory for everyone. That data was available to everyone and should have scared everyone off mortgage bonds immediately.
@@johnh6065 So it's more of the fact that he did a huge bet that should've payed off in theory, but he didn't look deeper into some red flags like that. But also hindsight is 20/20.
The rating agencies should have been sued into the ground and prosecuted with jail time. Don’t see any difference between their conduct and Arthur Anderson’s handling of Enron
The problem with betting against a financial system is the corruption inside those systems are very strong. In order to actually get paid, the majority of investors have to side with you on seeing the mistake. What happens is the corrupt system will just cover itself until it can't be hidden any more.
Politically it’s impossible for public administrators and politicians not to do everything in their power to offset corrective forces even if knowing the costs… they’re forced to act propping up asset prices with newly created money from the Fed causing short term inflation and creating distortions in capital flows who knows how destructive..kicking the can down the road
Nah, even without corruption it doesn't work out most the times even if you're generally correct. If you bet against, you need a counter party who won't offer an open ended deal. You have to give specific number and date or else you'll lose even if you were right in general.
When I saw your vid title I thought it was going to be about Carl Icahn. You should do another vid on Carl Icahn because he ALSO lost $9 BILLION in his "big short" just over the last several years and his case is particularly interesting because he was recently featured in an HBO documentary "Icahn: The Restless Billionaire" where they didn't mention any of this massive loss. He is famous for being an activist shareholder. His Wiki entry described him as "Widely regarded as one of the most successful hedge fund managers of all time and one of the greatest investors on Wall Street".
To my understanding this just proves how much we need an edged as an investors because playing the market like everyone else just isn’t good enough. I’ve been quite ensured about investing in this current market and at the same time I feel it’s the best time to get started on the market, what are your thoughts?!
That’s true , I’ve been getting assisted by ‘Margaret Johnson Arndt’ for almost a year now , I started out less than $200k and I’m just $19,000 short of half a million in profits.
I am being advised by Margaret Johnson Arndt, an experienced financial professional. If you're interested, you can easily find more information about her as she has accumulated years of expertise in the financial market.
I know of a Dutch bank ceo who at the time did not know the difference between the Dutch (European) and American mortgage system. In America the mortgage is on the house and the person can walk away from the property, giving the keys to the bank. In Europe the mortgage is on the persons (man and woman) with the house as collatoral. And any remaining debt after (forced) selling of the house will still be payable to the bank for the rest of your lives.
Well, none of this could happen without regulators allowing it or even forcing it to happen. Enter Fannie Mae and Government subsidized debt. Where Government forced banks to loan money to black home buyers who could never service their loans and who never had any intention of paying them off. The debt was then packaged and sold off..... and that's the real scandal.
I used to work in the investment banking world building compliance system. What I learned about investment banking world made me feel that entire world is completely corrupt and F-ed up beyond hope. Even though the fed gov requires every firm run rebalance and compliance check regularly, most do not and simply assume they will pay fines. Those fines are passed on as management fee to the people buying into the fund. One of the banks that tanked during the crisis was Wachovia and I know for a fact they didn't run compliance regularly. They weren't the only investment bank that didn't follow the rules. If both dem and republican parties didn't screw with the SEC and purposely strip them of funding and power to do their job, it might not have happened. Until voters stop supporting both parties, this kind of crash cycle will continue and that 0.01% will get even richer.
Yes. I agree with you. It's "Bad"!!! It's "Very Bad"!!!!! But, what other "Political Party" is there to support???!!!" There's only "2 Political Parties" in America to support. The "Democrats and the Republicans"!!!!! That's it!!! 😐😐😐😐😐
Yours is the scariest observation yet. What happens when the trillions of $ injected into the economy during covid dries up? I haven't seen any improvements in productivity to offset these injections, so....Yikes!
I worked for First American mortgage during this time and I remember getting 3-4" thick stacks of single page letters of foreclosure notices for some person's home every single day. I remember the moment in my mind they stopped becoming people and just became another number. I ended up quitting not long after that. I don't think we ever really recovered but just got used to walking around with an open wound.
Hamish, a few things. First: CDOs and Synthetic CDOs were different, it was the former not the latter that were the huge market. Second, Kathy is not Mark's boss, she's essentially his banker, who lent the capital for Mark & Frontpoint's position, with Frontpoint also renting space from and using the trading/banking platform and infrastructure the bigger bank to make their trades.
in Ireland there were abandoned houses in my village that you couldn't give away for free in 1995. by 2005 the same houses were selling for 200 k. i knew something was wrong as it wasn't as if a gold mine opened in the area. the banks were begging people to borrow.
I worked as a subprime underwriter. We did 100% financing at stupid rates with a 4% fee. So congrats, you own a house you have no business owning and you are instantly underwater, more so if you have to sell. Good times.
The most significant lesson I gained from the stock market in 2023 is that uncertainty prevails, emphasizing the importance of humility. Adhering to a long-term strategy with a competitive edge is key.
Certainty eludes everyone; thus, it's vital to establish your own methodology, handle risk, and adhere to your strategy unwaveringly. This commitment should endure challenges and successes, all while maintaining a commitment to ongoing learning and improvement.
Embracing uncertainty, I realized after five years that attempting to predict market outcomes through chart analysis was futile due to the unpredictable nature. My lack of a mentor led to six years of struggle. I transitioned to following the market's direction and adopting a straightforward, disciplined approach.
@@DeannaPeters-lz8we Who is the professional who is advising you, if you could perhaps tell us? As a novice investing in stocks without the correct direction of a professional, I have lost a lot of money.
There are a lot of independent advisors you might look into. But i work with Monica Amanda McClure , and she is excellent. You could proceed with her if she satisfies your discretion. I endorse her
The Big Short was an excellent movie but didn’t explore the government’s role in starting the whole thing. Banks were being forced to give mortgages to lower credit scores with the promise that they could sell them off to Fanny Mae or Freddy Mac. Banks figured out a way to make those loans and then dump them on the government or pension funds. It was as if thieves were given the keys to the vault.
> "[The movie] didn't explore the government's role in starting the whole thing." > Explains how private institutions took advantage of the goverment by knowingly dumping their bad loans on them. The way you explained things, the government didn't start anything at all and was actually a victim as well.
@@korayven9255 Sorry, that’s not the way I explained things. Read up on how Barney Frank and the Clinton administration forced banks to lower underwriting standards. I find it humorous that you think the government was a “victim”.
I think we should all be able to agree that the real culprit here were the ratings agencies that didn't have the sack to be honest about the ratings they were handing out just because they were afraid that they would lose business. These entities need to be shredded if they are so beholden to profit.
I think one of the scariest things about the whole crisis was how little actual collision occurred... Especially near the end, it seems there was some joint efforts made to cover losses and whatnot, but generally speaking, it seems that the parties involved were all just looking out for themselves and their bottom line, and as a result, multiple entities worked together without actually working together... They didn't have to actually colude bc all of their interests alligned on their own...
I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.
I've heard that mortgages are a specialized form of contracts. Under Contract Law, I think, contract can be assigned, hence the CDOs. I have the DVD, liked that they kept the information easy to understand and the fact that the folks that were doing the malfeasance were depicted as 'not getting it,' or not carrying. That is what also came across with CBS' 60 Minutes on their several spots on this topic. Mores the 'Yikes!'
When I heard the existence of synthetic CDOs I had exact reaction as Mark Baum. My jaw just dropped to how someone can be so negligent My question is, does this still happen? Are CDOs, synthetic CDOs etc still in the play? Are we heading into another 2008?
Some people keeps comparing the 2007 collapse to today. If you look into the recession in 80's what we have happening today is very similar to before the recession in the 80's. 🤷♂️
Before the bubble popped I heard for at least a year that it was coming. Mostly from people that had been in the mortgage business but had jumped ship to the industry I was in. It took long enough that I decided it wouldn’t happen and I had no idea how bad it would be how could mortgages be worthless?
People didn’t want to believe it because it was such an immense inflectional fraud at every stage of the system. That’s hard to believe. But even more so it’s terrifying to imagine happening and even people who may have thought it may happen didn’t want to believe it because as we saw the consequences were horrifying beyond what anybody thought could be possible. But who in their right mind would’ve believed people were writing the mortgage paper that was being written at the time? I mean it’s still hard to imagine that people wrote loans without even bothering to see if somebody made what they said they made.
Bill Clinton did, Congress helped. He pushed heavily for the re-legalization of the mortgage-backed securities. Bill ruled the Democrats during the 90's
No, not really. Congress created what might have been a much smaller problem. Wall St. saw a way of making buckets of money through deception and made it a huge problem. Lots of people should have gone to prison for this.
Utter and complete BS. You need to get your facts straight. You are referring to the CRA (Community Reinvestment Act), which was passed in 1997. And indeed, Clinton did leverage banks into writing more CRA loans in the late 90s. But if you are going to blame the crisis on that, you need to show NUMBERS and DEFAULT RATES. In that era (late 90s through the crisis) CRA loans accounted for a whopping 6% of the sub-prime market, which itself was about 30% of the mortgage market overall. So, CRA loans represented about 1.8% of the mortgage market. In addition, CRA loans experienced delinquency rates that were HALF those of the sub-primes as a whole. So, that means about 0.9% of all delinquencies originated from CRA loans. It only takes some very basic research to find out these FACTS. After the crisis, the Federal Reserve even wrote a short paper on this, where they concluded the CRA had no appreciable impact. If the CRA had never existed, the credit bubble and the crash would have been exactly the same. The real question is why to people like you believe such lies. Clearly, the answer is YOU WANT TO. And that reveals a serious underlying bias and lack of objectivity.
G’day Hamish. Very much enjoyed this video. I’ve watched The Big Short 3 times and had so many holes in my understanding even after the 3rd watch! This video has been excellent for me. Much appreciated.
This was a really great explanation of some of the aspects of the GFC ( although it made me feel sick). But how have some of these short funds done with continuing short selling. I read that Bury lost big short selling Tesla? How much of the short selling success was just luck? The other real question, who lost this money during the GFC. Yes the FED ( the public) but also how much of the losses were "shifted" to pension funds and ordinary investors?
The common term from Wall Street and Especially our government is “I assume no risk for my decisions” If they must take responsibility for a fail economy, then none of these bad decisions will ever be made or a lot less frequent. Because if their job and livelihood is on the line, yeah their decision will be very different.
The movie did not mention at the time banks were under pressure to lend money to people with bad or no credit so they could buy houses in the name of fairness and opportunity.
I have no understood why the banks were giving loans to anyone before this. It’s because the banks were just bundling them up and getting them off the books. The more money lent , the more money made without any actual risk if the person defaults
Bubbles form on backs of good people where smart people stand holding that bubble. And when it pops, smart rich throws it on the face of good person as it explodes. And that is basically socio-economics.
Saw recently Michael Burry has taken a large short position on Tesla . Shortly after saw that the EV market has dropped severely and Tesla one of the worst hit with sales dropping by 15%. Makes you think doesn't it lol
@thosoz3431 Check out the videos of massive acres and acres of electric cars in China just rotting. Don't know the makes though. Tesla sales are down by 15% this year though and that's a fact. Don't forget the American housing market was rock solid in 2007. If it hadn't been you would have heard about it right ?
So as planned he took the fall, took a year off, cleared north of 34 million after fines and went back to business as usual after a year off. Sounds like crime pays.
The market's direction can swiftly change, with indexes frequently transitioning from a bear market to a bull market precisely when the news is most negative and investor sentiment reaches its lowest point.
Howie Hubler "is" in The Big Short ... when Mark goes into Kathy's office, to his left coming out of an office a male on a cell phone says "You tell Goldman I'm not transferring funds." ...
It's hilarious that anybody could watch this movie and still argue that capitalism/free markets always result in the best possible outcome for regular people
1:31 CDO isn’t clever, it’s illegal to sell insurance on a bond because it increases the risk of default. Credit default swaps were a big part of this.
![ลองสุ่มไอโฟน 990 โกงมั้ย? [ โกงมั้ยครับ ep.101 ] | DOM](http://i.ytimg.com/vi/bfsWe0j492k/mqdefault.jpg)
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The bundling of bad loans didn't crush the economy... It was the synthetic c d o's which could be bought by anybody, Even though she didn't own the bonds
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beating sp500 between 91-2005 . sp500 brother ;) explains everything ;P
I was working at a webcasting company called TalkPoint Communications and we were the ones who webcast the American Subprime Lenders Association summit, and the Eisman-Miller debate definitely happened--across my desk. There were raised voices, and I had a semi-circle of colleagues standing around me asking why a guy was yelling.
BearStearns was also one of our biggest clients, as was AIG and GoldmanSachs. We webcast the end of the world, and I nearly SHIT MYSELF when I saw this scene in The Big Short because I lived it in realtime.
Did someone in the audience shout out like in the movie and did Bear Sterns collapse whilst the talk was happening?
@@JCJW101 There was shouting that drew colleagues to my desk... but honestly I cannot remember if that was also the day BS collapsed. Bear was *also* a client and all of this stuff happened in the back half of '08.
So when did you guys realize shit is hitting the fan?
Wow
Do you know if there is a recording of that meeting ?
NINJA loan
I love the "sub-prime" wording too... a way to call total garbage something "just slightly below perfect".... genius.
Wait till people find out that Banks print money out of thin air to loan for the purchase of your home and then when you default on something they never gave you they get to come in and take the real asset, the home....
Derivatives
They were cynically also called "liars loans" In the finance industry
The Jews love fancy words to disguise the garbage they're peddling to fleece the goyim. And the goyim never seem to learn the lesson.
I got a girlfriend ,one could call sub model quality , I was very drunk , in the morning I was retching my guts for a whole bunch of reasons
poor girl , I wish her well
at least it didn't cost me more than some drinks
"A real engineer builds bridges, a financial engineer builds, builds dreams. And when those dreams turn out to be nightmares, other people pay for it." - Andrew Sheng
Who puts up the toll booths
When construction projects are nightmares the engineer isn't footing the bill either. But nice philosophizing
Financial engineers can also find ways to structure products that bridge people’s time and risk preference to allow more physical bridges to get financed.
@@ManforSomeMarkets Sure... But that is not the point. When they took risks the US gov bailed them out. Millions lost everything and the banks came out just fine. Remember that part?
@@doresearchstopwhining “They” (Lenders, originators, servicers, insurers, GSE’s, the institutions that bought/traded MBS’s and even the borrowers themselves) took risk in housing and mortgages because general housing prices almost never fell between 1975 to 2006. Agency MBS’s were perceived almost as safe as government debt because people tended to pay, they are collateralized by the property and guaranteed by GSE’s (implicitly the government itself). An implicit guarantee that got more extreme when Freddie and Fannie began buying large amounts of Alt-A and non-agency Subprime to maintain their mandate of affordable housing.
The US was/is obsessed with home ownership and investors were/are obsessed with higher yielding products. Combining policy and demand gave perverse incentives to each part of the mortgage value chain.
Besides Lehman’s death and the fall of BS/WaMu, there were plenty of banks who never returned to their prior glory (DB, Citi, CS). Fannie and Freddie are still in conservatorship today. Maybe more executives should have went to jail for fraudulent lending practices, but it would be disingenuous to say that banks faced no punishment.
And as a reminder the government bailout wasn’t just aimed at banks. Two of the Big 3 auto manufacturers went bankrupt at the time and there was a general loss of confidence in just doing business. Even regular repo and money markets froze. The government not intervening would have been more politically insane than the intervention itself.
And no, TH-cam comments are unfortunately not transferable college credits. But thanks if you do read and consider my comment. I recommend the Brookings write up on the housing market as well as books like “All the Devils are here” for a glimpse of the GFC, because any analysis of it is an autopsy of Rasputin.
This actually makes Forensic Accounting sound like a fascinating career.
It is interesting to see it come together but having to find the connections is mind breaking stuff and most cases end incomplete because they end up settling before the full extent of the crime can be discovered
Just learn accounting you will never be poor knowing everything
Forensic accountants get d3ath threats too much. The higher the stakes, the higher the desperation, and the more dirty people are willing to play.
Yeah it's almost as dangerous as being a journalist covering the story of a dictator. They will find a way to get you and all you'll be is just an obit in the newspaper for a week or two. There's so many cases of financial investigators being disappeared
it is! My ex was one and travelled with armed security around the world auditing suppliers. Crazy stories!
OOOHHhhhh. This movie makes SO much more sense now. I never really understand that scene at the end.
I knew something was up when, in 1998, my wife and I applied for a mortgage of $159,000 and they said we actually qualified for a mortgage of $250,000. They said "You could completely furnish the house or even buy a bigger house and furnish that one". We said "No Thanks" and walked away with our smaller mortgage, and I told my wife at the time that something bad is going to happen with this whole mortgage thing, but I was an unsophisticated with money at the time and didn't know how to act on my instinct.
It happened all over just like this. The banks were and are as crooked as hell. Everyone wanted to blame the mortgage holders, but the BANKS were just giving money away and fomenting the crisis.
It is going to happen again. You should learn from success stories and dig further.
It get's worse. I was given the name of a reputable banker from Stifel Bank, here in St. Louis..and old money brick and mortar bank. Hell..they have their bank's name on the St. Louis Cardinals' baseball uniform. Anyway, I applied for a loan, and here's the phone conversation. Him..."How much do you want?" Me..."3". Him..."I'll give you 7." Ummm...NOPE. The loan was for $289,500.00. There is no way in hell I could ever have managed a five thousand dollar a month loan. Well..maybe...but I would have been house-poor.
Ok boomer
It`s the same now. We can borrow with our current income up to 300 000 pounds.
Bought a bouse for 125 000. Deposit 32 500. Nice house somewhere in Wales.
Bought based on a single salary so that we can still live like we do now if one of us loses income, separate or whatever.
The mortgage guy just kept pushing that 300 000 mark. Big fucking finger.
I'm a big fan of the Big Short and knowing what went on, but you presented a lot of stuff I didn't know and I appreciate it because it really put some of the stuff that I understood, but didn't see the foundational pieces together.
x2
Agree. Good work.
same here
Please, please read the book. It’s very, very interesting. It goes into the Hubler trade in detail and it’s crazy, it’s the chapter “A Death of Interest”.
I lived in NYC back then, working in a completely different field. My neighbor was a banker, great parties, interesting (not always nice...) guests. Weird group dynamics. I usually was one of the only non-bankers. After having witnessed them (middle management) I didn't feel comfy with my investment and sold 90% of my stocks in winter 2006/2007. Best decision ever. Then bought my apartment when the prices were low.
You're so lucky to have gained that insight by being so close to the problem or at least exposed to the social circles. I can't tell you how many times I wished I'd had the foresight to exit the market in the fall of 2007 (basically trade my stock funds for treasury bonds), and then trade back for all the stock funds in the spring of 2009. Had I done that then I'd probably be retired today (I'm 46). The silver lining (I guess) is that I never traded or sold off my shares while everything plummeted 35%, I just left everything alone and had gained my value back by 2011-2012. Hindsight is always 20/20 and I didn't have a crystal ball, but I'm happy to hear you made smart moves at the right time because you listened to what was going on around you, great job.
@@SteelDoesMyWill Yes, a crystal ball would be something. I just was lucky. It was more a feeling after I saw those bankers than a rational decision. Plus I moved to Europe at that time and thought buying an apartment there might be a good idea as the prices were low. Which it was in hindsight. Back then others made fun of me. I lucked out.
Beautiful thing about finance guys is that they call "poisoning the water supply" as offloading which is equivalent to terrorist attack with chemical wepon
It sounds like what is happening today. I have friends who have, but they have a lot of student loan debt and consumer debt. The reason they didn't feel like living paycheck to paycheck was because of the low-interest rates. It's happening all over again. A lot of people are one job lose away from their assets being seized.
When I saw the title, I thought this video was going to be about Phil Falcone... now there's a fascinating Wall Street story no has really told yet... guy was one of the biggest winners on the short housing bet... guy was a legit billionaire, he even owned part of the Minnesota Wild, but 10 years later he was flat broke
To be honest why would someone continue trading that aggressively with a billion dollars?
He and his offsprings could live indefinitely from it and have whatever they want to have.......
@@lonelydogclub Because someone like that always wants one more dollar...
Nobody ever talks about the US Congressional Banking committee politicians like Barney Frank who set the whole system up, told the banks the govt would backstop them and convinced them that they would be required to lend to subprime buyers or get shut out of the whole system. Not Michael Lewis, not the players, nobody ever brings this up.
Exactly
It's not talked about much, because it was a much smaller piece of the puzzle. Blaming Congress is designed to deflect from the greed that largely caused the crisis. I worked for one of the firms at the center of it and we used to half-joke with one of the C-level executives that "I hope you look good in orange". Everybody was making boat loads of money.
@@SecondPlaceInTheGeneticLottery Are you sure it's a small part of the puzzle? It was the Clinton Administration who used the Community and Reinvestment act of the Carter Administration to convince the banks and investment firms to allocate assets into the sub-prime segment. The trade off protrayed in the book (or one of the books I read) stated that Clinton's Admin told the banks that if they wanted to continue their orgy of consolodation, they would have to lend to lower credit segments of the market. Indeed, greed played a large role, but as usual the negative externalities of an idea to promote "fairness" was met with ugly consequences. Perhaps greedy businesses and stupid politicians would be apropos.
Nor do any taxpayers, asking where their bailout returns are now that the market is doing well...
Congress literally made the system and then told these guys hey we did this go crazy lmao @@SecondPlaceInTheGeneticLottery
He said the credit agencies gave high ratings because if not the bank would go to another agency. That's not true. They gave high ratings because they had no obligation to be honest. And they still don't.
Quiet funny how there are laws for everything. Except for stuff that really matters.
This would make sense if their where mot emails from investment banks threatening to fire a rating agency if they didn't give a CDO a higher rating
@@alibizzle2010well that's a certainly a way of saying you're missing the point. Them firing or going to another bank is literally the same effect...loss of revenue. And my point, which still applies, is that the rating agencies had no obligation to be honest. Officers of a company have a fiduciary responsibility, lawyers have a legal obligation to represent to the best of their abilities, ratings agencies, whose products impact millions, have a responsibility only to businesses in their ecosystem.
@@alibizzle2010
Banks being able to threaten them with replacement is a symptom not a disease. The real issue is they they are under no obligation to actually rate things honestly..
A lack of obligation to a particular thing isn't a motivation to do the opposite.
A perfect case of "You can't make this sh it up."
Byyyeeeeeee Kaaaaathyyyyy
Make $42mil by fraud, get fined $7mil. Sounds about right.
Don’t hate the players, hate the game
@@sirlost94 those players are the ones who rigged the game that way.
They only proved 7 million was fraud money, so thats what they got. For other millions, they did not have proof or time to find it all. Beurocracy got killed by beurocracy....
@@sirlost94we can quite easily do both.
Dont hate the players of the game....hate those who didnt paid their debts.
Synthetic CDO’s are exactly what they sound like, selling insurance on a CDO tranche is economically the same as owning the CDO tranche outright….biggest difference is the CDO tranche has finite dollar size, but I can sell ‘infinite’ insurance on it….which is why the synthetic CDO market was 20x larger than the cash CDO market
The Big Short is one of my favorite movies. Your insight and analysis has enhanced my understanding. Thank you! Entertaining and educational.
Honestly this is the best and clearest summary of the big short, really amazing
They weren't mortgage backed assets. The bonds were the returns on the mortgages backed by an asset. The house!
I've watched this movie sooo many times, it is one of my favorites. But I could never make sense of the scene where Eismann sits in his boss' office and has this revelation about the outfit he works for. I just moved past it, thinking it has no real relevance.
Thank you for laying this out for us and putting the scene into context. As many times as I have watched this movie, I find out new angles that I hadn't known existed.
There is a problem among financial academics and practicers not understanding inherent risks that aren’t factored into their mathematical models…not knowing what they don’t know and their risk exposure is open tailed…just because it hasn’t happened recently doesn’t mean it’s never going to happen.
I studied Finance and what you talk about has always fascinated me. Pricing and risk management used to be more subjective, but with all the mathematical models we have now, it gives pricing and risk management an air of objectivity. But like you said, this ´objective´ way of looking at things favours certain risks while ignoring others. So in a way it is subjective, but it´s a subjectivity that we like to copy of of each other. This is dangerous because if everyone is wrong in the same way, then when shit hits the fan and the assumptions of the models aren´t holding up, then it goes bad for everyone at the same time, and the impact is magnified. In practice not everyone will use the exact same models, but there is significant overlap. Maybe we should shift to a more bayesian model of risk and pricing where expert opinions are also factored in. This would allow more diversity in pricing and risk assessments.
2006. The company I worked for went belly up. My 401(k) money was about 100k at that time. I parked it in CD's, for two years. It was the highest yield at the time. From the time I moved it over, to when I put money back INTO the markets, the stock market went from 14k to 8k. I didn't lose a dime, and in fact, made about 12k. My money then doubled, and then doubled again, by the time I retired. Thank you housing bubble! I got very, very lucky.
He didn’t tell the full story the same guy that lost 9 billion ended up getting all that back plus more.
I was really waiting for the story but he started the ad
Through bailout?
The problem is a CDS is an insurance policy regulated not as an insurance policy but as a security. First, you don't need an "insurable interest". You can't buy insurance on someone else's property or life, but you can buy a swap against securities you don't own. This means the swap and related markets can be several times the size of the assets they are securing, which they in fact were. When an asset-tracking investment class becomes several times larger than the asset class it's supposedly tracking, it's tulip time. Second, an insurance policy can't be traded up and down an investment chain; a CDS and related instruments can. Which means your "insurance policy" is worth only as much as the ability to pay of the weakest link in that investment chain, regardless of any repo agreements.
To be fair the rating agencies didn’t know how to rate these bonds. They used the banks formula to rate these bonds.
Not knowing how to rate delinquent assets is kinda strange for a risk researchers
So the guy who had the $9b loss was shorting the sub-prime assets did everything right.
It’s just that he didn’t know that the amount of fraud going on with the sub-prime mortgages being inside the “better quality” bundles basically.
The first meeting with Vennet and Baum where Baum is told the default rate of mortgages is already close to wiping out the bonds in 2006 should have been 5 alarm fire territory for everyone. That data was available to everyone and should have scared everyone off mortgage bonds immediately.
@@johnh6065 So it's more of the fact that he did a huge bet that should've payed off in theory, but he didn't look deeper into some red flags like that. But also hindsight is 20/20.
The rating agencies should have been sued into the ground and prosecuted with jail time. Don’t see any difference between their conduct and Arthur Anderson’s handling of Enron
The problem with betting against a financial system is the corruption inside those systems are very strong. In order to actually get paid, the majority of investors have to side with you on seeing the mistake. What happens is the corrupt system will just cover itself until it can't be hidden any more.
Nah the broader market just reflects economic cycles
Politically it’s impossible for public administrators and politicians not to do everything in their power to offset corrective forces even if knowing the costs… they’re forced to act propping up asset prices with newly created money from the Fed causing short term inflation and creating distortions in capital flows who knows how destructive..kicking the can down the road
Nah, even without corruption it doesn't work out most the times even if you're generally correct. If you bet against, you need a counter party who won't offer an open ended deal. You have to give specific number and date or else you'll lose even if you were right in general.
Corruption won't last long in the market
When I saw your vid title I thought it was going to be about Carl Icahn. You should do another vid on Carl Icahn because he ALSO lost $9 BILLION in his "big short" just over the last several years and his case is particularly interesting because he was recently featured in an HBO documentary "Icahn: The Restless Billionaire" where they didn't mention any of this massive loss. He is famous for being an activist shareholder. His Wiki entry described him as "Widely regarded as one of the most successful hedge fund managers of all time and one of the greatest investors on Wall Street".
The transition into the promo was flawless.
I tried to understand this film watching a lot of videos. This was the clearest explanation
The "buy back*" mistake seems like a pretty big correction that probably just warrants re-recording that whole section.
To my understanding this just proves how much we need an edged as an investors because playing the market like everyone else just isn’t good enough. I’ve been quite ensured about investing in this current market and at the same time I feel it’s the best time to get started on the market, what are your thoughts?!
That’s true , I’ve been getting assisted by ‘Margaret Johnson Arndt’ for almost a year now , I started out less than $200k and I’m just $19,000 short of half a million in profits.
I am being advised by Margaret Johnson Arndt, an experienced financial professional. If you're interested, you can easily find more information about her as she has accumulated years of expertise in the financial market.
I just checked her out on google and I have sent her an email. I hope she gets back to me soon.
I know of a Dutch bank ceo who at the time did not know the difference between the Dutch (European) and American mortgage system. In America the mortgage is on the house and the person can walk away from the property, giving the keys to the bank. In Europe the mortgage is on the persons (man and woman) with the house as collatoral. And any remaining debt after (forced) selling of the house will still be payable to the bank for the rest of your lives.
It works like that here too, the only way to get rid of a mortgage for good is to file bankruptcy.
Europeans seem to be more mature than Americans in every aspect of governance
Lol you mean that continent that couldn’t create a constitution after hundreds of years of government?
Well, none of this could happen without regulators allowing it or even forcing it to happen. Enter Fannie Mae and Government subsidized debt. Where Government forced banks to loan money to black home buyers who could never service their loans and who never had any intention of paying them off. The debt was then packaged and sold off..... and that's the real scandal.
I used to work in the investment banking world building compliance system. What I learned about investment banking world made me feel that entire world is completely corrupt and F-ed up beyond hope. Even though the fed gov requires every firm run rebalance and compliance check regularly, most do not and simply assume they will pay fines. Those fines are passed on as management fee to the people buying into the fund. One of the banks that tanked during the crisis was Wachovia and I know for a fact they didn't run compliance regularly. They weren't the only investment bank that didn't follow the rules.
If both dem and republican parties didn't screw with the SEC and purposely strip them of funding and power to do their job, it might not have happened. Until voters stop supporting both parties, this kind of crash cycle will continue and that 0.01% will get even richer.
Yes. I agree with you. It's "Bad"!!! It's "Very Bad"!!!!! But, what other "Political Party" is there to support???!!!" There's only "2 Political Parties" in America to support. The "Democrats and the Republicans"!!!!! That's it!!! 😐😐😐😐😐
Nothings changed
Yours is the scariest observation yet. What happens when the trillions of $ injected into the economy during covid dries up? I haven't seen any improvements in productivity to offset these injections, so....Yikes!
I worked for First American mortgage during this time and I remember getting 3-4" thick stacks of single page letters of foreclosure notices for some person's home every single day. I remember the moment in my mind they stopped becoming people and just became another number. I ended up quitting not long after that. I don't think we ever really recovered but just got used to walking around with an open wound.
Hamish, appreciate the content and effort as always 👏
Hamish, a few things. First: CDOs and Synthetic CDOs were different, it was the former not the latter that were the huge market. Second, Kathy is not Mark's boss, she's essentially his banker, who lent the capital for Mark & Frontpoint's position, with Frontpoint also renting space from and using the trading/banking platform and infrastructure the bigger bank to make their trades.
Great video in helping explain some of the finer elements of what was going on in the film.
the fact that none of these thieves didn't go to jail is a travesty
thanks. you're the only one who made me understand the big short and the financial crash of 2008. 😊
in Ireland there were abandoned houses in my village that you couldn't give away for free in 1995. by 2005 the same houses were selling for 200 k. i knew something was wrong as it wasn't as if a gold mine opened in the area. the banks were begging people to borrow.
Banks were inflating the local housing market?
I worked as a subprime underwriter. We did 100% financing at stupid rates with a 4% fee. So congrats, you own a house you have no business owning and you are instantly underwater, more so if you have to sell. Good times.
Hey man. Thanks for representing Australia so beautifully. Love the analysis.
Excellence recap, fascinating all the intricacies and nuance at play during the GFC.
The most significant lesson I gained from the stock market in 2023 is that uncertainty prevails, emphasizing the importance of humility. Adhering to a long-term strategy with a competitive edge is key.
Certainty eludes everyone; thus, it's vital to establish your own methodology, handle risk, and adhere to your strategy unwaveringly. This commitment should endure challenges and successes, all while maintaining a commitment to ongoing learning and improvement.
Embracing uncertainty, I realized after five years that attempting to predict market outcomes through chart analysis was futile due to the unpredictable nature. My lack of a mentor led to six years of struggle. I transitioned to following the market's direction and adopting a straightforward, disciplined approach.
@@DeannaPeters-lz8we
Who is the professional who is advising you, if you could perhaps tell us? As a novice investing in stocks without the correct direction of a professional, I have lost a lot of money.
There are a lot of independent advisors you might look into. But i work with Monica Amanda McClure , and she is excellent. You could proceed with her if she satisfies your discretion. I endorse her
Thanks for sharing, needed this myself. I just looked her page up online and I would say she really does have an impressive background on investing.
Why didn't Wing Chau short the housing market himself if he knew it was all a steaming pile of garbage?
That's basically a massive conflict of interest. Imagine managing CDOs and telling investors that they're safe but then betting that they'll fail.
He was an insurance agent, can’t think of anything more useless than an insurance agent.
Most people did not know and him, he was just a salesman, who was making a living on fees
Great analysis, especially with the real life references. One of my best movies ever.
Recording your video in Imax? what is that clarity?
what an explanation, man, of the complex subjects. commendable
Great channel thx you
The Big Short was an excellent movie but didn’t explore the government’s role in starting the whole thing. Banks were being forced to give mortgages to lower credit scores with the promise that they could sell them off to Fanny Mae or Freddy Mac. Banks figured out a way to make those loans and then dump them on the government or pension funds. It was as if thieves were given the keys to the vault.
> "[The movie] didn't explore the government's role in starting the whole thing."
> Explains how private institutions took advantage of the goverment by knowingly dumping their bad loans on them.
The way you explained things, the government didn't start anything at all and was actually a victim as well.
@@korayven9255 Sorry, that’s not the way I explained things. Read up on how Barney Frank and the Clinton administration forced banks to lower underwriting standards. I find it humorous that you think the government was a “victim”.
I think we should all be able to agree that the real culprit here were the ratings agencies that didn't have the sack to be honest about the ratings they were handing out just because they were afraid that they would lose business. These entities need to be shredded if they are so beholden to profit.
@@johnl6176 everyone shared some of the blame. They all worked together to create a perverse incentive structure and did nothing to stop it.
Yep
But the thing is...those cdo managers got to keep their pockets filled, to an extent, so they werent wrong
I think one of the scariest things about the whole crisis was how little actual collision occurred... Especially near the end, it seems there was some joint efforts made to cover losses and whatnot, but generally speaking, it seems that the parties involved were all just looking out for themselves and their bottom line, and as a result, multiple entities worked together without actually working together... They didn't have to actually colude bc all of their interests alligned on their own...
*collusion
I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.
They might just go up again. It's a lottery.
I've heard that mortgages are a specialized form of contracts. Under Contract Law, I think, contract can be assigned, hence the CDOs. I have the DVD, liked that they kept the information easy to understand and the fact that the folks that were doing the malfeasance were depicted as 'not getting it,' or not carrying. That is what also came across with CBS' 60 Minutes on their several spots on this topic. Mores the 'Yikes!'
When I heard the existence of synthetic CDOs I had exact reaction as Mark Baum. My jaw just dropped to how someone can be so negligent
My question is, does this still happen? Are CDOs, synthetic CDOs etc still in the play? Are we heading into another 2008?
Now, please do a video on total return swaps as it relates to citadel capital, market structure, naked shorting, and Gamestop.
"That is fucking crazy."
"It's not. It's awesome."
I love this movie so much.
GREAT VIDEO BUDDY! I wouldn't dream in a modern colony as Romania, my home country, that such transcripts would exist.
Some people keeps comparing the 2007 collapse to today. If you look into the recession in 80's what we have happening today is very similar to before the recession in the 80's. 🤷♂️
Can you please elaborate. How so?
Before the bubble popped I heard for at least a year that it was coming. Mostly from people that had been in the mortgage business but had jumped ship to the industry I was in. It took long enough that I decided it wouldn’t happen and I had no idea how bad it would be how could mortgages be worthless?
You heard because everyone heard.
@@mastpg thanks
People didn’t want to believe it because it was such an immense inflectional fraud at every stage of the system. That’s hard to believe. But even more so it’s terrifying to imagine happening and even people who may have thought it may happen didn’t want to believe it because as we saw the consequences were horrifying beyond what anybody thought could be possible. But who in their right mind would’ve believed people were writing the mortgage paper that was being written at the time? I mean it’s still hard to imagine that people wrote loans without even bothering to see if somebody made what they said they made.
So many conflicts of interests and I'm sure it has not all been fixed.
Even if they fix the problems, they loosen their regulations as time goes on. People forget the lessons of the bad times.
Haha
No because the purpose is utter destruction
@@evegreenificationNever attribute to malice that which is adequately explained by stupidity.
I love how no one talks about the fact that congress essentially forced banks to create this problem in the first place.
Bill Clinton did, Congress helped. He pushed heavily for the re-legalization of the mortgage-backed securities. Bill ruled the Democrats during the 90's
No, not really. Congress created what might have been a much smaller problem. Wall St. saw a way of making buckets of money through deception and made it a huge problem. Lots of people should have gone to prison for this.
Utter and complete BS. You need to get your facts straight. You are referring to the CRA (Community Reinvestment Act), which was passed in 1997. And indeed, Clinton did leverage banks into writing more CRA loans in the late 90s. But if you are going to blame the crisis on that, you need to show NUMBERS and DEFAULT RATES. In that era (late 90s through the crisis) CRA loans accounted for a whopping 6% of the sub-prime market, which itself was about 30% of the mortgage market overall. So, CRA loans represented about 1.8% of the mortgage market. In addition, CRA loans experienced delinquency rates that were HALF those of the sub-primes as a whole. So, that means about 0.9% of all delinquencies originated from CRA loans.
It only takes some very basic research to find out these FACTS. After the crisis, the Federal Reserve even wrote a short paper on this, where they concluded the CRA had no appreciable impact. If the CRA had never existed, the credit bubble and the crash would have been exactly the same.
The real question is why to people like you believe such lies. Clearly, the answer is YOU WANT TO. And that reveals a serious underlying bias and lack of objectivity.
G’day Hamish. Very much enjoyed this video. I’ve watched The Big Short 3 times and had so many holes in my understanding even after the 3rd watch! This video has been excellent for me. Much appreciated.
This was a really great explanation of some of the aspects of the GFC ( although it made me feel sick).
But how have some of these short funds done with continuing short selling. I read that Bury lost big short selling Tesla? How much of the short selling success was just luck?
The other real question, who lost this money during the GFC. Yes the FED ( the public) but also how much of the losses were "shifted" to pension funds and ordinary investors?
Boom!
Great share. I never knew the deets of this subplot
“hey there’s bubble” who doesnt know
The common term from Wall Street and Especially our government is “I assume no risk for my decisions”
If they must take responsibility for a fail economy, then none of these bad decisions will ever be made or a lot less frequent. Because if their job and livelihood is on the line, yeah their decision will be very different.
And yet, they never learn and history keeps repeating itself....
I was actually a subprime loan during the crisis. It was crazy. My dad who was a AAA mortgage was like whaaaat
Subscriber for life right here man you’re great at what you do
Our national debt is FOUR times what it was in 2008. The next crash will crush our entire economy.
The one thing the Big Short misses is the fact the govt pressure on banks to give loans to people who couldn’t afford it.
The movie did not mention at the time banks were under pressure to lend money to people with bad or no credit so they could buy houses in the name of fairness and opportunity.
Amazing research, immediately subscribed to your channel.
Nice work. Original and well researched.
Good research thanks
Any idea whats going to happen this time around with the housing markets?
I have no understood why the banks were giving loans to anyone before this. It’s because the banks were just bundling them up and getting them off the books. The more money lent , the more money made without any actual risk if the person defaults
Yes. Mortgage originators were basically salesmen working on commission.
Bubbles form on backs of good people where smart people stand holding that bubble. And when it pops, smart rich throws it on the face of good person as it explodes.
And that is basically socio-economics.
I saw it and pulled back on my 401k. A woman I know lost a quarter million. I didn't lose, just made a fraction of a percent interest.
Saw recently Michael Burry has taken a large short position on Tesla . Shortly after saw that the EV market has dropped severely and Tesla one of the worst hit with sales dropping by 15%.
Makes you think doesn't it lol
Funny that there are no yards full of unsold Teslas.
If there were we WOULD know about it.
@thosoz3431
Check out the videos of massive acres and acres of electric cars in China just rotting. Don't know the makes though. Tesla sales are down by 15% this year though and that's a fact.
Don't forget the American housing market was rock solid in 2007. If it hadn't been you would have heard about it right ?
Did Michael Scott drop a “boom” 😄😄
Hey Hamish, great content. Subscribed
Great vid 👍🏽
So as planned he took the fall, took a year off, cleared north of 34 million after fines and went back to business as usual after a year off. Sounds like crime pays.
The market's direction can swiftly change, with indexes frequently transitioning from a bear market to a bull market precisely when the news is most negative and investor sentiment reaches its lowest point.
Howie Hubler "is" in The Big Short ... when Mark goes into Kathy's office, to his left coming out of an office a male on a cell phone says "You tell Goldman I'm not transferring funds." ...
Great stuff..this was very revealing and thank you
2:05 NINJA?! Why am i not surprised... also YOU HAVE A FIRM???
CDSs weren't invented in 2003 at MS they were created in 1994 at JPM
It's hilarious that anybody could watch this movie and still argue that capitalism/free markets always result in the best possible outcome for regular people
This video was dope my boy! 🙌 Kudos to you
1:31 CDO isn’t clever, it’s illegal to sell insurance on a bond because it increases the risk of default. Credit default swaps were a big part of this.
since when was it made illegal to sell insurance on a bond?
You explaining this better than the movie lol
I stopped trading for a month after losing 3,000 rupees once. = $40
I got 1:29:48 into the movie and finally realised why they call it the big short