Assignment #4: The Big Short Movie Review
The Big Short is the story about the U.S. subprime mortgage crisis in 2008 occurring from the housing bubble. The story is told by three groups of people during the same period.
Michael Burry is a hedge fund manager of Scion Capital who discovers the tendency of a housing bubble in the near future. He finds that the housing market is backed by subprime loans which are poor credit rating loans and have high default risk. Then, he decides to bet against the housing market. After that, he offers the banks to buy short against the surging housing market, which is called ‘a credit default swap’.
At the same time, Jared Vennett finds out about what Burry are going to do and he also believes that U.S. economy are going to collapse soon. Vennett introduces the credit default swap investment to Mark Baum, who is a hedge fund manager, and his team and they agree to join the bet against the U.S. economy …show more content…
The crisis in 2005 was caused from home mortgage, which was financed with mortgage-backed securities (MBS) and collateralized debt obligations (CDO). According to The Big Short, all main characters proposed several banks to purchase credit default swap which are a financial derivative against a default in mortgage-backed securities (MBS). The mortgage-backed securities are a huge collective of bonds. At that time, no one believed that the whole financial market would collapse since the U.S. housing market seemed to have a steadily high growth so almost all the banks were welcome to sell this credit default swap as they were confident that they will gain a premium from it. Also, the mortgage-backed securities (MBS) are consisted of a bundle of mortgages that the risk is likely to be low for since the total of mortgages should not default at the same time. In fact, during the mortgage crisis, lots of borrowers failed to make the
The Big Short is the story about the U.S. subprime mortgage crisis in 2008 occurring from the housing bubble. The story is told by three groups of people during the same period.
Michael Burry is a hedge fund manager of Scion Capital who discovers the tendency of a housing bubble in the near future. He finds that the housing market is backed by subprime loans which are poor credit rating loans and have high default risk. Then, he decides to bet against the housing market. After that, he offers the banks to buy short against the surging housing market, which is called ‘a credit default swap’.
At the same time, Jared Vennett finds out about what Burry are going to do and he also believes that U.S. economy are going to collapse soon. Vennett introduces the credit default swap investment to Mark Baum, who is a hedge fund manager, and his team and they agree to join the bet against the U.S. economy …show more content…
The crisis in 2005 was caused from home mortgage, which was financed with mortgage-backed securities (MBS) and collateralized debt obligations (CDO). According to The Big Short, all main characters proposed several banks to purchase credit default swap which are a financial derivative against a default in mortgage-backed securities (MBS). The mortgage-backed securities are a huge collective of bonds. At that time, no one believed that the whole financial market would collapse since the U.S. housing market seemed to have a steadily high growth so almost all the banks were welcome to sell this credit default swap as they were confident that they will gain a premium from it. Also, the mortgage-backed securities (MBS) are consisted of a bundle of mortgages that the risk is likely to be low for since the total of mortgages should not default at the same time. In fact, during the mortgage crisis, lots of borrowers failed to make the