The Big Short

Jared Vennett introduces the audience to the seemingly dull world of banking, which is shaken by Lewis Ranieri's revolutionary strategy of mortgage-backed securities. This innovative approach promises higher profits while minimizing risks, creating an illusion of stability in the market.

Hedge fund manager Michael Burry captures attention as he conducts an interview with a young analyst in his office. During this discussion, Burry shares his personal struggles and insights on the housing market, observing a significant disconnect between the actual health of the market and what is projected.

In a group therapy session, Mark Baum expresses his outrage over retail banking injustices that have adversely affected the working class. His anger is rooted in personal tragedy, as he lost his brother to the devastating effects of the financial system.

As Burry performs in-depth market research, he uncovers the unsettling reality that the housing market is extensively supported by subprime loans. Realizing the potential for disaster, he devises a plan to create a market for credit-default swaps, betting against the housing market.

Vennett organizes a meeting with Baum and his team, presenting the concept of credit default swaps. Using culinary analogies, he emphasizes the ticking time bomb that is the mortgage market, stirring the group's interest as they contemplate the implications.

Emerging investors Charlie Geller and Jamie Shipley struggle with big banks over their incapacity to execute trades due to missing paperwork. However, upon discovering Vennett's presentation, they realize the looming threat of the housing bubble and begin seeking vital guidance.

Moses and Collins venture into neighborhoods ravaged by foreclosures, gaining firsthand insight into the despair faced by affected residents. Their explorations underscore the real-world consequences of the financial crisis, illustrating the impact on everyday people.

As mortgage delinquencies reach alarming heights in early 2007, Baum grows more resolute in pursuing the truth behind the failing housing market. Despite pressure from risk assessors to abandon their swaps, he defiantly pushes forward, convinced of the upcoming disaster.

The teams converge at the American Securitization Forum in Las Vegas, where Baum confronts industry insiders about their deceptive practices. Meanwhile, Shipley navigates connections within the SEC, probing into regulatory oversight on mortgage bonds without success.

As anticipated, the financial system begins to crash by the end of 2008, rewarding those who bet against it while revealing the deep flaws of the banking system. Baum grapples with the implications of their success amidst widespread economic devastation.

The fallout from the crisis results in staggering losses, with approximately five trillion dollars worth of wealth evaporating, eight million jobs lost, and six million foreclosures nationwide. The aftermath raises questions about accountability and corporate greed.

Baum reflects on the devastation caused by the crisis but chooses not to gloat about their foresight, indicating a nuanced moral perspective. This moment encapsulates the bittersweet nature of their financial triumph amid widespread suffering.

Fast forward to 2015, and we observe banks repeating the same mistakes, carelessly selling billions in CDOs. This alarming cycle raises concerns about whether lessons from the past have been truly learned or if history is destined to repeat itself.

Burry, now focusing on unconventional investments like water, continues to remain unnoticed despite his foresight during the crisis. His isolation speaks to a broader narrative of how the industry disregards those who accurately predicted the impending collapse.