The Big Short Explained: What’s Up With the Ending?

The Big Short (2015): Why The American Financial Bubble Burst? The Meaning Of The Film The Big Short, Analysis Of The Plot, Explanation Of The Ending In Simple Words.

Country: USA

Year of production: 2015

Director: Adam McClay

Actors: Christian Bale, Ryan Gosling, Brad Pitt, Steve Carell and others

tagline: Incredible but true story

Awards: Oscar 2016 and British Academy Film Award for Best Adapted Screenplay

The general meaning of the film “The Big Short”, which tells about the American mortgage (and as a result: the world) economic crisis of 2008, can be caught even without special knowledge in the field of finance. But getting into the details is much more difficult. Let’s try to do both.

The essence of the 2008 global financial crisis

To give a very brief description of the 2008 crisis, it could be this: an inflated financial bubble in the US mortgage market burst and brought down the entire world economy. How exactly did it happen?

First, let’s look at how mortgages work in the US. A citizen or family chooses a home, saves money for a down payment and turns to a mortgage broker. The latter brings clients together with a mortgage lender who gives a mortgage loan. For each such transaction, the broker receives a commission. After that, citizens become owners (but not yet owners) of the house. For them, this is beneficial, since housing prices are rising, and they have already fixed a sum of money for themselves, which they will be obliged to gradually pay.


Investment banks have long found a goldmine for themselves in this scheme: the income from one such transaction (when a respectable citizen successfully pays off a mortgage) is stable and has a high degree of reliability, which means that the income from a thousand such transactions will be very large, and most importantly, practically guaranteed. So banks do the following: they buy thousands of bonds from mortgage lenders.

Although the mortgage broker initially screens each potential client, the risk of non-payment on individual transactions still remains. Therefore, banks insure themselves: they collect all obligations in one “box” and, with the help of experts, distribute them into three “trays”. These are safe, normal and risky obligations (safe obligations, okay obligations, risky obligations). This whole “box” is called Collatarelized Debt Obligations (CDO).

From that moment on, obligations that turn into bonds become a full-fledged banking product that various organizations can buy – in other words, invest in mortgage transactions, hoping for income. For the purchase of risky bonds, a higher interest rate is offered – 10%, for the purchase of normal – 7% and safe – 4%.

In addition, banks insure bonds. After that, the rating agencies award them the appropriate rating. Safe bonds are rated “AAA” (Triple A – triple ey), that is, “very reliable.” Normal get a rating of “BBB” (Triple B – triple bi) – “medium reliability”. Risky bonds are not rated.

Safe “AAA” bonds are usually bought by pension funds that hope to generate income with minimal risk (after all, retirees’ savings are at stake). Normal “BBB” bonds are bought by other banks. And risky people buy hedge funds, that is, investment funds managed by professional financiers in the interests of investors.


Everything is going well – every link in the chain is making a profit. But now investors are asking for more bonds to get even more profit. The request for all links is transferred to mortgage brokers working with ordinary citizens. However, they are running out of reliable customers and looking for dubious ones in order to earn extra money. To make life easier for brokers, mortgage lenders are lowering their requirements for borrowers: now you can get a mortgage without a down payment, without confirmation of a permanent income, without documents. Such loans are called “Sub-prime mortage” – “subprime loans”. And there are more and more of them.

This moment can be called the beginning of the collapse. Everything is going according to the previous scheme, but now everyone is at risk, because the number of unreliable obligations is increasing. Unfortunate borrowers, who thoughtlessly took houses on a mortgage, stop paying and their housing goes to banks. Banks are not worried yet, because real estate can be sold, which they do. Thus, the number of houses for sale on the market increases and supply begins to exceed demand. As a result, the price of real estate starts to fall.

Citizens whose housing is in a mortgage see the following picture: houses are being sold all around, and their cost is several times lower than the size of their mortgage obligations. What’s the point of paying exorbitant prices? So they stop doing it. Now house prices are falling even more.

The investment bank thus becomes the owner of a large number of cheap houses. He’s backing out of mortgage deals and trying to sell CDOs to investors. But those themselves already have a lot of such bonds, and they refuse.

In the end, citizens are left without homes, loan brokers are fired, and everyone else in this chain is bankrupt (remember that among investors, pension funds and other organizations from all over the world – they also lose money, which means the world economy is going to the bottom). Of course, except for those who noticed the beginning of the collapse in time and managed to cash in on it – they are the subject of the film “The Big Short”.

What is the movie about

Shorting begins with the story of how bonds became a goldmine for financiers after Lewis Ranieri proposed mortgage-backed bonds in the 1970s.

Christian BaleChristian Bale as Michael Burry. Frame from the film.

Next, we meet a hedge fund manager named Michael Burry (played by Christian Bale). He has an artificial eye, has difficulty communicating with people, and loves heavy metal. Michael notices that the mortgage lending market is unstable, as there are too many unreliable subprime obligations. In a conversation with his new employee, he mentions past financial crises and instructs him to prepare a report on twenty top mortgage bonds to find out what transactions provide them.

The next eccentric character is Mark Baum (played by Steve Carell), the head of another investment organization called Front Point. He mentions a fraudulent scheme that his friend is running and wonders how he can rob ordinary people and still sleep peacefully.

Michael Burry stays in his office for days looking at reports on mortgage bonds and discovers that many of them are risky subprime loans and the number is growing rapidly. When floating rates on them come into force in 2007, the bonds will depreciate. Michael reports this interpretation of financial trends to the lead investor in his hedge fund, but he, guided by experience, is confident that the real estate market is reliable and there will be no collapse. However, Burry has the necessary authority to act despite the disagreement of those who entrusted him with their money.

Mark Baum’s conversation with his wife reveals this character to the audience. Mark survived the death of his brother, who committed suicide, and blames himself for this. Probably, this tragic event made the hero rather nervous. In addition, he seems to have transformed his sense of guilt into a sense of injustice and personal responsibility for the fraudulent schemes that flourish in the financial market.

Steve CarellMark Baum was played by Steve Carell. Frame from the film.

Michael Burry, using funds from his investors, is betting on a collapse in the residential real estate market through deals with several banks. These transactions consist in the purchase of CDS (“Credit Default Swaps” – “credit default swaps”), that is, in essence, insurance that is paid in case of a downgrade or depreciation (default) of credit bonds.

However, as long as this does not happen, Michael is required to make monthly payments. The hero buys $1.3 billion worth of swaps from various banks (he makes a $200 million purchase at Deutsche Bank alone) and agrees to pay approximately $90 million annually on them until the bonds begin to depreciate. Bank managers are delighted, because they are confident in the reliability of the real estate market and are almost guaranteed to receive money “out of thin air”. Michael’s clients (investors) are nervous, but he is unshakable.

A Front Point employee talks about inflammation in his scrotum, a hint that not everything is in order in the “reproductive system” of banks. We casually get acquainted with other employees of the Mark Baum Foundation – they are just like him, fighters against the system.

When one of Deutsche Bank’s top financiers, Jared Wennet (played by Ryan Gosling), mistakenly calls Front Point, confusing it with an organization with a similar name, Mark’s employees learn that the bonds in the mortgage market have begun to quietly, but sag. They promptly call Jared for a meeting at their office. There, using the example of a pyramid made of wooden blocks, he explains that over time, bonds that are rated “Triple B” turn from normal to risky and depreciate, shaking the foundations of the entire “financial building”. For everyone here, this is an opportunity to bet short with credit default swaps, just like Michael Burry did, and get rich.

Ryan GoslingRyan Gosling played the role of Jared Vennett. Frame from the film.

Front Point employees are dumbfounded. They demand an explanation: how can banks not notice all this? Jared finishes them off with the following argument: it turns out that Deutsche Bank includes bond packages, the contents of which are becoming increasingly risky, in CDOs. The authors of the film compare this process to the work of a chef who takes stale cheap fish and cooks expensive soup out of it.

Meanwhile, hedge fund executives Charlie Geller and Jamie Shipley accidentally learn of signs of a future downturn in the residential real estate market. They also want to get into the short game by buying credit default swaps. However, their organization by the standards of financial tycoons is too small for such large transactions. Therefore, they want to seek help from retired broker Ben Rickert (played by Brad Pitt), who is busy thinking about the imminent apocalypse.

Mark’s team decides to check if Jared’s reasoning about the mortgage bubble is correct. To do this, Front Point employees go to talk to citizen homeowners and are horrified: the phase of total non-payment of mortgage loans has already begun. This is eloquently evidenced by the scene among the hundreds of abandoned “houses like in Pripyat”, where only four people live. Mark Baum and colleagues are also talking to two mortgage brokers. They are extremely pleased that the number of approved loans (and hence the total amount of their remuneration) is growing and behave extremely frivolously. In response to the question whether they refused loans to anyone, the guys laugh, because in fact there are no requirements for borrowers anymore – mortgages are distributed “left and right”.

Frame from the film.Frame from the film.

Brokers paint a portrait of their typical clients: they are migrants and strippers who do not think about the contracts they sign. Mark is dating one of these strippers. She considers herself a “VIP client” of credit brokers, because they make a flexible rate for her. The girl does not even indicate her real profession – she writes in the appropriate column: “therapist”.

Moreover, she took, “like everyone here” (in a strip bar), several houses and an apartment in a mortgage. After this conversation, Mark finally comes to the conclusion: there is a bubble. He gives the command to buy swaps. Mark’s dubious employee calls Jared Vennett and asks what his benefit is. He honestly answers that he simply receives very generous commissions. He creates a “swap market” and Front Point takes a $50 million stake.

Charlie Geller and Jamie Shipley persuade Ben Rickert to help them – use his “hunting license” for “ISDA” (International Swaps and Derivatives Organization) to “short”. To short is to make a short (short is a short position; the original title of the film “The Big Shirt” is a play on words: “The Big Short Position”).

John MagaroJohn Magaro played the role of Charlie Geller. Film frame,

A short is the sale of securities that the seller does not own. The principle is this: the paper is borrowed, sold at a high price, and after its fall is returned to the owner. The price difference is the seller’s profit. It’s still the same down bet. As a result, Charlie, Jamie and Ben go to banks and make deals with them.

There comes a day when subprime loans collapse. But Mark Boom’s team is discouraged as the bonds backed by these risky trades are somehow rising in price.

The clue is that banks, along with rating agencies, put a face on a bad game: bad bonds are simply assigned a high reliability rating – “Triple A”. Mark and his colleague are convinced of this during a conversation with a representative of one of the rating agencies. The woman, after several excuses, honestly declares: they are forced to give high marks to bad bonds, because otherwise the banks will simply turn to competitors for it.

Thanks to the artificial growth of bad bonds in the price, Michael Burry continues to lose money: he fixes a negative yield of the fund (-11.3%) on his board and screams, venting aggression. Charlie and Jamie are also confused – their situation is similar.

Both Jared Wennet, in a conversation with Front Point employees, and Charlie, in a conversation with Jamie, suggest taking advantage of the situation and, despite the current financial losses, buy more swaps. Both those and others go to Las Vegas for the American forum on securitization (attracting financial assets), which is attended by big tycoons and representatives of the banking sector.

mortgage brokersHamish Linklater as Collins, Rafe Spall as Danny Moses. Frame from the film.

Loud statements are heard from the forum scene that mortgages are the basis on which the country’s economy rests. On the sidelines, it turns out that everyone knows about the impending default, but they continue to selflessly earn money. Even the girl who is on the commission that is supposed to check the big banks tells Charlie and Jamie in a conversation by the pool that in fact no one controls anything for a long time.

At this time, Michael Burry in his office is already at the limit: the percentage of negative returns on his fund falls from -11.3% to -19.7%. He asks his subordinate to get rid of the shares so he can keep making swap payments. Michael begins to be tormented by doubts: perhaps he was wrong after all.

In a conversation at the table, Charlie, Jamie and Ben, having convinced themselves that they are right, decide to bet on a decrease in the formally most trustworthy bonds. They meet with representatives of financial institutions and conclude appropriate deals. Before leaving Los Angeles, Ben cools the ardor of his “accomplices”. He calls to realize that the guys have actually made a bet against the American economy and if their theory is correct, people will lose their jobs, pensions, many will simply find themselves on the street.

For Mark Baum, a conversation with one of the managers involved in “CDO” puts a fat point. He shamelessly tells that “A” (high security) bonds are partially made up of “B” (normal security) bonds, and “B” bonds are partially made up of risky bonds. Moreover, there are even so-called synthetic “CDOs”, which consist solely of credit default swaps, which are almost a financial atomic bomb.

Finn WittrockFinn Wittrock as Jimmy Shipley, John Magaro as Charlie Geller. Frame from the film.

The authors of the film explain their meaning using the example of pop star Selena Gomez playing in a casino. She has a series of victories and people are betting on further success – these are synthetic “CDO” of the first order. But then there are those who bet on the victory of those who bet on the victory of Selena. These are already synthetic “CDO” of the second order.

Thus, the rates increase by tens and even hundreds of times, exceeding the amount of insurance by the same amount. In fact, synthetic “CDOs” are a financial pyramid: in case of a win, banks simply will not be able to pay the winnings to everyone – they do not have that much money. After this conversation, Mark asks his colleagues to “short everything” – to acquire half a billion dollars in swaps.

The collapse of the financial system begins. Victory is close, but the heroes do not triumph. Mark Baum, realizing that everything happens because of the greed of people, feels depressed. He again talks to his wife about the death of his brother and again feels guilty for everything that happens. His wife consoles him: “It is not always possible to help. Stop trying to save the world.” Charlie Geller talks about the approaching crisis of his mother, but she does not believe. He, along with Jamie, is also trying to inform journalists about the colossal fraud of banks trading in risky CDOs, but they are unwilling to do anything.

In the end, all the major representatives of the financial market stop buying CDOs – everyone is only interested in swaps. Jared Wennet informs Mark Baum about the beginning of this process in a telephone conversation, adding: “It’s time to put on life jackets and jump overboard.” This means: it’s time to sell the available swaps.

Mark maintains an iron grip and does it at the very last moment, receiving the largest profit of all the main characters of the Big Short of 2000% (for comparison, Michael Burry’s fund received 487%).

Before that, Front Point representatives learn that, thanks to the financial machinations of their partners, they were actually betting against themselves. However, in the end, thanks to the swaps sold for such a high price, they still manage to stay in a big plus, like all the main characters of the picture.

Ending explanation

In the end, we learn that in the midst of the crisis, the banks that made it possible simply put the blame for everything on the emigrants and the poor, completely denying their own. No one but one businessman was held responsible. The state, which, guided by bitter experience, should have begun to seriously regulate the banking sector, has not taken any significant steps. No lessons were learned from the mistakes – everything got back on track.

This meaning of the ending of the film “The Big Short” is simple – in fact, it is proclaimed by the Mark Twain quote shown at the very beginning: “It is not the fact that we do not know something that leads to trouble. What leads to disaster is knowledge that we think is true but is actually wrong.” And another important quote from director Adam McKay himself: “Truth is like poetry, and most people hate poetry.” In other words, people prefer, figuratively speaking, to be blind – not to notice the obvious, to continue to harbor illusions. Few people are able to believe in the bitter truth until such frivolity leads to complete collapse.

Another explanation for the ending stems from the mixed feelings of the main characters in the finale of the tape. They are cunning businessmen who have made a fortune on a common misfortune.

However, satisfaction from the received wealth is opposed by thoughts about the fragility of the economy and the world as a whole, indignation from human greed. The viewer experiences something similar: he is happy for the main characters who pulled off a clever scam, but is in disarray: if everything shown is true, then our world is fragile and we live on a powder keg. What to do with this information – everyone decides for himself.

hot conversation in the officeFrame from the film.

The ending meaning of the film

Despite the abundance of terms, it can hardly be argued that the authors of The Big Short put any special hidden meaning into the picture. On the contrary, they honestly tried to make a visual analysis of complex financial terms and phenomena, to convey a simple idea: people tend to make mistakes, and if it brings momentary benefits, they are ready to do it consciously.

The authors criticize capitalism, but still clearly do it with love for its real sharks and would probably be happy to be in their place.

If we present the essence of the film as a guide to action, then the point is that everyone should think about who they trust with their finances and, as a result, their lives. And in independently understanding the economic intricacies, which in the end can become life-changing. Fortunately, if you delve a little, everything is not so difficult.

Similar films

  • The Wolf of Wall Street” (USA, 2013). The ascent of the cynic-financier to the business Olympus by Leonardo DiCaprio.
  • Moneyball (USA, 2011). The film is about the brilliant manager of the baseball team played by Brad Pitt.
  • Wall Street (USA, 1987). A classic crime drama about an aspiring broker starring Charlie Sheen and Michael Douglas.
  • Wall Street: Money Never Sleeps (2010) Another drama about financial ascent with Michael Douglas.
  • The Social Network (USA, 2010). A drama about the creation of Facebook directed by David Fincher.
  • Margin Call (USA, 2011). Thriller about the financial crisis of 2008.
  • Inside Job (USA, 2010). Documentary about the causes of the 2008 financial crisis.
  • Too Big to Fail (USA, 2011). The US Treasury Secretary is trying to avert the 2008 crisis.
  • Spotlight (USA, 2015). The story of a journalistic investigation that shocked the world community.
  • Boiler Room (USA, 2000). Crime drama about a cheater who became a broker.
  • Vice (USA, 2018). A biopic directed by Adam McKay about the influential American politician Dick Cheney.
  • Don’t Look Up (USA, 2021) Another Adam McKay film, this time a social satire about the coming apocalypse.
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