ShmoopTube

Where Monty Python meets your 10th grade teacher.

Search Thousands of Shmoop Videos


Principles of Finance Videos 166 videos

Principles of Finance: Unit 1, Company Formation, Structure, Inception
97 Views

How is a company... born? Can it be performed via C-section? Is there a midwife present? Do its parents get in a fight over what to name it? In thi...

Principles of Finance: Unit 1, Intro: Company Formation, Structure, and Inception: Unit Intro
43 Views

Company Formation, Structure, and Inception: Unit Intro. Sorry, Leo DiCaprio fans—we're not going to be breaking down the plot of Inception. We'r...

Principles of Finance: Unit 1, Alex, That’s Finance Potpourri for $500
67 Views

Okay, so you want to be a company financial manager. It's basically up to you to make money for the shareholders. It would also be swell if you mad...

See All

Principles of Finance: Unit 2, The Big Short 6 Views


Share It!


Description:

Missed the movie The Big Short? After watching this video, you'll feel as if you've seen it. (But... you should still see it anyway.)

Language:
English Language

Transcript

00:00

principles of finance a la shmoop the big short wait the big short like

00:07

the movie the one with Steve Carell and Christian Bale and that guy from lala [movie actors in a line]

00:11

land yeah that's the one well we're gonna

00:14

give you the quick and dirty plot summary why well because as outlandish [man drinks champagne in bathtub]

00:17

as the story may seem all this really happened I'm gonna be summarizing from

00:23

this bathtub a la Margot Robbie in the movie a because like why not and be

00:28

because while I really need to exfoliate anyway okay so basically the big short [man exfoliates leg in bathtub]

00:32

focuses on the investor who predicted the collapse of the housing bubble in

00:36

2008 and he bet the ranch almost literally that the markets would [Christian Bale holding balloon]

00:40

collapse he recognized that overly easy terms had been given to too many

00:45

borrowers and that the market was poised for a massive correction to reflect the

00:50

inability to pay of oh so many marginal borrowers yeah big bubble yeah kind of

00:55

like that one by deeply analyzing the data and zeroing in on the ignorance and [stock market data]

01:00

a quasi corruption of the players responsible for this financial crisis

01:04

this hedge fund manager Michael burry who looks a little bit like Batman there [man working at computer in the dark]

01:09

yeah realizes that a collapse is imminent and decides to warn everyone

01:13

shouting from the rooftops that the economy is in major trouble and that

01:17

people should sell and get out just kidding he totally does the opposite he

01:21

quietly on his own figures out how to take best advantage of that situation

01:25

for himself and his shareholders well that's what they hired him to do anyway

01:29

right okay well how does he do this well he invests in a credit default swap and [writing on white board]

01:34

starts essentially shorting the housing market much to the temporary dismay of

01:38

his clients and even of the vaunted goldman sachs who he warns could almost

01:43

go bankrupt and they literally laugh at him and they almost do to refresh

01:47

shorting is the act of selling a security at say the par value of a

01:51

thousand bucks in the case of a bond and then betting that you can buy it back

01:54

later for say yeah 400 bucks at some future date in the same vein a credit

01:59

default swap is basically life insurance sold by the issuer in this case mortgage

02:04

selling banks such that if the bonds went bankrupt while the banks would be [bank on a hook in the ocean]

02:08

on the hook not only for the bonds themselves but for the entire package of

02:12

bonds and given mortgage portfolio well it turns

02:15

out that Batman was right and a few others catch wise as well including the

02:19

guy from lala land and the guy from 40 year old virgin they identify the

02:23

culprit cdo's AKA collateralized debt obligations basically giant pools of [writing on white board]

02:29

mortgages all packaged up in one investment vehicle

02:32

they've been rated by the credit rating organizations like Moody's and SPS in

02:36

the gang way higher than they should have been and it's the public's faith in

02:41

these bogus loan packages that has been steadily driving the market over a cliff [cars driving over cliff]

02:46

so in the end it was the ratings agencies and their tendency to hand out [trick or treaters on halloween]

02:50

triple-a ratings like their Milky Way bars on Halloween that led to this

02:54

horrible mortgage crisis that almost bankrupted our country well a lot of

02:58

very smart and observant people made fortunes shorting all of this when they

03:02

recognized it in advance while the rest of the world well had yet to uh figure

03:06

it out and guess that's how Batman was able to afford his Batcave regardless

03:10

this is a must watch movie for anyone who cares about government regulations

03:14

irresponsible fiduciary dealings by banks and those evil money-grubbing

03:18

bankers who just live to make the commission of another quick buck and if

03:23

you're here because you were looking for the biopic of Danny DeVito you actually

03:28

want to watch the little short

Related Videos

GED Social Studies 1.1 Civics and Government
39794 Views

GED Social Studies 1.1 Civics and Government

Fake News
11938 Views

How do you tell fake news from real news?

Finance: What is Bankruptcy?
260 Views

What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...

Finance: What is a Dividend?
1777 Views

What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...

Finance: How Are Risks and Rewards Related?
589 Views

How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...