The Big Short Summary

San Diego Mesa Community College

The Big Short

Summary

Angel Milan

Real Estate 101

April Woods

The movie begins in 2005 where a hedge fund manager, Micheal Burry has discovered that the real estate market is unstable. The instability of the real estate market is due to high risk loans that return increasingly few returns. Knowing this and predicting a market collapse in 2007, he decides to bet against it. He does by creating a credit default swap. He continues to go to major banks, them believing he is wrong, take up his idea.

As the collapse of the market comes closer and closer, investors begin to lose their confidence in the market and start trying to pull their money out; However, Micheal Burry knowing about the collapse decide to put a moratorium on any their withdrawls. The market finally collapses and in turn produces a 489% profit for Burry. Jared Vennett later hears about Micheal Burrys decision to bet against the collapse, he soon believes that Burrys prediction is more than likely to be true.

So, Vennet decides to put his stake into the credit swap. A hedge fund manager named Mark Baum later joins Vennett after a accidental phone call alerting him about vennetts plans. Thay discover that the collapse is being pushed on by CDO’s, collateralized debt obligations. When Baum goes to the American securitization forum in Las Vegas he interviews a man named Mr. Chau.

Mr. Chau created synthetic collateralized debt obligations, creating a series of bets on faulty loans. He then realizes that the large scale fraud will cause the collapse of the economy. Baum is then persuaded by his business partners to get into the credit default swap to profit from what is going to happen.

Charlie Geller and Jaime Shipley, two young ambitous investors, come across a paper written by Vennett. They then decide to get involved with the credit default swaps; However, due to the fact that they are required to pull off the trades to profit from from the credit...