If you're struggling to imagine how watching people holler at each other about synthetic collateral debt obligations could be a fun way to spend two hours, you probably haven't seen The Big Short. The film, based on Michael Lewis' book of the same name, features an all-star cast—Christian Bale, Steve Carell, Ryan Gosling, Brad Pitt—and a seemingly impossible mandate: Derive a mass-market hit from a story about a cadre of financial professionals orchestrating the purchase of huge sums in credit default swaps.
Director Adam McKay (of Anchorman fame) succeeds by wrapping the story in comedy, with celebrity cameos spliced in to explain otherwise inaccessible concepts in plain English. It's a populist tale of criminal greed on Wall Street and regulators who can't be bothered—but not even Hollywood can obscure the fact that these banks acted knowing Uncle Sam would bail them out if their bets went bad. Downside risk is meaningless when someone else takes the loss.
This article originally appeared in print under the headline "Moral Hazard and The Big Short".
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