The Big Short is a film, that was released in 2015. The movie highlighted the credit and housing bubble collapse, which occurred in the mid- 2000’s (starting in 2005). In the film, four outsiders, which included a hedge fund specialist, a banker and a Wall Street investor predicted that the housing market would crash in upcoming years and decided to bet against it. Until the collapse, the housing market was seen as one of the most stable parts of the economy, so to bet against it was simply insane. However, these outsiders essentially saw what the big banks and Wall Street investors failed to see, which was that the housing market was prompted up on bad loans.
To summarize the film, Michael Burry (Christian Bale) was an ex- physician, who turned into a hedge fund manager. He had autonomy and freedom within the company to make decisions, so he bet against the housing market. Burry believed that the housing market would crash because it was built off bad loans given out to people who couldn’t afford to keep up with the loan payments, which would eventually cause the housing market to collapse. Burry, knowing this information, made an offer with the banks that if the
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To put it simply, banks gave out mortgages to people who didn’t qualify and couldn’t afford to keep up with the payments, then banks bundled the mortgages into bonds and sold them to top investors and financial institutions that were told were safe and secure investments. The bonds quickly lost their value when they were not getting paid and this caused huge investment losses from the top financial institutions. This quickly turned into a domino effect, which caused the entire economy to suffer big. People in turn lost jobs, houses and money because these big financial institutions went
Huge technological improvements and scientific breakthroughs have paved the way for larger, more stable and profitable financial markets. Fast and easy money was to be made by playing the booming stock market - many laymen took advantage of these opportunities without having a complete understanding of what exactly they were doing. This inevitably led to the crash that sent America and the world into the Great Depression. In the movie we see the first stages of the panic that spread throughout the country. People got scared and ran to the bank to take out their life savings.
The year 2008 was a very scary one for anyone involved in the US stock market. Due to subprime lending, and cheap mortgages, the housing market became grossly overinflated. Naturally, as with a balloon that’s filled too much, it “popped”. The resulting collapse of the housing bubble had severe implications for the rest of the US economy, housing, and related industries such as lumber, construction, and realty all came crashing down, and the people employed in those fields soon found themselves out of work. As with the stock market crash of 1929, fear of the economic instability caused people to pull their money out of any investments they had. This can be a problem for a healthy bank, being unable to supply the money people are requesting if it’s tied up in loans. However, this would prove to be an even bigger problem if the money never existed in the first place, and would take down one of the largest scams in American history.
“The housing market will get worse before it gets better” –James Wilson. The collapse of the United States housing market in in 2008 was one of the most devastating moments for the world economy. The United Sates being arguably the most important and powerful nation in the world really brought everyone down with this event. Canada was very lucky, thanks to good planning and proper preventatives to avoid what happened to the United States. There were many precursor events that occurred that showed a distinct path that led to the collapse of the housing market. People were buying house way out of their range because of low interest rates, the banks seemingly easily giving out massive loans and banks betting against the housing market. There were
In “The Big Short”, this movie about the economic collapse of 2008 in America highlights how Americans of all racial backgrounds were hit hard when the housing market collapsed. The film provides a very compelling argument and describes how the market crashed because banks began to give out more unstable loans out to people in order to sell more properties, which eventually led to the housing market to be built upon millions of risky loans. This practice grew until the housing market became too unstable because of all the risky loans and resulted in an economic crash. The housing market collapse led to millions of Americans to lose their homes because of foreclosures and led to massive amount of homelessness and unemployment since the Great
9 to 5 is a 1980 comedy film starring Jane Fonda as Judy Bernly, Lily Tomlin as Violet Newstead, Dolly Parton as Doralee Rhodes, and Dabney Coleman as the boss Franklin Hart Jr. The film focuses on a department that is being poorly run by a "sexist, egotistical, lying, hypocritical bigot" boss. After finally getting over their differences, the three main ladies develop a friendship, vent to each other, take down their boss and eventually help each other run the company.
It can be argued that the economic hardships of the great recession began when interest rates were lowered by the Federal Reserve. This caused a bubble in the housing market. Housing prices plummeted, home prices plummeted, then thousands of borrowers could no longer afford to pay on their loans (Koba, 2011). The bubble forced banks to give out homes loans with unreasonably high risk rates. The response of the banks caused a decline in the amount of houses purchased and “a crisis involving mortgage loans and the financial securities built on them” (McConnell, 2012 p.479). The effect on the economy was catastrophic and caused a “pandemic” of foreclosures that effected tens of thousands home owners across the U.S. (Scaliger, 2013). The debt burden eventually became unsustainable and the U.S. crisis deepened as the long-term effect on bank loans would affect not only the housing market, but also the job market.
The Seven Five is a documentary that frivolously reexamines the crimes of Officer Michael Dowd and his team of dirty cops. Dowd is a former New York police officer who was stationed in the 75th Precinct in Eastern New York. The film presents the nefarious deeds of these officers via original interviews with Dowd and his former comrades as they recount their crimes and explain the reasoning behind their unethical behaviors. While working as a cop, he embellished his income through criminal exploits which include stealing guns, drugs, money, and eventually he began working in drug rings selling cocaine. Dowd’s felonious activities were extremely lucrative and earned him approximately $4,000 a week. Dowd was eventually arrested in 1992,
This was the rich got richer and the poorer got poorer effect. Then there was the investors ' speculation, where they were buying stocks with the belief that they could always be sold at a profit, they were counting their chickens before they hatched, I believe that this was the “rock that sunk the barrel” and caused the crash of wall street, and which is still being done today, and then the lack of action by the Federal Reserve System, who could have had some control of the crash, and by not deciding to raise interest rates but to merely warn banks to reduce the amount of money they were loaning, even though they were warned by others more aware of the danger, to raise the interest rate, but they didn’t listen, this with an unsound banking system, that made loans easy to get, and lending money to everyone for business activities, real estate, and investments in stocks and bonds. Banks just assumed the economic boom would go on forever, but after “the crash of the New York Stock Exchange on October 29, 1929”, many banks had to close their
The recession officially began when the 8 trillion dollar housing bubble burst. (State of Working America, 2012) Prior to that, institutions bundled mortgage debt into derivatives that were sold to financial investors. Derivatives were initially intended to manage risk and to protect against the downside, but the investors used them to take on more risk to maximize their profits and returns. (Zucchi, 2010). The investors bought insurance against losses that might arise from securities so that they could secure their money. Mortgage defaults unexpectedly skyrocketed, which caused securitization and the insurance structure to collapse. (McConnell, Brue, Flynn, 2012). The moral hazard problem arose. The large firm investors thought they were too big for the government to allow them to fail. They had the incentive to make even more risky investment.
The "subprime crises" was one of the most significant financial events since the Great Depression and definitely left a mark upon the country as we remain upon a steady path towards recovering fully. The financial crisis of 2008, became a defining moment within the infrastructure of the US financial system and its need for restructuring. One of the main moments that alerted the global economy of our declining state was the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and after this the economy began spreading as companies and individuals were struggling to find a way around this crisis. (Murphy, 2008) The US banking sector was first hit with a crisis amongst liquidity and declining world stock markets as well. The subprime mortgage crisis was characterized by a decrease within the housing market due to excessive individuals and corporate debt along with risky lending and borrowing practices. Over time, the market apparently began displaying more weaknesses as the global financial system was being affected. With this being said, this brings into question about who is actually to assume blame for this financial fiasco. It is extremely hard to just assign blame to one individual party as there were many different factors at work here. This paper will analyze how the stakeholders created a financial disaster and did nothing to prevent it as the credit rating agencies created an amount of turmoil due to their unethical decisions and costly mistakes.
All good things must come to and end. In late 2005, the housing bubble burst, and housing began to decline in price. People who refinanced, particularly those who financed with variable interest rates suddenly found their homes were valued at much less. The housing market became flooded with homes for sale, because the homeowners with variable rates and interest only loans could not continue to make their payments. (Greenspan) The rise in the number of homes for sale caused further lowering of home values.
The Wolf of Wall Street produced and directed by Martin Scorsese tells a story of Jordan Belfort, a stockbroker living a luxurious life on Wall Street. Due to greed and corruption, Jordan falls into a life of crime and abusive activities. Belfort made millions of dollars by selling customers “penny stocks” and manipulating the market through his company, Stratton Oakmont, before being convicted of any criminal activity (Solomon, 2013). Jordan reveals behaviours and impulses all humans have, however, on an extreme level. This movie illustrates “why ethics is another tool whose importance cannot be overstated” (Delaney, 2014). Without ethics and morality, individuals can never truly live an honest and happy life.
Individuals like the two young and rambunctious mortgage consultants portrayed in the film gave loans to anyone and everyone that could sign the paper, regardless of the recipient’s ability to pay the loan in full. It is doubtful that all consultants fully understood the ramifications of their actions, but undoubtedly the overall disregard for consequence was the start of the collapse. Mortgage consultants mislead and tricked people into loans they could never afford by playing on their desire to live the American dream. Distributing adjustable rate loans to individuals without jobs, without collateral is unconscionable. Unfortunately, from their perspective they were helping these individuals. In a twisted way, these consultants were acting ethically from a utilitarian point of view. The consultants won because they received utility in the form of a bonus for distributing the loans, and the loanee won because they could now afford the home of their dreams. What the consultants didn’t consider in their calculations were the long term results and utility of their actions, unethically building the flawed foundation of the housing
Wall Street is a movie that exposes corruption and disguises all values, beliefs, and other ethical philosophy. Throughout the movie, Wall Street shows how ethics adapts to a person’s personality by power and wealth alongside honesty and truth. Bud Fox, a young stockbroker is looking for a way to make a name for himself. He is determined to get as many clients as he can to become successful. He later meets a ruthless man named Mr. Gekko where learns how to reach to the top by illegal actions such as insider trading. Bud Fox was an honest living man who had good ethics but was later showed what true power is became money hungry. The power of greed is fascinating the code that everyone lives by is inevitable once money comes into play. There are five types of interpersonal power; reward power, coercive power, legitimate power, referent power, and expert power. These types of power will be used to correspond relationships throughout the movie. In Wall Street we realize how Gordon Gekko uses Bud Fox for his benefit. In this paper I will show the types of powers that are used by Gordon Gekko and how they are used. One clear type of power that Gordon Gekko uses in his relationship with Bud Fox is the Referent power base. This power stands out because it is clear that Bud wants to become a top notch in the industry. Bud is striving to be successful when he exposes what he’s able to do at the meeting with Gordon Gekko he instantly become closer to his goals. There were scenes where Gordon had legitimate power. His knowledge and information was what made him rich. Bud Fox had to listen to what Gordon was telling him in order to become successful. This was an example of Gekko having legitimate power over Bud Fox. Expert power which is an ...
This movie starts off as Jordan Belfort, the main character in the movie, losing his job as a stockbroker in Wall Street. After losing his job, he goes and gets a job in a Long Island brokerage room. In the brokerage room, he sells penny stocks. Thanks to him being aggressive in his selling skills, he was able to make a profit. With the new income, he gives his wife a bracelet and she asked him why doesn’t he go after the people that can afford to lose money, not the middle-class people or lower income people. That is when he gets the idea to get a lot of young people and train them to become the best stock brokers.