"The Big Short" is an unusual screenplay on a couple of counts. Not only the "cut to celebrity cameo to explain boring financial information" trick, but also breaking the fourth wall where characters address the camera directly, and one of the minor characters flips back and forth from participant to narrator.
But we can overlook the pyrotechnics to get at the story structure. It's a three-hander: Michael, Mark and Jamie & Charlie. Who's the protagonist? To my mind, it's clearly Mark. He's the one with the clear flaw at the start of the movie: he cares so much, he's an asshole. The one who has a personal demon and struggles most deeply with the dilemma of making money on the collapse of the economy.
One note. I've organized it according both to standard three-act structure and with Jacob Krueger's Seven-Act Structure. I might not have them exactly right, but then not all movies line up exactly on the right page numbers. Here goes.
ACT I/SEQUENCE 1 - UNLIKELY DISCOVERIES
PAGE 1 Some crucial background on the bonds at the core of this story. The creation of housing bonds/tranches. The original sin.
PAGE 6 MICHAEL BURRY. A flashback to childhood football, when his glass eye popped out. Mike's always felt socially awkward, thinks it's his eye. Another flashback: An adult party: he leaves after a few minutes. He'd rather be crunching numbers.
PAGE 8 MIKE. DOMINANT TRAIT (NORMAL WORLD). A movie character is defined by a dominant trait. Mike's is easy. He plays thrash music and he looks deeply at numbers. Deeply than anyone else. Even the offering lawyers. So he asks a new hire to get him the top 20 selling housing bonds. Every mortgage inside of those bonds.
MIKE/LAWRENCE. DEBATE. LAWRENCE is Mike's antagonist. He like Mike because he's made him a lot of money in the stock market. He's conventional, doesn't have a stomach for the big play. Conflict: Mike announces he's going to short housing. Lawrence tells him to stick to the stock market. Housing has never fallen. It's a sure bet. Anyway, there's no vehicle for shorting housing. Resolution: Mike wins with the declaration he will get banks to create short instruments.
PAGE 14 MIKE. TAKING ACTION. Mike visits banks and buys $1.3M in shorts against housing. Traders party on this easy money.
PAGE 19. MIKE/LAWRENCE. Mike tells Lawrence he made the bets. Lawrence didn't agree to this. He's highly distressed. Doesn't Mike have doubts about such a big contrary bet. Mike: No doubts, but he's nervous.
MIKE'S FLAW: The flaw flows from an excessive Dominant Trait (too much of a good thing.) His deep analysis plus his autism means Mike can't have doubts, and without doubts he doesn't hedge.
PAGE 20. MIKE - FALLOUT. Mike might have total faith in himself but his investors are furious and they have lots of doubts.
PAGE 21. MARK'S FIRST IMAGE: A cell phone on the sidewalk. Mark on the other end. This flashback will eventually make sense.
PAGE 22 MARK BAUM. FIRST IMAGE. Mark barges into his therapy session, interrupts it, then takes a call, leaves. Mark's yelling that he doesn't want "bad money."
DOMINANT TRAIT & FLAW: The content of that call is crucial. It's not just that he's an insensitive asshole; he is. It's this theme of "bad money." Throughout the film, Mark is fighting against the "bad" bankers. He's a good banker. But he's a lousy person. FLAW: But he takes it too far, makes too many enemies, is too angry. At one point Jared will josh to Frontpoint that they're the "world's angriest hedge fund."
PAGE 25 MARK/CYNTHIA. Cynthia WANTS Mark to get on meds. Mark says he's fine, even as he rants about some assholes. He screams he loves his job and then fights with someone over a cab. DENIAL. The scene is intercut with images of a man jumping out a window, the dead body, and and again the cell phone.
PAGE 27. FRONTPOINT. MEET THE TEAM. Quick meet of Kathy (boss), and Frontpoint staff: Vinny, Porter and Danny.
PAGE 29. FRONTPOINT. INCITING INCIDENT. Danny takes a call from a wrong number, JARED VENNETT, about shorting housing bonds. Mark calls Jared in. Jared gives his presentation about CDOs. Mark's mind is blown.
PAGE 35 MARK/FRONTPOINT. DEBATE. The team debates whether this is for real or they're being played. Mark orders the team to investigate these incredible claims. This scene establishes VINNIE as the leader of the FP staff, and an obstacle to Mark's plans but Mark always has the last word. Conflict: Vinnie charges Mark wants it to be true, Mark responds hell, yes, he does.
PAGE 37 JAMIE/CHARLIE. DOMINANT TRAIT: IN OVER THEIR HEADS. We meet them trying to hit on women in a club. The women tell them to fuck off, and they do. Likewise, the next scene shows them showing up for a meeting at Morgan Chase. They're trying to get a trading platform at Morgan. They don't even know the trading minimum and a young kid doesn't let them past the lobby. In other words: Fuck off. The essence of J&C is they don't know enough to know how out of their league they are, whether it's hot women or the big bank. They don't really have a FLAW, they really succeed through this sweet naive desire to make it big.
PAGE 39 J&C. INCITING INCIDENT. In the lobby they discover Vennett's report on shorting the housing market. (But not really.) Just like that they embark on their quest to short housing. But since they can't get a ISDA, they need help.
PAGE 43 J&C. They need to call BEN. A fb shows he's a super-paranoid ex-trader.
ACT II/SEQUENCE 2 - CAN THIS POSSIBLY BE TRUE?
PAGE 45 FP - INVESTIGATION. The team goes to Florida and discovers: a development almost entirely empty; a tenant with kids afraid of being evicted; abandoned home; alligator in a pool.
PAGE 48 MIKE/LAWRENCE. FIRST OBSTACLE. Conflict: Lawrence WANTS his money back. Michael WANTS to keep the fund intact. Resolution: Mike wins because his swaps get washed out if capital drops too low and everyone would lose their money. Locking their money up like that without disclosure is really bad. But Mike knows he's right so he has no compunction about doing a deal to get the swaps.
PAGE 51 MARK. INVESTIGATION. A series of low-conflict scenes mostly about investigating the market. Mark wants to hate these people but they're not evil, they're just doing their jobs. Tour Florida with a real estate agent. She mentions a wee bit of a "gully" but of course it will bounce right back. Mark asks to meet brokers. Black and Maroon (brokers) boast about how they do NINJa loans, etc. They mention their best clients are strippers.
PAGE 56. MARK. INVESTIGATION. Mark interviews the stripper, he just wants to talk but she has to dance. He is shocked to find she has two loans on five houses. He tells her they are all converting to ARMs. She is shocked.
PAGE 58. MARK. COMMITMENT. Mark tells Vinny to purchase 50 million. Vinny makes the call to Jared but demands to know "how you're fucking us."
PAGE 60. J&C. COMMITMENT. They call Ben, get through some paranoia from him. He is impressed with the prospectus, agrees to get them the ISDA, is even willing to fly out to NY.
SEQUENCE 3 - "The game is rigged"
PAGE 63 MARK - FIRST OBSTACLE. Mortgage defaults set record high but CDOs are not moving. Vennett wants a huge new premium payment. AND the risk assessment guys are there. Mark's solution: Tell them to fuck off.
PAGE 67. MIKE - SELF INSIGHT. Fund Value is going down. Wife talking to Michael about son's behavior. He's obviously weird in the same way as Michael. (Asbergers)
PAGE 68. MARK TRIES TO FIX THE PROBLEM. Mark confronting the rating lady. She come cleans and admits they rate to get the banks' business. But is Mark outraged on behalf of the consumers, or because it hurts the short? She call him a hypocrite. His response, as always: Short them.
PAGE 71. J/C. OBSTACLE. They're running into the same issue.Delinquencies went up and the bonds got more expensive. It's rigged! Insight: the system has no idea had to value these things. We should buy more while they're ignorant. But they eed to understand it better. Vegas!
PAGE 72. MARK. He always suspects fraud. Jared says it's stupidity. They too are going to Vegas!
PAGE 74 MIDPOINT - Vegas! At the end of Sequence 3, we're about half way through, and there's a sea-change to the story. For one thing we're changing location. More importantly, the story's gonna get bigger. The first half was about profiting from the CDO swaps; now they're discovering the massiveness of the situation. As for Mark, in the first half, he utterly denies being affected by Paul's death and this comes out in his anger professionally. In the second half he will have to deal with Paul and with they hypocricy of what he's doing.
SEQUENCE 4 - "THESE GUYS ARE IDIOTS!"
PAGE 74. J&C - At the con, Ben schools the boys on some terminology, focuses them on the goal: figure out if these folks know something they don't. He has them set up with a face to face.
MARK - The team sees these folks as 'clowns.' Vennett has set them up with meetings, but remember the idea is to research not advertise the big short. Mark: "We'll be good boys."
PAGE 76. J&C - They're at a shooting range. They keep trying to ask about the biz but the contact says don't talk about work. You're just here so we can expense the ammo. The guy is a dick who calls them Brown hole. J/C: "These guys are morons." Jamie has a contact with the SEC. He will see what she knows.
PAGE 77. MARK - Mark interrupts some presentation. The guy is saying subprimse losses stop at 5%. And Mark interrupts, saying ZERO PERCENT CHANCE they stop at 5%. He's not a good boy. Then in the middle of the response, Mark takes a call and walks out. It's his wife. Just calling to say hi. (Reflection of his opening scene. In that scene he was obliviously insensitive. Here he is intentionally rude. Is that progress?)
PAGE 79. MIKE - Emails of investors pulling out. Mike is a mess. Asks asst to come in early to liquidate assets. "What's going to happen?" "I don't know. The bonds arent going down. The system is fraudulent." He's steadfast, though. He ponders, I guess I could be wrong. I don't know how though. He knows he's right. Later he lets out a scream. This is getting to him.
PAGE 80. J/C - They try to buy more swaps but now they're priced at 5%. They're not giving away the swaps anymore but they still value the bonds high. That sucks, and the Bear guy calls out brown-hole. "Fuck you!" "Calm down."
PAGE 81A. Jamie interviews Evie, the SEC woman. She's here on her own dime, floating resumes. How is that not a conflict? Everyone does it. Hot guy waves at her and she jumps up to flirt. "He's with Goldman." He grabs her and jokes about regulation. They're going to have sex, clearly.
PAGE 82. J/C/Ben discussion. Bear laughs at them, they can't afford the swaps anymore, but AAs are dirt cheap because everyone even Ben thinks they're rock solid. They realize that they're not and BECAUSE of what we just learned about the SEC, no one's regulating what's in them. THIS IS THE THING THEY DID THAT NO ONE ELSE DID - BET ON THE AA'S.
J/C - They make the buys easily and they're dancing in celebration. Ben is pissed and explains 40,000 people die for every unemployment point. They apologize. Ben goes home and waits for it to get bad.
SEQUENCE 5 - ITS WORSE THAN YOU EVER IMAGINED & EXTRAORDINARY MEASURES
PAGE 85 MARK - Interviews Mr. Chau. He's a smug, rich asshole. A CDO manager. He's in bed with Merrill but claims to represent the investors. He explains some new concepts to Mark: A synthetic CDO. These are bets on CDOs. THAT MARKET IS 20X BIGGER than the actual CDO market. As the cameo explains. This is Mark's HOLY SHIT moment. Chau smugly wants to compare dicks (net worth) and Mark calls him an idiot. Tells the team to short everything Chau has touched.
PAGE 92 MARK/CYNTHIA phone call. MARK'S BREAKDOWN SCENE. Mark explains the world is screwed and they will make a lot of money. He brings up his brother. When Paul told Mark his troubles, Mark's first response was to offer money. He feels the shame of that. She tells him: "You like to think you're better than bankers. But you're a banker." She CONNECTS THE TERRIBLE THINGS OF PAUL'S SUICIDE AND THE FINANCIAL CRISIS. You will make a lot of money from the crisis and that's not virtuous. It's just life. You try to pretend that feelings don't exist. You couldnt stop Paul's suicide and you can't stop this. So just feel the pain of it.
[This is the crucial thing. Connecting the personal and the political. Mark feels guilt for both terrible things happening. And his powerlessness at stopping them. Really, guilt for his inadequate attempts at stopping either. I think he gets off easy here. He's committed to the bet now, can't get out of it, but the RIGHT THING to do is to try to save the economy.]
PAGE 95 MIKE - His son is diagnosed with Asperger's. Mike recognizes the symptoms in himself. A med colleague tells him how obviously he has Aspergers.
PAGE 96 MIKE - DOUBLING DOWN. Sends email to investors, freezing their funds! Phones ring, email blows up, and Lawrence announces he's suing.
SEQUENCE 6 - CRASH
PAGE 98 J&C - On the TV, second biggest mortgage lender in default.
FRONTPOINT - TV: CDOs holding value; Kathy wants FP to sell shorts to Morgan; the banks need the shorts. The banks THEMSELVES held the long position. Mark: We're not selling: *Morgan can go down.*
PAGE 100 J&C - Email from Bear. They realize the banks are selling what they now know are worthless CDOs: that's fraud, the SEC the rating agencies don't care. We need to go the press.
PAGE 101 J&C - Mtg with CASEY, WSJ reporter. They explain the fraud. Casey declines to mess up his relationships. He has a wife and kids. They're shocked. Every institution COULD do something and is doing nothing.
J&C - A horrible thought. Bear is freezing value. They are exposed. J&C are exposed to Bear. Bear can't go down, it's been around forever.
PAGE 103 MIKE - Sure enough, Bear liquidates. Cut to July: handing over files on Lawrence's lawsuit.
MIKE - Calls with the banks. They want to "accurately" mark the swaps. He busts their fraud. They have nothing to say.
MARK/TEAM - The market's turned. Countrywide goes down. The banks are desparate to buy swaps.
MARK/KATHY - She tries to say everything's fine when it's obviously not. He demands honesty. Guesses $3-4B in losses. The truth? more like $15B. Mark: What are you doing to stop a run? She's terrified.
ACT III/SEQUENCE 7 - SELLOFF
PAGE 109 MARK/VINNY - Morgan could go down. Vinny: We should get out at 1/3 value or risk going broke. Mark refuses. We should short the banks themselves. I SAY WHEN WE SELL.
J/C - They are desparate to sell before Bear goes down. Dont know how to sell. Ben has to do it. He's on vaca somewhere in England.
MIKE - Starts to sell off, disappointed.
PAGE 112 Ben in a pub in England works a phone and computer. Manages to sell $200m for $80m. They say they're out but they gotta short Bear.
PAGE 114 MARK v Bullish Man - It's a fin conf. Bullish Man says he's not worried but everyone's phone is going off, Bear stock is plumetting. Mark: I thought we were better than this, and I'm sad we're not. The crowd heads to the lobby!
PAGE 118 J&C - Lehman employees being escorted out of building. J&C want to get in. Someone gives them a badge.
FRONTPOINT - Vinny trying to get Mark: we have to sell now! Danny panicked. Can't get a read. Mark's not answering. Danny's having a heart attack. Call 911.
J&C - Upstairs, it's abandoned. What'd you think we'd fine? The grownups.
FRONTPOINT - Danny didn't have a heart attack. Porter invites him to dinner. (Running joke about Danny wanting to eat.)
PAGE 120 MARK/VINNY - phone call. We have to sell. Mark blankly, yeah ...
PAGE 121 MIKE - Making money's not like I thought. It kills the part of life that's essential. Montage of the damage to people. Mike shuts down the fund. +489%. Jared's check: $47M.
PAGE 124 MARK/VINNY - There will be a bailout. The banks never cared. The taxpayers had to bail them out.
PAGE 125 JARED'S FANTASY - Heads rolled. Justice was meted out. Just kidding. Only one banker actually went to jail.
PAGE 126 MARK/VINNY. Mark: If we sell, we're just like them. No, we didn't do this, but we get to kick them. OK SELL IT ALL.
Text epilogue. Jamie/Ben still in biz. Charlie moved away. Mark became gracious and gave money to a charity. Mike couldn't interest the govt in his story. Trades in water. The banks: They're still selling CDOs.
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