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From The Socialist newspaper, 3 February 2016

Film review

Witty take on credit crunch misses problems at heart of capitalism

Pete Watson

'The Big Short' is a story about the 2008 world economic crash. You won't find the unemployed or the homeless in it. But what you will see is the fraud, corruption and greed of finance capital at its worst.

The film is entertaining and witty as it seeks to explain the deliberately obscure world of high finance. Much of its humour comes from the eccentricities of its main characters.

It is difficult, however, to sympathise with individuals who made millions of dollars from a crash which led to misery for billions of workers.

The plot follows the true story of three groups of US banking "outsiders" who could see the financial system was about to crash.

Lenders had been selling mortgages to US workers who they knew could not afford long-term repayments.

They hid this 'sub-prime' debt in packages called collateralised debt obligations (CDOs) for sale on the finance markets.

They even invented the 'synthetic' CDO, which made money by betting the CDO market would continue to make a profit.

The Big Short nicely sums this up with a scene at a Vegas gambling table. The protagonists aimed to make a fortune by betting CDOs would fall in value - known as short selling.

The trillion-dollar CDO market was - as Marx would describe it - fictitious capital. (This bit isn't in the film!)

Real capital is based on workers making products and running services. Capitalists only pay back part of the value workers create as wages - keeping the rest as profit.

Fictitious capital is money expanding itself through 'speculation' - betting on real wealth - or speculation on speculation. As the economic upturn turned into its opposite, this great credit swindle was found out.

The outsiders tried to warn the financial establishment that CDOs were about to crash. What they found was a gravy train of financiers, 'regulators', mortgage brokers and credit assessors - whose interests were to cover up the truth.

Big institutions like Lehman Brothers and Bear Stearns crashed, but the taxpayer bailed out the system. In the USA alone, nearly nine million people have lost their jobs and around seven million their homes since the credit crunch.

"Only kidding!"

The film went on to say that, of course in the years after 2008, the state prosecuted hundreds of brokers, broke up the banks, and strengthened regulation... It then delivers the punchline: "Only kidding!" In fact, only one minor banker faced prosecution.

In 2015, US banks started to market CDO-like packages once again. Capitalist competition requires this endless quest for ever riskier, ever more short-term profits.

The Socialist Party calls for public ownership of the finance sector, to plan resources for social need instead of gambling to enrich the 1%.

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In The Socialist 3 February 2016:

Socialist Party news and analysis

Solidarity with health workers

Tax the 1%

Bedroom Tax ruling: The fight to scrap it must continue

Air pollution destroys more lives and homes

Conservatives have no interest in collecting corporation taxes

Them & Us

Readers' comments and reviews

Private renting: Unfit homes and couch surfing

Witty take on credit crunch misses problems at heart of capitalism

Arrested 'Heathrow 13' climate activist speaks


Socialist Party reports and campaigns

Fight to save Huddersfield A&E

Angry south Londoners march against the housing bill

Newham Labour disunited against austerity

Councillor suspended after cuts query: activists seek joint work

Wakefield tells big business to frack-off!

Celebrating the revolutionary life of Robert Burns

Fighting to save the last two play centres

Socialist Party features

World economy heading into a storm

Zika virus: Another healthcare system failure

Workplace news

Fight to save 1,550 finance jobs in Surrey

Tories axe 310 jobs in Northern powerhouse

London Transport workers braced for huge cuts in spending

Tories are taking London taxi drivers for a ride

Crane drivers' strike for pay rise

Tesco slashes pay for thousands of workers

Workplace news in brief

International socialist news and analysis

Japan: The failure of 'Abenomics'

CWI world congress success


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