And why do they agree to this? Because you pay them. Another party agrees to pay out if something bad happens and your product loses its value. ItвЂ™s possible to transfer the risk surrounding what you hold to someone else - you just have to pay them for taking it on. If you can predict a risky product with fail, then you can make big profits from that prediction. It was around this point that hedge fund manager Michael Burry (Christian Bale) realized that the housing market was overvalued, with much of it based on risky mortgages. These products were so complex that it was difficult to know how risky they were, but because the US housing market was always a safe bet, their use grew and grew until the CDO market was worth $226bn in 2006. A bank doesnвЂ™t mind taking on the debt if they know that it will get paid back regularly over the term of the loan вЂ“ and of course theyвЂ™ll make some money from the interest.Д«ut the kind of risky mortgages being arranged in the US seemed like unattractive investments, so instead selling individual loans, banks would group mortgages of all different risk levels together, and sell them in slices as a brand-new product called a Collateralized Debt Obligation (CDO). These mortgage loans were sold and traded between financial institutions. This attitude saw mortgage lenders offering riskier and riskier loans to people whoвЂ™d only be able to make payments if the price of their house continued to increase. In the US, many people had come to assume that house prices would always rise, because theyвЂ™d risen without fail for many years. We also usually hope that the value of the house we buy will go up not down. Most of us when buying a house take out a loan (mortgage) and pay back the purchase price over time.

By doing this investors can make money out of products losing value, as well as gaining value, and successes can be made from the failure of others. How did they do this?Д®ssentially, they bet that the US housing market would crash, using a process known as вЂshortingвЂ™. First published in 2010, the book tells the story of the mounting problems in the US housing and mortgage markets that preceded the crash, and the select few people who not only saw it coming, but managed to turn that prediction into big profits for themselves. Michael Lewis was a bond salesman on Wall Street before he became a writer, and his insight and experience enabled him to pen one of the most essential accounts of the 2007-2010 financial crisis, called The Big Short: Inside the Doomsday Machine. His previous book Moneyball: The Art of Winning an Unfair Game, which was ostensibly about baseball statistics, may not have made for the greatest elevator pitch, but the film adaptation, also starring Brad Pitt, was nominated for six Oscars and took over $100m at the box office, proving that stats can make for compelling drama. The Big Short was written by financial journalist Michael Lewis. But in recent years, cinema has provided a useful window into a world that remains mysterious to many, despite the effect it has on all our lives. YouвЂ™ll probably never see The Rock playing the Chancellor of the Exchequer.

The financial crisis, and finance in general, arenвЂ™t the usual fare of blockbuster movies. But what exactly was the вЂBig ShortвЂ™, and what did it mean for the global economy? A film about finance! WhoвЂ™s going to watch that? Starring Christian Bale, Steve Carrell, Ryan Gosling and Brad Pitt, The Big Short (2016) tells the story of the 2008 financial crash and the men that made big money betting that things would go wrong.

The big short characters