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04/15/2024

“A cautionary tale about the excess seen in financial markets”

Professor Fendel introduces The Big Short at Doing Value film screenings in Koblenz

New York City in 2005. The dollar is shockingly powerful. The economy is flying high. But the housing bubble looming over the country is about to burst. The Big Short, a 2015 film from director Adam McKay, tells the story of the “Great Recession,” the global financial crisis that characterized 2007/8. It is also the film that Professor Ralf Fendel, who heads the Chair for Monetary Economics at WHU – Otto Beisheim School of Management, chose to present and discuss at Doing Value, a series of film screenings hosted by the Koblenz Kino Center Odeon Apollo.

Based on the non-fiction book of the same name written by financial market expert Michael Lewis, The Big Short attempts to show that “value,” as a concept, is a living phenomenon. That our culture is fickle in determining what it considers valuable (or, by the same token, worthless)—whether it be paintings, the iPhone, democracy, or real estate. All of the films chosen for these screenings focus on the nature of appreciation, depreciation, and the lending of status.

“The Big Short makes clear how (book) value works in financial markets and how a combination of speculative trading and continually increasing values only leads to so-called ‘bubbles,’” said Professor Fendel, introducing the film at the theater. From his standpoint, the film also shows how these values plummet the second the bubble bursts and how the very real and, at times, severe damage caused can also affect innocent bystanders—as can happen when a global economy marches toward financial crisis. It also unmasks those who benefit economically when values collapse, “in particular, those who engage in speculative trading, because they believe they understand what something’s true fundamental value is and position themselves accordingly. That is, they ‘sell short,’ which is where the film gets its name.”

To Professor Fendel, the film is a highly realistic depiction of financial market cycles and a success for the director, who managed to take rather dry subject matter and spin it into a film interesting to the general public. It is a “wonderful cautionary tale about the unfortunately very real and excessive greed and hubris seen in financial markets,” he said. 

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