Am I stupid for not understand the explanations of robbie, Bourdain etc?
the movie lasts 2 hours ten, and for me took three fking hours ´cause I had to stop and rewind every time I loose it. Good movie tho
shareThe Robbie and Bourdain explanations were overly simplified metaphors. They were meant to brush past the complexities of financial instruments and simply get to the plot point that the film is trying to convey. Simply put, Robbie doesn't explain what a Sub-prime mortgage is and why it is worthless, she just tells you that it is worthless. Likewise, Bourdain doesn't really explain a CDO. He just tells you how they became worthless once banks began using them as dumping grounds for low rated bonds they couldn't otherwise sell.
shareIt's amazing how stupid Hollywood thinks the average American is. They did the same thing in wolf of Wall Street, just waxing over what Jordan Beaufort did and say "it's really complicated, but it's illegal" rather than just explain how it was a simple pump and dump strategy.
Then again the average American bought a ARM that had no caps on its variable rate which lead to the bubble and collapse. So maybe saying "sub prime mortgages are *beep* is as intense as they could go for as an explanation without losing the average viewer
>Robbie doesn't explain what a Sub-prime mortgage is and why it is worthless
I have the DVD here still, so I scrolled around til I found her at 14:10.
She explains that the bonds were made up of mortgages - of people with good enough jobs to afford them. But the banks made profits on selling these bonds, and wanted MORE. So they started filling them with bad loans. I guess everyone knows what a bad loan is - one that's going to default. Seems pretty clear to me!
Guess it's a whole nother story why those happened. Like later in the film, the stripper with five houses and a condo that she couldn't afford, and hoping to keep it going by refinancing - basically a pyramid scheme with herself! No checking of income, as the two laughing boneheads explained before they lost their dumb loan-approving jobs and ended up at the job fair at the end.
Loans were given to people with bad credit scores, people who are bad at financial things. They got in way over their heads because of greed and no savvy, on top of the basic desire to have a home. I remember I got a mortgage in the early 00's and I was pushed to get as much as I could possibly afford. A lot of people do that because "real estate always goes up." I instead got what I need and what I could best afford. So I could afford if my variable rate went crazy. A lot of people didn't think about it and were quickly in over their head.
Bourdain's explanation a bit later is more of an analogy. Does he really make soup with old fish?? Three days old, really? Wow. I can see using scraps or what didn't sell that day, as long as they are still good and fresh. But it can still be good soup, either way. Unlike the CDOs.
I preferred Baum's explanation of it right after that clip. "Mortgage bonds are dog$hit and CDOS are dog$hit wrapped in cat$hit (IE, the worst of the unwanted dog$hit repackaged to make it even $hittier.)