I suppose it should go without saying that if The Big Short starring Steve Carell and Ryan Gosling amongst others is a must see movie, the book should be must read material as well. The 2010 best selling book written by Bay Area author Michael Lewis follows up where his book Liar's Poker seems to leave off... focusing on the little understood mortgage backed securities market and telling the story we should know by now: how Wall Street scammed investors and left taxpayers footing the bill.
I loved the honesty of this movie and quite frankly, I'm surprised by it. I'm surprised a movie studio actually made a mainstream movie with some of Hollywood's brightest stars (hello to Brad Pitt as well) that exposes just how fraudulent the entire financial system is and although the movie is played for some laughs, the director does a poignant job of showing the dark side of the scam: 9 million jobs lost, 6 million removed from their homes, etc.
Among the many highlights is the understated Vegas pool scene where a SEC employee is chasing after a job on Wall Street and later is seen kissing a Wall Street yuppie goodbye outside the hotel the following morning. Clearly, it's a nod to the SEC literally getting in bed with Wall Street.
Another favorite scene involves a Selena Gomez cameo where she's talking to the audience (you and me) and explaining synthetic CDO's while playing and using black jack as the metaphor. It's all simply explained to make you furious if it weren't so well told and humorous at the same time. (By the way, nice nod to the Golden State Warriors with the guy in this scene wearing Klay Thompson's #11 Slate Jersey which debuted only last season... oops.)
The scariest thing about this movie is that it tells the ugly, naked truth about Wall Street and the financial system that we all rely on. Basically, our system as we know it is so fundamentally flawed and fraudulent that the masses don't know any different, and perhaps worse, they have no idea what to do about it.
Ultimately, the financial meltdown takes place in 2007 and the movie closes with this: what happened then should be a wake up call to everyone right now. The system wasn't fixed and no one was held accountable. In fact, the problems that created the problems are even worse now than they were before.
And this time it's not just mortgage back securities and propped up stock and housing markets that have me worried. Since the last financial crisis, the global economy has added another 50 trillion dollars to our colossal pile of debt. Add the fact that that all the too big too fail banks have grown
even larger and, scarier thought, each of them have trillions of dollars in derivatives that
are hanging out there like a nuclear financial bomb capable of wiping
out everyone's bank account and portfolio. That means this fragile economy and its celebrated phony recovery is far more vulnerable to a crisis than we were the last time around. And what's being done about it?
So it got me thinking: How can one bet against the entire financial system? And then the answer came to me... keep doing what I do and recommend to my clients. Continue to buy and own physical gold and silver and keep cash parked with financial institutions that are legally required to maintain 100% reserves: life insurance companies via dividend paying Whole Life insurance contracts (via the Infinite Banking or 770/702 Account strategy-- all the same strategy, just different marketing).
And where possible, absolutely stay out of debt. Don't go buying houses in markets that are clearly being propped up by malinvestment. Buy other real assets that can generate profits even in a deep recession, like businesses with a solid track record.
Doing these things is the safest bet you can make and you'll sleep well at night. You won't get stupid rich over night like those that bet against the housing market in The Big Short, but you also won't be like the rest of the masses who lose their life savings because they failed to see what should be so obvious if you watch this movie.
Do yourself a favor and go see it. Then do something about your financial future. Go to www.CashValueBanking.com, watch the videos and schedule an introductory telephone appointment by clicking here.
Happy New Year!