The big long blog on The Big Short

The global financial crisis was a caused by several intricate, complex and interconnected factors. Many people believe these issues to be either too complicated or too boring to try and comprehend. However, there are dedicated communicators who have sought to convey the economic crash in a tangible and informative way that appeals to broad audiences. When exploring how these people approach their task of informing various publics about financial matters, it is important understand that both the professionals and the communicators working in the field must adhere to a very simple, yet profound principle; transparency.

Throughout and beyond the global financial crisis, the economic world has frequently been riddled with misconduct. However, time and time again, those who seek to cheat the system are continually caught out, often watching their empires crumble beneath them. This high standard of integrity is also imposed on those in communicative roles. Attempting to share difficult concepts commonly requires the simplification of the relevant information, however it is vital to ensure that the message is always open, honest and complete. This not only benefits the audience, but also follows the best interests of those inside the organisation. With not only incomprehensible amounts of money at stake, this close relationship between finance and communications has to be balanced appropriately.

There are many various ways that finance is communicated. One of the most prominent avenues is through entertainment media. Numerous movies and documentaries have followed economic storylines, with many being based around reality. These films often focus on times of crisis or scandal, as they create compelling plots, and it’s interesting to note how the directors of these works frame the issues. People naturally crave narrative. A neat beginning and end, with complications, and satisfying resolutions. “Essentially, stories do more than simply organize events; they impose an interpretive structure on events that is designed to satisfy these criteria – namely, elucidating a structure of purposiveness, justifying one’s questionable actions, maintaining a belief in one’s efficacy, and bolstering self-worth.” (Baumeister & Newman 1994, p. 688). These films do not end unresolved. They follow the characters’ lives either highlighting the rise of the righteous, or the demise of those who ‘cheat’.

A recent film, ‘The Big Short’, seeks to portray the juxtaposition of this simultaneous rise and fall. It follows a group of investment bankers, as they realise the nature of the hidden, but imminent housing market collapse.

Based on the true stories from Michael Lewis’ book of the same name, the obscure dramatic comedy tackles some technical financial concepts, yet director Adam McKay handled the risks associated with such a technicality-rich project and “makes this story completely accessible to everybody. You don’t have to be an expert in economics”. Instead of simply wading through the dull details, on several occasions, the movie acknowledges these complexities, brakes the fourth wall, and inserts high-profile cameos to avoid losing the audience’s attention. These cutaways make it clear that direct messages are an effective, yet undervalued tool in financial communication. They enable the audience to be included, despite the quick pace of jargon-filled scenes in the film. “Mortgage-backed securities, sub-prime loans, tranches, it’s pretty confusing, right? Does it make you feel bored, or stupid? Well, it’s supposed to. Wall Street loves to use confusing terms to make you think only they can do what they do. Or even better, for you just to leave them the fuck alone. So, here’s Margot Robbie in a bubble bath to explain.” (The Big Short 2015).

However, the real difficulty of the movie was not conveying the theory of banking. McKay wanted to push well beyond that. The Big Short is a movie which greatly challenges the audience to consider the fraudulent greed of America’s big bankers, while reflecting on the events of the largest economic collapse since the great depression “which have arguably never been properly processed despite their corrosive effects on our politics and culture and psychology. And that ultimately this experience will lead to some kind of reckoning that causes us to face uncomfortable truths about responsibility and financial capitalism and our entire way of life.” (Pressler 2015).

There are, conversely, some criticisms of the film. Simplifying such complex situations leaves gaps for information that some regard as important, or necessary to include. The film focusses the blame of the collapse mainly on the private sector, while skipping over the effect that years of previous government fiscal policy had across many international sectors. Unfortunately, there is “only so much you can do” in a two-hour movie, McKay says. “I’d love it if this movie gave a kick in the pants to the conversation about the economy and finance, the collapse, and regulation, and made people a little less intimidated by the subject.” (Ip 2015). Ultimately, the key point that the entire movie drives home can be summarised by one line delivered by Steve Carell’s character Mark Baum “Fraud has never ever worked. Eventually things go south. When the hell did we forget all that?” 

Beyond the cinematic world, there is a realm of pseudo-financial entertainment television, where investment pundit juggernauts battle for viewership, ratings and advertisement deals. One of the most prominent shows of this description is Jim Cramer’s ‘Mad Money’. The hour-long nightly program, which has been running since 2005, features the eccentric host’s daily market recommendations, accompanied with sound effects, props and boisterous rants. While this very direct and straight forward framing of the stock market is clearly attractive, consistently drawing in more than 300,000 viewers each night, many criticise its oversimplification, deeming it as nothing more than a guilty pleasure for those in the industry, targeting the naïve laymen outsiders (Karniouchina, Moore & Cooney 2009, p. 245).

Although this show in particular is aimed at those with little to no actual financial knowledge, the investments that are featured do tend to show some positive growth when given ‘buy’ recommendations. This show can even be examined similarly to marketing and advertising campaigns, with “traditional advertising variables, such as message length, information clutter, and source credibility, influencing the size of the market reaction.” (Karniouchina, Moore & Cooney 2009, p. 244).

Since the early 1970s, there has been an increased focus on financial journalism as a discipline. Prior to this, the prominent view was that “Finance has always had its own, specialised culture. A world of ‘long-established firms…personal relationships built on trust’ and exuding ‘solidity, permanence and discreet luxury’, it was not a part of everyone’s every day and it was not assumed many people – beyond those already ‘in the know’ – would be interested in it.” (Greenfield, Williams & Beadnell 2003). Although the economic world has become more accessible in this time, decades later, the underlying theme still remain, as demonstrated in ‘The Big Short’. This growth in commercial reporting, despite never fully penetrating into our daily lives, has generated a sustained and immense response from markets of varying scale.

While large audiences are attracted to the projects of major networks and high-budget cinematography, the impact of small, local media on financial markets is often overlooked. In their study, Engelberg & Parsons (2011) find that seemingly insignificant factors, such as the lack of distribution of a local newspaper, caused by adverse weather conditions, or the time zone that a city is in can effect and disrupt trading patterns. On a larger scale, global markets can be categorised into two groups, developed and emerging markets. Although news media in developed economies is far more saturated, with countless reports featuring daily, the response from investors indicates that this information is far more valued than the stories presented in the emerging economies. “This is surprising given that with less news coverage, one might think that emerging market news events should be particularly important.” (Griffin, Hirschey & Kelly 2011, p. 3988). This is shown by Griffin, Hirschey & Kelly (2011) to be mainly a result of the prevalence of illegal insider trading and the low quality of reporting conducted in these emerging markets. Exploring the subtle psychology behind investment decisions reinforces this notion that following a practice of direct, clear and transparent communication should always be preferred in this field, as “financial markets may be less about the actuality of economic facts than about how information is perceived and interpreted by market participants.” (Oberlechner & Hocking 2004, p. 422). As mentioned in Oberlechner & Hocking’s article, technological advances continue to drive the speed and breadth of commercial reporting, and this has caused market participants to look further into the future for their competitive edge, relying more and more on the speculation and rumours perpetuated by the business media.

While it’s clear that these journalists do have an impact on their audiences, and in turn the financial markets, the most significant issue becomes their burden of responsibility; especially when reporting in times of crisis. In the period following the 2008 global financial crisis, there has been focussed questioning of whether they were adequately acting as a watchdog for consumer interests. For example, in a radio interview, Richard Aedy (2008) asks “Why did this happen? Why wasn’t the real digging taking on the powerful institutions at the time when they were behaving most egregiously? Why wasn’t that happening? Because that’s the stuff that people get into journalism to do, surely?” Unfortunately, there were three significant factors which underscored this inability to serve the public. Government deregulation in the financial sector meant that journalists lacked the supportive legal backing to challenge big banks. Secondly, the struggling media climate meant that journalists were lacking confidence and a sense of aggression. Leading up to 2008, The Wall Street Journal alone had undergone four rounds of worker lay-offs. This resulted in what Dean Starkman describes as the decisive factor; journalists had a heightened aversion to risk throughout their reporting (Aedy 2008). “Interviews with financial journalists reveal a practice whereby journalists [were] too close to their business and finance sources. They [saw] their role as informing them, rather than informing and educating the public in a watchdog role.” (Knowles, Phillips & Lidberg 2014, p. 59). This has shown how the role of financial journalism as a watchdog for the general public was and is diminishing (Knowles 2013, p.346)

As argued by Clark, Thrift & Tickell (2004), finance reporting has transformed into a media event that is now regarded as a ‘performance’. It is difficult, then, to distinguish an appropriate level of professionalism and expertise in this context. While influential reporters such as Jim Cramer are rightly seen as knowledgeable personalities, it can be difficult to determine the extent of understanding to which all journalists in the field should be held accountable. It is also challenging for these figures to find the critical balance between simplification and pandering to an audience. Jon Stewart challenges Jim Cramer on this issue saying “I can’t reconcile the brilliance and knowledge that you have of the intricacies of the market, with the crazy bullshit I see you do every night.” Cramer himself concedes “There’s a market for it, and you give it to them.” Unfortunately, when journalists make mistakes in this field, whether intentional or not, they can be “disingenuous at best, and criminal at worst.”

After the global financial crisis, it was not only the economy that took a major hit. The financial communications industry was exposed as being thoroughly lacking, disreputable, and at times, arguably criminal. For journalists, among other economic communicators, it is essential to reflect on the widespread mistakes of the recent past, in order to progress towards a consistently valuable and trusted source of much-needed information. As shown throughout these examples, the most reliable way to ensure a message is communicated effectively, is to strive for transparency. This necessity applies to any and all audiences within the field, whether they are comprised of naïve laymen, or seasoned investment experts. While this may involve leaving some elements of a story out, in order to simplify the concepts, nothing should ever be actively hidden. Many of the principles that guide successful financial practices are directly applicable to communicating the complexities of the economic system, and this correlation between disciplines serves a fundamental aspect of business culture.



And with that, “I am going to try to find moral redemption, at the roulette table.”




Aedy, R 2012, The responsibility of finance reporters – a case study of the origins of the GFC, ABC Radio National, viewed 4 May 2016, <;.

Baumeister, RF, Newman, LS 1994, ‘How stories Make Sense of Personal Experiences: Motives that Shape Autobiographical Narratives’, Personality and Social Psychology Bulletin, vol. 20, no. 6, pp. 676-690.

Clark, G, Thrift, N & Tickell, A 2004, ‘Performing Finance: The Industry, the Media and Its Image’, Review of International Political Economy, vol. 11, no. 2, pp. 289-310.

Engelberg J, & Parsons, C, 2011, ‘The Causal Impact of Media in Financial Markets’, The Journal of Finance, vol. 66, no. 1, pp. 67-97.

Greenfield, C, Williams, P & Beadnell, C 2003, ‘The Rise and Rise of Journalism Pertaining to Finance’, in Australian Media Traditions Conference, RMIT Publishing, Melbourne, 13-14 November, viewed 4 May 2016, <;dn=818849647850495;res=IELHSS&gt;.

Griffin J, Hirschey, N & Kelly, P 2011, ‘How Important Is the Financial Media in Global Markets?’, The Review of Financial Studies, vol. 24, no. 12, pp. 3941-3992.

Ip, G 2015, What the ‘Big Short’ Movie Gets Right—and Wrong—About the Financial Crisis, Wall Street Journal, viewed 15 April 2016, <;.

Karniouchina, E, Moore, W & Cooney, K 2009, ‘Impact of Mad Money Stock Recommendations: Merging Financial and Marketing Perspectives’, Journal of Marketing, vol. 73, no. 6, pp. 244-266.

Knowles, S 2013, ‘Financial Journalism through Financial Crises: The Reporting of Three Boom and Bust Periods’, PhD thesis, Murdoch University, Perth.

Knowles, S, Phillips, G, Lidberg, J 2013, ‘The framing of the global financial crisis 2005-2008: A cross-country comparison of the US, UK and Australia’, Australian Journalism Review, vol. 35, no. 2, pp. 59-72.

Oberlechner, T & Hocking, S 2004, ‘Information sources, news, and rumors in financial markets: Insights into the foreign exchange market’, Journal of Economic Psychology, vol. 23, no. 3, pp. 407-424.

Pressler, J 2015, The Ultimate Feel-Furious Movie About Wall Street, Vulture, viewed 18 May 2016, <;.

Tetlock, P 2007, ‘Giving Content to Investor Sentiment: The Role of Media in the Stock Market’, The Journal of Finance, vol. 62, no. 3, pp. 1139–1168.

The Big Short 2015, film, Paramount Pictures, Hollywood CA, directed by Adam McKay.



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