The Big Short (2016) springs from the acclaimed book of the same name by Michael Lewis (2011), which tells the story of the 2008 financial crash from the points of view of those very few traders who could see it coming and decided to bet against (short) the “certainty” that there would be no such crash.[i] As you could imagine, Wall Street had no hesitation in taking their money (“free money,” as one character said, working for Goldman Sachs at the time) and soon these intrepid investors were paying millions of dollars in premiums to the gleeful investment banks, while the years rolled by, getting closer and closer to 2007. Then, when the cracks in the financial system began to show and the value of the “insured” financial entities began to fall to zero, Wall Street had to pay out, in turn, to the traders who reaped the rewards of their risks to the tune of hundreds of millions of dollars, while the financial system of the USA finally had to get bailed out by the US taxpayer in the amounts of trillions of dollars.You will have to read the book and see the movie to even begin to understand how it all works and even then, you won’t. No one knows. It’s too complicated. That’s why no one except for a man with Asperger’s, along a few others, could see it coming. So I will not be giving you another layman’s inadequate version of the central financial features that brought the system down: NINJAs, subprime loans, CDO’s, CD swaps, tranches, etc. The movie did an excellent job at that, as did Lewis in his book.
My task here is different. I will not try to understand the text or script in the usual way of subject-centered interpretations applying familiar categories of understanding.[ii] Instead, I found myself participating in what has been called a hermeneutic reversal, in which a meaning implicit in the text became alive, as a subject, and appropriated my understanding to its telos of manifestation. To give you a taste of how a text can serve living meaning in this way, I will tell the story of Jason Elliot in Afghanistan when he visited a shrine, a tomb of Sufi saint.
What appeared from a distance to be the shading within these shapes was in fact a mosaic of angularly stylized Arabic characters, with each character itself composed of tinier tiles. … the mosaics themselves depicted verses from the Qur’an … Something was getting under my skin as my eyes roamed the walls. I had a feeling that this was different from any art I had ever seen. And in that cold, lowering dusk, in that shabby courtyard, where the tile work is a third destroyed, a ray of meaning seemed to leap from the walls. It was as if they had suddenly become articulate and, shedding for a moment their almost formal precision, began to dance and weave with meaning. … This was not the art of decoration but of sacred ciphers, in which the onlooker is invited to participate, not merely stand in awe, and decode the patterns according to his means.[iii]
As I struggled with The Big Short, through the tortured and convoluted financial dealings of the trading world, tripping over the endless acronyms that the bond market invented to obscure its shady bets, a meaning “leaped from the pages,” as Elliott describes. And this is what I want to tell you about. To do so, unfortunately, I have to make an attempt to briefly talk about the financial entity that lies at the bottom of the 2008 catastrophe—a catastrophe that Lewis describes this way:
On Wall Street in 2008 the reality finally over-whelmed perceptions: A crowded theater burned down with a lot of people still in their seats. Every major firm on Wall Street was either bankrupt or fatally intertwined with a bankrupt system. … the International Monetary Fund would put losses on U.S.-originated subprime-related assets at a trillion dollars. One trillion dollars in losses had been created by American financiers, out of whole cloth, and embedded in the American financial system. Each Wall Street firm held some share of those losses, and could do nothing to avoid them. No Wall Street firm would be able to extricate itself, as there were no longer any buyers. It was as if bombs of differing sizes had been placed in virtually every major Western financial institution. The fuses had been lit and could not be extinguished. All that remained was to observe the speed of the spark, and the size of the explosions.
This catastrophe was also called the subprime crisis. Here is my layman’s description. I know a little about it because I was one of the consumers who took out a subprime mortgage loan back in 2001. These loans were typically made to people whose financial status normally disbarred them from owning a home (NINJA—no income, no job). In fact the lenders did not want them to repay the loan. They were drawn in by teaser interest rates (that went up in two years to 12.5%), and told they did not have to make any payments but to simply roll the owed interest payments into an accruing principal balance. This would last for two years until the interest rate jumped and there was no hope of repayments. And so, as a result, the defaults on the loans began to avalanche.
But why did the lenders make such risky loans in the first place? This remarkable lack of restraint in lending has to do with what the lenders did with the loans, once acquired. They sold them to firms such as Goldman Sachs who packaged huge numbers of such almost valueless loans into bonds (CDO’s), with various credit ratings attached to them, that could then be sold to investors.[iv] With this financial instrument in place, the original real-life debts owned by real people became represented as a financial asset which could be further manipulated by the money market, in essence functioning in a very sophisticated betting ring, as the movie demonstrates so well. More instruments (such as CD swaps) were invented to even further distance the financial world from the empirical reality of the growing number of defaulting mortgagees. The ever-increasing abstractions reached such a level of sophistication and complexity that, when the bubble finally burst, no financial expert knew what had happened. The US government even turned to the author Michael Lewis for help:
The story was also “serious,” in the sense that important people felt they needed to know about it. The instant the book was published it brought with it another experience new to me, the interest of politicians. In the space of a few months I was asked to address one large room filled with Republican Congressmen, and another large room filled with Democratic Congressmen. … But Wall Street had grown so complicated that it was virtually impossible for an outsider to understand it without help. After an ordinary financial crisis political leaders typically would turn to the people on Wall Street whom they trusted, for advice and education. After this financial crisis there was no one on Wall Street whom they could trust. The sort of people who had once formed the American financial elite had so discredited themselves that United States Senators no longer believed they were capable of giving honest advice to their country in its time of need. And so the Senators began to read up on the subject for themselves.
As I waded through this financial miasma with the help of author Michael Lewis, the meaning I referred to earlier began to leap out at me, and it is simply this: the entire financial world, the world of money and its machinations, is simply a reflection of a far deeper process that is manifesting in many other walks of life today. It has to do with representational reality!
I will explain.
First, actual people who could not possibly afford to repay any loan were enticed into buying a home (in one case, the movie shows a stripper owning five apartments under this scheme). When subprime loans are bundled together and named as CDOs (collateralized debt obligation), the “reality” status of the original empirical situation undergoes a transformation. Where we had real people buying homes, we now have a subprime loan, i.e. documentation that represents the real situation. When millions of these loans are packaged into bonds then these posited bonds now represent millions of loans whose “individuality” gets completely lost. There was no way for anyone to investigate the status of individual loans that were wrapped up in the CDOs, and therefore it was impossible to rate their financial credit status:
… the scary thing was, my managers didn’t know anything either. I asked these basic questions—like, Why do they own this mortgage bond? Are they just betting on it or is it some part of a larger strategy?” … there was effectively no way for an accountant assigned to audit a giant Wall Street firm to figure out whether it was making money or losing money. They were giant black boxes, whose hidden gears were in constant motion.[v]
The representational nature of mortgage loans (the documentation) and then the bonds (representing the bundled documentations) was lost and a new financial (virtual) reality was posited. These instruments became entities that had a ‘life’ of their own and were treated as having a “thing” nature, no longer understood as representational. This capacity to posit reality belongs to a subject centred consciousness which posits meaning on an otherwise lifeless world:
Where the world becomes picture, beings as a whole are set in place as that for which man is prepared; that which, therefore, he correspondingly intends to bring before him, and, nearby, in a decisive sense, place before him. A being is first and only in being is so far as it is set in place by representing-producing humanity.[vi]
Heidegger is pointing to our modern structure of consciousness in which the human being has become the subject and for whom the world has become a picture for us and only has being as that picture. The picture’s representational character is lost to us. Any aspect of being that cannot be represented scientifically (measured, objectified) simply disappears into oblivion as far as the constructed world picture and its corresponding cultural practices are concerned. This world picture now is the new reality and the financial system is simply one cultural form that arose accordingly. With an increasingly complex array of financial instruments, Wall Street replaced one representation (which had already lost its reference to anything real on the empirical level) with another and proceeded to relate to that representation literally, lifting off empirical reality altogether into the stratosphere of what shall we call it, purely fictional or virtual reality (but not understood as such)?
The underlying meaning of the Crash is this: The global financial system is a cultural form rooted in the human being as subject who posits reality (generating a world picture). This definition of the human being shows that all meaning must come from this subject and be imposed on an otherwise silent and meaningless world. “Descartes” is the symbol that conveys this form of consciousness in much of the literature today but the historical roots that produced the meaning-bearing human subject go deeper than the 16th century.
What happens to human beings who blindly or habitually enact this form of consciousness? Lewis’ book is replete with examples of the human wreckage that is the consequence of such blindness. First and foremost we see that abstracting from ordinary reality and privileging that abstraction as reality, blinds human beings to theirs and others’ humanity.
For example, lets talk about Michael Burry. He is the hero of Lewis’ book, a fund manager suffering from Asperger’s Syndrome, who shunned human companionship. His syndrome enabled him to do what no other trader wanted to do: study the mind-numbing prospectuses of hundreds of mortgage bonds. In so doing his eyes were opened to the fictitious nature of the bonds—they were backed by loans that had no real value (the NINJAs who could not possibly pay the interest on their mortgages). He proceeded to short these bonds (bet against any increase in their value) and in few years made a profit of $750 million for the investors in his fund. You’d think they would be grateful! Here is what happened to Burry at the end of it all:
In 2007 alone Burry had made his investors $750 million—and yet now he had only $600 million under management. His investors’ requests for their money back came in hard and fast. No new investors called—not a single one. Nobody called him to solicit his views of the world, or his predictions for the future, either. So far as he could see, no one even seemed to want to know how he had done what he had done.[vii]
On October 27, Burry wrote to one of his two e-mail friends: “I’m selling off the positions tonight. I think I hit a breaking point. I haven’t eaten today, I’m not sleeping, I’m not talking with my kids, not talking with my wife, I’m broken. Asperger’s has given me some great gifts, but life’s been too hard for too long because of it as well.” On a Friday afternoon in early November, he felt chest pains and went to an emergency room. His blood pressure had spiked. “I felt like I am heading towards a short life,” he wrote. A week later, on November 12, he sent his final letter to investors. “I have been pushed repeatedly to the brink by my own actions, the Fund’s investors, business partners, and even former employees,” he wrote. “I have always been able to pull back and carry on my often overly intense affair with this business. Now, however, I am facing personal matters that have carried me irrefutably over the threshold, and I have come to the sullen realization that I must close down the Fund.” With that, he vanished, leaving a lot of people wondering what had happened.[viii]
The movie is filled with similar examples of people treating one another badly—very badly. It seems that when a world is posited and a world picture generated, which is then treated as reality with its entities having a “thing” status, human beings, along with bonds, are treated merely as part of that increasingly abstract (virtual) reality. The human-ness of human beings drops off into oblivion because our humanity cannot be measured or represented, or abstracted, without losing its essence. Burry goes on to say something remarkable: “The thing is, I haven’t identified what it [the business] kills. But it is something vital that is dead inside of me. I can feel it.”[ix]
The financial system, as a cultural form (maybe the dominant one now), displays the underlying structure of consciousness-world that gives rise to such forms (what I call here the underlying meaning) in the first place. Elsewhere I show that this determining structure has already undergone another transformation, with the consequence that the present stabilized forms of culture are no longer expressive of the new underlying logical structure but instead are maintained through habit only. The financial Crash is expressive of the fact that such cultural forms are no longer supported by the objective psyche (the determining logic or structure of any cultural form) and so must be supported only by habit, human willfulness, and terror. To use a financial term, the human cost, in maintaining a cultural form that Life (the logic of Life) has now left behind, is devastating.[x]
We are now acting against Life and its transformational movements and the moneymen are showing us the human cost. Neither winners nor losers are spared. Interestingly, the cost invariably lies in experiences of our embodied being, that aspect of Life that has nothing to do with any world picture and so is consigned to oblivion. My book, Oblivion of Being, goes into this question and points the way to a new structure of consciousness and its correspondingly new cultural forms. In this book I ask:
A new birth on Earth—now the true world … is bestowed on us as “already happened and unnoticed in language.” But how is this new true world configured? What are its contours? And what kind of human being is able to perceive these contours? How can it be spoken?[xi]
[i] Lewis, M. The Big Short: Inside the Doomsday Machine. NY. Norton, 2010. The Big Short movie (2015).
[ii] This way of understanding is, as Nietzsche says, “to be able to express something old and familiar.”
[iii] Elliott, J. Unexpected Light: Travels in Afghanistan. London. St. Martin’s Press, 2011.
[iv] The story of the corruption in credit ratings companies is a book in itself.
[v] Lewis, M. Op. Cit. 10.
[vi] Heidegger: The Age of the World Picture
[vii] Lewis, M. Op. Cit. 245.
[viii] Ibid. 247.
[ix] Ibid. 225.
[x] I call the new structure: the interpenetration of fictional and empirical reality, although this naming itself does not language the new reality in its own terms. See the foreword of my book, UR-image, available at: https://www.academia.edu/12915773/UR-image_Foreword or at Amazon.
[xi] Oblivion of Being. Available at Amazon.
