the

The Big Short - "Jenga" Clip (2015) - Paramount Pictures

hi how are you hey mr. Bennet did we

have let's see what you got you smell

that what is that what what sets no the

Cologne no opportunity no honey I smell

money okay Chris this is your basic

mortgage bond all right the originals

were simple they were just thousands of

Triple A mortgages bundled together

guaranteed by the US government the

modern ones are different they're

private and they're made up of layers of

tranches the highest level triple A's

getting paid first the lowest rated B's

getting paid last taking on defaults

first now obviously if you're buying B's

you can make more money but they're a

little risky sometimes they fail Chris

somewhere along the line these bees and

double bees went from a little risky to

dog where's the trash I'm talking

rock-bottom FICO scores no income

verification adjustable rates dog

the default rates are already up from 1

to 4 percent fellas and if they rise to

8 percent and they will a lot of these

triple B's are going to zero - and that

you're to close is an opportunity okay

you're saying that at 8% the bonds fail

and we are already at 4% that's right if

they go to 8 it's Armageddon yeah that's

right how come nobody's talking about

this you're completely sure of the math

look at him that's Mike want your what

my quantitative my math specialist look

at him you notice anything different

about him look at his face

that's pretty racist look at his eyes

I'll give you a hint his name's yang

he won a national math competition in

China he doesn't even speak English

yeah I'm sure of the math actually my

name's Jung and I do speak English Jared

likes to say don't because he thinks it

makes me seem more authentic and I got

second in that national math competition

so you're offering us a chance to short

this pile of blocks how with something

called a credit default swap it's like

insurance on the bond and if it goes

bust you can make ten to one even twenty

to one return and it's already slowly

going bust 10 to 121 no way and no one's

paying attention no one is paying

attention because the banks are too busy

getting paid obscene fees to sell these

bonds but wait you are the bank where

you work for the bank I bet your margins

are pretty nice and fat let's not talk

about my margins by the way being nice

and fat that's a nice shirt do they make

it for men aren't you the bank guy work

for the bank I don't think like a bank

big banks small bank I like to make

money all right let me put it this way

I'm standing in front of a burning house

and I'm offering you fire insurance on

it

Heys 0b0 double b's zero triple B's zero

and then that happens what is that

that's America's housing market