Jared Vennett is a fictional character in the movie The Big Short (2015), based on the story of the financial crisis that happened in 2007-2008. Jared Vennett’s role is played by Canadian actor Ryan Gosling and is based on a real-life person named Greg Lippmann, who worked as a trader for Deutsche Bank. Jared Vennett was one of the few people who realized that the U.S. housing market was on the verge of collapse and who knew how to make profits from it.
Let’s read how he predicted the financial crisis and what he said about making profits.
Who Is Jared Vennett?
In The Big Short, Jared Vennett’s character is shown as a smart and confident bond trader. He works at an investment bank, and his job is to sell financial products to investors. Vennett was found to be extraordinaire because he realized what very few people noticed: the housing market was under major stress.
Most people believed that buying homes was a safe investment and thought the housing market would always increase in value, making it a reliable investment method. However, Vennett believed that many of the loans given to people to buy homes were risky. These loans, called “subprime mortgages,” were given to people who couldn’t afford them, which would cause problems down the line.
What Was The Subprime Mortgage Crisis?
The subprime mortgage crisis was the main cause of the financial meltdown in 2007-2008. Subprime mortgages are home loans given to people with poor credit scores or low income. Banks and other lenders made it easy for people to borrow money, even though they might not be able to repay it. The idea was that housing prices would keep rising, so if someone couldn’t pay their loan, they could always sell their house at a higher price.
Banks took these risky home loans and bundled them into bonds, which they sold to investors as safe investments. Having a different opinion, Jared Vennett stated that this was a disaster waiting to happen. When people could no longer afford to pay their mortgages, the whole system would fall apart, leading to a collapse of the housing market.
Vennett’s Idea: Betting Against The Housing Market
Jared Vennett presents the idea to bet against the housing market on the basis of his realization that the subprime mortgages will fail, and when they do, the housing market will crash. Instead of investing in the housing market, Vennett sees an opportunity to make money by betting that the market will go down. This is known as “shorting” the market.
To explain his idea, Vennett approaches investors and presents them with a financial product called “credit default swaps.” These swaps are like insurance policies—if the housing market crashes, the people who own the swaps will get paid a lot of money.
However, most people thought Vennett was crazy because the housing market was seen as rock-solid. But Vennett was confident in his prediction and convinced some smart investors to take the risk and place their bets.
How Did Jared Vennett Convince Others?
One of the most famous scenes in The Big Short is when Jared Vennett uses a simple visual aid to explain the housing crisis. He compares the financial system to a Jenga tower. Just like pulling one block can cause the whole tower to collapse, Vennett shows that the bad subprime loans were like weak blocks in the system. When these weak loans failed, the entire financial market would crumble.
This explanation helped people understand just how dangerous the situation was, and Vennett’s clear presentation made it easier for investors to see why they should bet against the housing market. His ability to explain complex financial ideas in simple terms was key to convincing people.
Teaming Up With Mark Baum
A major part of Vennett’s story in The Big Short is his partnership with another character, Mark Baum, played by Steve Carell. Baum is based on a real person, Steve Eisman, a hedge fund manager who was also skeptical about the housing market.
After hearing Vennett’s pitch, Baum does his own research into the subprime mortgage market. He talks to people in the real estate industry and sees firsthand that the loans being given out are terrible. Baum eventually agrees with Vennett and decides to bet against the housing market, too.
Together, Vennett and Baum’s team invest in credit default swaps, and when the housing market collapses, they make huge profits. But even though they made money, the situation was bittersweet because millions of people lost their homes, jobs, and savings in the financial crisis.
The Moral Dilemma
While Jared Vennett is shown as someone who makes a lot of money from the financial crisis, his character also raises some moral questions. Is it right to profit from a disaster that affects so many people? In the film, Vennett doesn’t seem too concerned about the ethical side of things. He is mainly focused on being right and making money.
However, the movie encourages viewers to consider the wider consequences of greed and risky financial behavior. Even though Vennett and others made millions, their profits came at the cost of a huge economic collapse that hurt countless people.
Vennett’s Legacy In The Big Short
Jared Vennett’s character is important not just for predicting the financial crisis but also for explaining how it happened in an easy-to-understand way. His character bridges the complex world of finance and the everyday people affected by the crisis.
In real life, Greg Lippmann, the person on whom Jared Vennett is based, played a similar role during the financial crisis. Lippmann was one of the traders who saw the problems in the housing market and made a lot of money by betting against it.
Conclusion
The end of this article clearly explains how Jared Vennett, as portrayed in The Big Short, predicted the financial crisis of the housing market and convinced investors to bet against it, leading to significant profits. While he accurately foresaw the crisis, the question of his morality arises.
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