In Margin Call, it took a rocket scientist to figure out that the economy was in a downward spiral. The film is written and directed by J.C. Chandor. The opening scene is a typical Wall Street office being seized by human resources conducting layoffs. Among the fired is a 19 year veteran executive Eric Dale (Stanley Tucci). He is handed a folder called “looking ahead” with a picture of a sailboat on it and given 6 months salary. After packing up his office he pathetically walks down the hall with his head down. As he steps on the elevator he is approached by a sympathetic and concerned young coworker, former rocket scientist Peter Sullivan (Zachary Quinto) who works in the risk department. Dale hands him a flash drive and tells him to be careful with it. Kevin Spacey plays the boss, Sam Rogers, who is sitting in his office as the seize is going on. Will Emerson (Paul Bettany), head of trading, comes into is office and asks what is wrong he says that he is upset because his dog is dying and he doesn’t know what to do with her. Later that night Peter finishes the project that Dale had given him and discovers that the company is worthless because the projected losses are greater than the worth of the company, a margin call. This is the discovery that set the ball rolling on the current financial crisis. Sam Rogers is called back in to the office after euthanizing his beloved dog. When Will Emerson shows him the figures and he says that he doesn’t know how to read them.
The remainder of the film is set over the next 24 hours. A meeting with Jared Cohen (Simon Baker), Sara Robertson (Demi Moore), Ramesh Shah (Aasif Mondvi), and eventually the CEO John Tuld (Jeremy Irons) is called in. Sullivan explains that the entire business model that they have all gotten rich from is bad. They have to come up with a plan to try and survive the eminent crash. Tuld and Rogers argue over the strategy during a break. Rogers is explicitly telling Tuld that if they start the ball rolling on unloading their toxic assets it will take down the entire financial market because it will cause mass panic. This is the beginning of the end of the bursting housing bubble. Companies like the one dramatized in Margin Call capitalized on banks that made bad loans to poor candidates. They did so by buying bundled assets, securing them, and then betting against them. Financiers made a lot of money despite the huge risk to their clients and the economy. In the end, the toxicity of the assets came to fruition. Tuld’s character in the film understood the risk and when it all crashed down he was prepared for it as if he expected it to happen all along. He had been in the business a long time and had lived through several cycles of capitalist consequence. The final scene is Sam Rogers burying his beloved dog.
Too Big To Fail is based on the book by Andrew Ross Sorkin about the tumbling of the US economy. The events in this film take place in the last weeks of September and early October 2008. The film shows the domino effect of mistakes made by Wall Street which were facilitated by the Bush administration. The importance and value of public perception to the financial market and the U.S. government is dramatized and the very close and intimate relationship between Washington and Wall Street is perused.
The CEO of Lehman Brothers, Dick Fuld (James Woods) has the humbling and humiliating experience of watching his giant investment bank fail while the largest nine others were being bailed out. John Tuld in Margin Call is most likely a tribute to Fuld. Lehman was allowed to fail so that the government didn’t look too much like socialists. Letting Lehman brothers fail was seen as Public Relations gold for the Treasury Secretary and the Bush administration. They made an example of Lehman and promised no more bailouts. He gave false hope to Americans and their faith in the real estate and stock markets. Until AIG fails. They held the insurance and secured the bad loans made by the other banks. The world economy begins to crumble as businesses are not able borrow money. Henry Paulson’s lecture on the moral hazard of not bailing out bad business becomes hypocritical as he realizes AIG is too big to fail. The homeowners are put at fault even though the lenders bottom fed, praying on the delusion of the American Dream. As the housing bubble burst and housing prices dropped, the mortgage backed securities tank and AIG had to pay them off all over the world at the same time. Of course, they couldn’t do this and all of the banks that they back would fail and the entire U.S. financial system would crumble. During the debacle, Henry Paulson and Timothy Geitner came up with the solution, a 700 billion dollar bailout that they call the troubled asses relief program (TARP). This money would be handed over to the big banks whether or not they wanted it, to shore up capital so that they could hold on to their toxic assets and circumvent a margin call. The real question that this movie begs is “where was the regulation?” The perception by the public was that the banks knew what they were doing and the U.S. government was watching out for the best interest of the American People. This perception is being protected in Too Big to Fail.
Some could theorize that the financial crises are caused by human nature, greed, and the all-American need to become wealthy and own a home. This fantasy is known to Americans as “the American dream”, a delusion that acts as a pillar for the U.S. economic philosophy. The financial institutions could be held responsible for not regulating themselves correctly. Financial experts and law makers also believed in faulty theories from economists who believed that free markets are self sufficient and self-regulating. Any single factor could be blamed and each film analyzed holds one or more of these theories responsible for the current state of the United States economy. However, there is a bigger problem at play and it covers the spectrum of brouhaha in all of the films. The current crisis was made by the way that we came out of the last one. It is a perpetuating cycle of capitalism. Capitalism does not solve its own crisis, it simply moves them to another location. The 1970’s were recovered from the excessive power of labor by shipping jobs overseas and the neo-liberal doctrine. By the mid-1980’s the labor-power issue was solved and there was access to the global market of labor. Capital became very accessible and companies were able to buy, sell and trade capital all over Wall Street. Finance capital continues to grow as wages of labor go down. However, this creates an issue with demand, the internal contradictions of capital accumulation (RSA). With little wages Americans cannot spend money and demand goes down. This is solved with credit cards and easy loans with high interest rates.
Capitalism thrives on financial innovation because it never solves it’s issues, it simply moves them around. Financial innovation has only given all the power to the financial consultants, speculators and brokers. As one mistake of capitalism is made, it takes rooms and buildings full of analysts, experts, and brokers to circumvent the crisis. By the 1990’s financial profits had shot up as manufacturing wages went down. (RSA) The financiers have written the rules to the game and have created an imbalance that is dramatized in the films. The leading characters are all part of the capitalist dance.
Power is what the main characters in the films evaluated have aspired to have or have attained and are trying to hold on to. Speculation is the vehicle that has driven their power and speculation is the vehicle that can take it away. In the modern United States, wealth and power are not mutually exclusive. The only thing more powerful than wealth is the perception of power and that is what the films all have in common. People have to believe that a politician is powerful in order for him to attain his power by being elected. The same could be said for a company or a certain commodity to climb the stock market. The perception that other people will buy into the entity is the most important factor. In laissez faire or free capitalist market, speculation is the foremost virtue. If speculation falls in your favor, so does capital, political or monetary. They are one in the same.
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