Too Big to Fail and The Big Short
As non-fiction books that were made into popular dramatized movies, Too Big to Fail and The Big Short make for a good comparison, especially in how they differ, and the differences are considerable. [click here to see films related to Too Big to Fail and The Big Short]
In the eBook version of Andrew Ross Sorkin’s 2009 best seller Too Big to Fail, a search for the word “greed” brought up eleven instances of the words “greed” or “greedy,” two instances of the word “disagreed,” and ninety-four instances of the word “agreed” as in:
- “The Federal Reserve had agreed to take on up to $30 billion of loses” (p.10),
- “Thain and Thornton had agreed to support Paulson” (p. 137),
- “AIG agreed to pay $126 million to settle criminal and civil charges” (p. 155),
- “Bernanke and Paulson had agreed that the time had come for a systemic solution” (p. 418), and
- “Merrill agreed to pay him a bonus of $39.4 million in cash” (p. 559).
The use of the word “agreed” demonstrates how the bankers and regulators were permitted to “agree” on how to “resolve” the catastrophe they caused, effectively leaving the wolves in charge of the henhouse. The use of the word “greed,” in one case, was used to positively affirm the character of the former head of Lehman Brothers: “Fuld seems to have been driven less by greed than by an overpowering desire to preserve the firm he loved.” (p. 535) Most of the other instances of the word greed are attributable to book reviewers and journalists in the “praise for” opening pages, or whose work is cited in the footnotes and bibliography.
As arbitrary and out of context as the quotes may be, they define the character of the book, which by all accounts was meticulously researched and is an accurate representation of how the Crisis of 2008 unfolded and was handled. While there is value in learning about the family backgrounds and personal histories of the financiers that rule the economy—to find out how they think, speak and act—in the attempt to create a day-to-day “fly-on-the-wall” reality by using an objective reportorial voice, the larger significance behind those thoughts, words and deeds are lost in a fog of details. At least it was for me. More important, the objective statement of facts over even a flawed analysis of what transpired has allowed the author’s characters to control the nonfiction narrative—something that is even more apparent in the HBO movie (Hanson, 2011). The end effect is that, like beauty, the identification of fraud, collusion and corruption is in the eye of the beholder.
In other words, the laissez-faire recording of factual information contained in Sorkin’s book has allowed the very people that caused the crisis because of their advocacy, policies and behavior to walk away from the Crisis looking like the guys that saved the day. This may explain why in a review of the HBO movie, a New York Times critic took the line of blaming the victim by saying,
“Mr. Sorkin’s take on the story is the conventional one. That doesn’t make it wrong. Presidents back to Reagan overderegulated (sic) the financial industry. Borrowing became too easy, especially for houses (sic). People got in over their heads. When they couldn’t pay back their debts, they dragged the banks (and one insurance company, A.I.G.) down with them.”
Yes of course, the people dragged the banks and A.I.G. down causing the Financial Meltdown. Damn people! The priviledged’s condescending attitude toward and isolation from working people are pervasive throughout the book and are crystallized in the opening of Chapter 17 of Sorkin’s book where we find Tim Geithner “tired and stressed” on his morning jog at the southern tip of Manhattan “as he stared at the Statue of Liberty and the first of the morning’s commuter ferries from Staten Island” made their way to work. Suddenly we find ourselves in the italicized world of Geithner’s head:
“This is what it is all about—the people who rise at dawn to get in to their jobs, all of whom rely to some extent on the financial industry to help power the economy. Never mind the staggering numbers—nor the million-dollar bonuses of those that made bad bets. This is what saving the financial industry is really about, he reminded himself, protecting ordinary people with ordinary jobs.”
Geithner’s bizarre epiphany, a version of which is depicted in the movie, represents an apologist’s worldview of a system that has failed ordinary people with ordinary jobs while attempting to make the apologist look heroic. That same worldview is at work throughout the entire book and the movie.
|Chock full of hubris: Ordinary people (without helicopters) on their way to ordinary jobs are noticed by ...||... the extraordinary Tim Geithner (Billy Crudup) out for his morning jog.|
|Band of insiders: Nancy Pelosi (Linda Glick) surrounded by the usual suspects; on the right, the bankers. ...||... Everybody is waiting for another group of insiders to arrive: the regulators. Together they will fight the good fight. There’s talk of nationalizing the banks, but not really.|
In the introduction to The Big Short: Inside the Doomsday Machine (2010), Michael Lewis explains that he wrote Liar’s Poker, the 1989 book about his experiences as a bond salesman on Wall Street, as a cautionary tale to warn young people away from the lure of money in favor of pursuing “their passions or even their faint interests.” Expecting the reader to be appalled by an “unsustainable” system that required fraud, Lewis was surprised to find himself “knee-deep in letters from students… who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.” In writing The Big Short, Lewis tries to re-direct that misreading.
The Big Short, both book and movie (McKay 2015), represents the financial market as a beast without a brain or heart that is buttressed by a use of language designed to keep outsiders at a distance by making them feel “bored and stupid.” Financial discourse is obfuscating rather than illuminating, and it has the end goal of making sure that the banks are left alone to do exactly as they please. “It’s like two plus two equals fish!” says one of the film’s characters, exasperated by the rating agencies failure to downgrade the subprime bonds that allowed the value of the bundled mortgages to go up even as large numbers of people default on their loans.
The characters in The Big Short live and work in a twilight zone somewhere between the insiders presented in Too Big to Fail, and the outsiders, or the outlaws in The Wolf of Wall Street. They want the wealth and are willing to play the game, but they also “distrust the system” and are represented as being acutely adverse to avarice and fraud. Their motivation to profit in the marketplace is less dependent on exploiting the public and more concerned with thumbing their noses at the Wall Street establishment while remaining, in some measure, very much a part of that establishment. Sitting at the top of the economic food chain, investment banks treat the insurgent capitalists like freaks and weirdoes who don’t know their assets from their elbows. As such, the characters in The Big Short are like the children in Hans Christian Anderson’s tale, pointing their fingers at the Emperor and his sycophants, exposing their naked ambition, vanity, arrogance, and finally their avaricious stupidity.
|Rain Man – Afflicted with Asperger’s Syndrome, Michael Burry (Christian Bale), a formerly practicing medical doctor whose way with numbers led him to success as a hedge fund manager, wears T-shirts and shorts and goes barefoot around his office, has a penchant for heavy metal drumming, and also for reading through tomes of mind-numbing prospectuses. Burry’s special talent for detail enables him to see what nobody else sees, a housing bubble, and is compelled to take advantage of a financial opportunity of a lifetime in spite of the objections of his apoplectic clients and backers whose money he manages and controls.|
|It lives again! Hell-bent on shorting the bubble, Burry puts on a suit and visits the top investment banks and convinces them to rejigger the credit default swap originally created by the twenty-somethings that worked for JP Morgan in 1994. The newly designed CDS would specifically apply to a new frontier of home mortgages. The bankers think he’s crazy for shorting what they see as a stable market. ...||... They mock him as he leaves their offices. Says one Goldman Sachs exec, “This is Wall Street Dr. Burry, if you offer us free money we are going to take it.” Burry buys $1.3 billion dollars of the home mortgage CDSs; when the bubble bursts he makes a total profit of $2.69 billion for himself and the clients who heretofore were threatening to sue.|
|Heard it through the grapevine: At a party, Jared Vennett (Ryan Gosling)—the narrator of the movie—finds out that someone, Burry, is spending hundreds of millions of dollars on custom-made home mortgage CDSs. After investigating, Vennett goes looking for investors willing to make the bets. ...||... A serendipitous wrong number connects Vennett to the boys at FrontPoint (from left, Hamish Linklater, Rafe Spall, Steve Carell, and Jeremy Strong), an autonomous arm of Morgan Stanley. After conducting field research based on Vennett’s proposal, FrontPoint follows Burry’s lead and starts buying the new swaps.|
Shot in the style of a reality TV show or mockumentary like The Office TV series, The Big Short features three parallel stories that follow three separate groups of money managers who will never meet each other but whose experiences converge at the same point of crisis and dubious success. Adam McKay, Saturday Night Live writer and writer/director of many Will Ferrell movies, took on the task of demystifying arcane verbiage and abstruse concepts with humor and through bold asides that don’t just break, but at times deconstruct the fourth wall. McKay’s movie deviates from the book by taking these dramatic liberties while remaining true to the source material and its historical context.
|The deconstruction zone: Clockwise from upper left, from her distracting bubble bath, Margot Robbie suggests that investment banks use language as a weapon of distraction and tells us that “Whenever you hear ‘subprime,’ think ‘shit.’” Describing himself as a “crafty and morally onerous chef” Anthony Bourdain scoops up three day old fish ripe for the compost heap and “turns it into a whole new thing,” a seafood stew that is analogized as a CDO (collateralized debt obligation). Elsewhere the CDO is analogized as “dog shit wrapped in cat shit.” A pop singer, an economist, and betting onlookers at a gambling table in Las Vegas, illustrate the complexities of a synthetic CDO.|
|House of Jenga: Vennett uses the block-stacking game Jenga to set-up the Bourdain seafood stew analogy, and completes the picture of how the tranches in a CDO crashed the housing market. The visual aid is used to a better effect than the sundry, line, bar, pie, or scatter charts presented in many of the documentaries on the subject.|
|Moody blues: “How can Standard and Poor’s help you?” asks Melissa Leo playing one of the “whores at the ratings agency.” She must explain to the “naïve” boys at FrontPoint how competition on Wall Street works. “If we don’t give [the banks] the [triple A] ratings, they’ll go to Moody’s, right down the block,” and that’s “the way the world works.” After being shamed because of her inaction by the boys from FrontPoint, she calls them out on their own hypocrisy as owners of swaps about to enrich themselves by betting on the crash. Oh yes, and then there’s the metaphor of the willfully blind leading the willfully rich.|
Regardless of the political or narrative mission of the various documentaries, fiction, or fictionalized films that explore the post 2008 political economy, one important aspect they all have in common is to make the tortuous, unnatural, hermetically sealed world of 21st century capitalism accessible for fear of losing audience interest. To do so they must dissect the institutions, the language, the law, and examine how those factors impact individuals in diverse social groups. And they must do so while entertaining a mass audience. The movies presented here do more than an adequate job of unpacking many of those factors in order to educate that sizable social group of uninitiated outsiders, often referred to as the 99%, who like myself have been largely ignorant of, or have had only a tenuous understanding of how the economy actually works. Yet, in spite of my recent education I still find myself thinking, “A synthetic collateralized debt obligation means what?”
Conclusion: the S word
I began my career as a New York City teacher amid a storm of controversy concerning three pages of a 443-page tolerance curriculum that referenced gay men and lesbians. In 2014 the NYC Department of Education introduced a clearly delineated and evolving four-page set of guidelines on how to support transgender students that was posted on their website with little, if any objection. As an admittedly pessimistic sixty-one-year-old, I never thought that so many social developments would be actualized so suddenly, in so rapid a succession, and during my lifetime. Decades of struggle by “single issue” grassroots movements have somehow coalesced into a strangely amorphous whole that appears to be moving more or less in the same direction. [click here to see films related to the Conclusion]
The United States has had an African American president. Same-sex marriage is now legal throughout the United States. Even rank and file Republicans question their leaders’ failure to acknowledge the science of climate change, as well as their failure to allow passage of even modest gun control legislation in the wake of recurring mass slaughter. Medical and recreational use of marijuana is on the road to decriminalization and possible legalization, and racial profiling and excessive force by the police have become part of the “national conversation.” For the first time a woman was nominated as president of a major political party. While she was not elected, her rejection may have had less to do with her gender, than what she represented to a disaffected electorate. While these developments have caused reactionary backlash as indicated by the election of Trump, and spikes in violence, and oppression of all types still clearly exists, the secret’s out: there are no more taboos. Everything is up for discussion and possible acceptance, except for a consumer comparison of available political economies: the last media-imposed taboo.
The legacy of the Red Scare and Cold War paranoia that led to redbaiting and blacklisting, the self-interest freely exercised by a handful of media conglomerates that control 90% of our news and entertainment, and the corporate money that funds a restrictive two-party system that cannot possibly represent the full spectrum of ideological beliefs held by the populace—all these have cuffed the democratic process by guaranteeing uninterrupted gridlock and putting a halt to any meaningful discussion of a consumer’s guide to comparative economies. To entertain an alternative to capitalism or to even suggest its major re-engineering is to risk the possibility of being labeled as un-American, a naive idealistic utopian, an ivory tower academic, a dupe of some foreign ideology, or as just plain stupid.
Like most baby-boomers born in the United States, I was raised to believe that the telephone, motion picture camera, washing machine, Teflon, microchips, GPS technology, and solar panels are examples of innovations that are the result of the more positive aspects of capitalism: the willing exploitation of human ingenuity through creative entrepreneurialism, healthy competition, and the promise of personal reward. And while it’s also true that capitalism has wrought the Pet Rock and the Snuggie, weapons of mass destruction and the greenhouse effect, gross economic inequity and the conflation of technological progress with human progress, my life-long indoctrination compels me still to embrace the baby while attempting to lose the bath water. Lately however, it seems the baby has gone missing while the bath water has become thick with muck. That’s the implicit theme of the movies written about here. The films’ portrayal of capitalism is missing the all-important inventive product and any hint of ingenuity, fairness or personal reward beyond the self-interests of an elite class of capitalist megalomaniacs.
The Financial Crisis of 2008 has spawn a cycle of popular films that question the superiority of our current economic system while refusing to reject it or to offer an alternative. But to offer an alternative would be an awkward imposition on the popular movie, to forego the emotional journey in favor of an intellectual pursuit. A film that had a didactic third act would most likely be viewed suspiciously as propaganda by an audience that expects to be entertained, maybe informed, possibly inspired, but never lectured to, even by films that appear to have a message that is socially relevant. Taken together, Arbitrage, Margin Call, The Wolf of Wall Street, Killing Them Softly, Cosmopolis, The Big Short, and Too Big to Fail are part of an ongoing rumination about the current state of predatory capitalism in the wake of what has come to be called the Great Recession. The rumination leads each of these post 2008 films to end with an inferred question mark as opposed to an emphatic exclamation point.
In the introduction to his widely praised book, Capital in the Twenty-First Century, French economist Thomas Piketty, while highly critical of a ruling class that has perpetuated inequality since the industrial revolution, is also critical of that class’s nemesis. He writes:
“I belong to a generation that turned eighteen in 1989, which was not only the bicentennial of the French Revolution but also the year when the Berlin Wall fell… I was vaccinated for life against the conventional but lazy rhetoric of anticapitalism, some of which simply ignored the historic failure of Communism and much of which turned its back on the intellectual means necessary to push beyond it. I have no interest in denouncing inequality or capitalism per se—especially since social inequalities are not in themselves a problem as long as they are justified.”
Instead Piketty says he is interested in contributing “to the debate about the best way to organize society and the most appropriate institutions and policies to achieve a just social order.” In other words, to no doubt oversimplify, Piketty is rejecting the capitalism/socialism polarity as a false dichotomy and appears to be on a quest for a new economic paradigm.
The popular support that the Bernie Sanders campaign enjoyed from the Millennials demographic is both a compliment and counterpoint to Piketty’s statement about the motivations of his generation. The Millennials, who now outnumber Baby Boomers in the United States, belong to a generation that not only came of age at the time of the 9/11 attacks but also witnessed the impact the Great Recession of 2008 had on their families, their own aspirations and their long term faith in capitalism as a tenable economic system. In other words, the Millennials enthusiastic support for the Sanders campaign suggests that they may be vaccinated for life against the conventional but lazy rhetoric of anti-socialism, some of which ignored the historic failure of capitalism in 2008.
The reaction to the evolving Sanders phenomenon on the part of the Democratic Party and various socialist groups has been instructive if predictable. After Sanders declared his candidacy in May 2015, Clinton supporter Sen. Claire McCaskill raised the specter of the hammer and sickle, while a writer from the Socialist Worker website lamented Sanders’ “decisive break” from his hero Eugene Debs “who advocated for working class independence from the two capitalist parties.”
|Party line: All McCaskill and her counterparts need do is lazily drop a catch phrase or two, and the public’s collective unconscious and the party line of the sundry socialist organizations- masters at alienating the public with their dogged insistence on using language and imagery anchored in the 20th if not the 19th century will do the rest.|
|Insults and injury: Former Secretary of State Madeleine Albright warns women against voting for Sanders by declaring “there’s a special place in hell for women that don’t help each other.”||Feminist icon Gloria Steinem castigates young woman by suggesting that they’re for Bernie because “the boys are with Bernie.” Both women expressed regret for their comments but the toothpaste never goes back in the tube.|
|Love train: With record-breaking crowds that number in the tens of thousands, Bernie wins the battle while losing the war. Not wanting to anger a constituency they are depending on in November, Democratic Party regulars put the hammer and sickle back in their toolbox; not wishing to discourage or alienate the ground swell of supporters, socialist groups accept Bernie’s shortcomings.Clinton's move to the left thanks to the Sanders' campaign, was too little and too late. Meanwhile the Sanders’ campaign has succeeded in using the Great Recession to articulate the flaw in capitalism’s pearl, and make the S word a lot less scary.|
Bernie’s talk of a “political revolution” and cautionary tales about the “billionaire class,” and his self-effacing acknowledgements about change happening “from the bottom up,” has resonated with a large audience, especially Millennials, who apparently are neither afraid of socialism nor married to it. Again, to no doubt oversimplify, Millennials appear to be rejecting the capitalism/socialism polarity as an either/or proposition. Whether this rejection leads to a new economic paradigm and what form that paradigm could possibly take is a whole other topic. In a sense, Sanders has tapped into the political process as an emotional journey without abandoning the need for the pragmatic, intellectual pursuit of knowledge stripped of a priori dogma. But mostly what the Bernie Sanders campaign has done is to connect people who were previously disconnected. Then again, so has Donald Trump.
The socially/politically disconnected populace is portrayed in a brief, understated sequence near the end of The Wolf of Wall Street, when FBI agent Denham (Kyle Chandler) is on the subway reading an account of the trial and sentencing of Jordan Belfort that he was instrumental in facilitating. He puts the tabloid down and looks at his fellow, passengers, many of whom are busy avoiding each other: one stands by the door waiting to exit, others are reading, sleeping, some converse, some stare into space—presumably thinking. The sequence ends with a shot of Denham, looking pensive, and like his cohorts, staring into space, thinking. It’s a sequence of shots that demands that the viewer either interpret or ignore. My interpretation is that Denham is wondering what his time and effort in bringing a white-collar criminal to justice has accomplished for himself and his fellow travelers who eat, sleep and commute in the shadow of what they do.