A recent remark by Rob Wijnberg, chief-editor of the largest Dutch online magazine de Correspondent, in a podcast with fellow-editors Jesse Frederik and Rutger Bregman showed the tremendous influence of Hollywood movies on the debate about the financial crisis. Discussing why structural phenomena like climate-change and financialization (at least before 2008) are underreported, Rob Wijnberg asked himself: “What is that movie called? Wolf of Wall Street?” Knowing where Wijnberg is getting at, Frederik corrects him: “No, The Big Short”. Wijnberg continues: ”Oh, the Big Short, the Big Short, [about] that man, the only one who saw it [the crisis, DH], and [who] was declared lunatic [for stating that] that a house-bubble arose, etcetera”.[1]

To avoid misunderstandings, the podcast is otherwise informative –I’ll come back to it-, but this off-the-cuff remark shows how the image a chief-editor has of the financial crisis is based on not much more than, well, a Hollywood movie, the title of which he barely remembers. And that shows the large influence of Hollywood-movies tout court. Whether here that is a positive influence of course depends on the movie in case. Some movies on the financial crisis are better than others. 

 

Blockbusters and reality

There is however a limitation that all blockbuster movies face. This limitation is actually related to the interesting point Wijnberg was making in the podcast. Hollywood-movies have to do what Wijnberg points out contemporaneous journalism unfortunately does as well (hence the aim of de Correspondent to break away from the media-agenda). A Hollywood-movie has to be a plot-driven, event-rich, suspenseful movie with a protagonist with whom the audience can identify. So it has to dramatize a slowly and unevenly unfolding political-economic conjecture, which consists of events like the 2008-Lehman Brothers collapse but cannot readily be reduced to such events.

The financial crisis is embedded in the post-1971 financial order and as such has been a long time in the making. In 1971 Nixon reneged on the 1944-Bretton-Woods promise to peg the dollar to gold. The (financially) costly Vietnam war had turned the USA from a creditor-nation into a debtor-country. From then on the USA had to borrow from the rest of the world. The solution was the financialization that unfolded in the seventies onwards. Wall Street ensured that foreign capital was invested in the USA, while skimming a nice percentage in the process. Countries who didn’t play ball could always be occupied, but oftentimes the IMF could convince countries to privatize their public sectors, to become investor-friendly and to invest their savings on Wall Street. Of course the incoming money didn’t reach the majority; American wages have stagnated the last three decades. Consumption didn’t stagnate however, because of a private-debt bonanza, in which Wall Street lend money to people who debt-financed a houses, colleges or cars they couldn’t ultimately afford.

To be short, what has been called the great financial crisis (GFC) is not an isolated event but is a historically developed structure if ever there was one. So how do Hollywood-movies depict the GFC and how to evaluate the influence they have on the public debate? There are four big budget post-2008 movies. If IMDB is any guide, the best is Wolf of Wall street (8.2), followed by The Big short (7.8), Margin Call (7.1) and Wall Street 2 (6.3). In my view the order should be exactly the other way round if the criterion is whether the movies have something interesting to tell about the GFC. But let’s not jump to conclusions yet.

 

The Wolf of Wall Street (The WoWS)

The Wolf of Wall Street is the most straightforward of the four, depicting a small swindler (played by Leonardo DiCaprio), who hustles his way to a small fortune. He aggressively sells penny-stocks with a combination of intimidation, seduction and outright fraud. Besides being a fraud, the protagonist is decadent to the bone. He is a coke-sniffing, sexist, egoistic man –and the audience is invited to see his point of view. The identification with the Leonardo DiCaprio-character does not last the entire length of the film, as towards the end of the movie the main character derails and discredits himself completely, so viewers –most of them at least- will stop short of fully identifying with him. 

The problem of the movie is that the financial crisis is reduced to the biography of one man; a man who moreover is just a small fish.

Be that as it may, you don’t need to be a Freudian to propose that the main character acts out pretty much all secret wishes of the WASP. He is a white, heterosexual man who indulges in every cardinal sin –sex, drugs, lying, cheating, dominating– and who does so with the charm that indeed sometimes comes with unchallenged privileges. In the end Leonardo DiCaprio’s character does not get away with it and ends up in jail. The Wolf of Wall Street is thus essentially a morality tale, transposed to the financial sector. Even a WASP-man can go too far, so be careful what you wish for (but wish for it we will). Whether the spree of sex, drugs and extravaganza is amusing depends on one’s taste, evidently many people think it is. Otherwise however the movie does not even come close to an analysis of the crisis, or of morality for that matter.

The problem of the movie is that the financial crisis is reduced to the biography of one man; a man who moreover is just a small fish. He is so small that the SEC (‘the financial FBI”) acts against him. He is thus far removed from the majority of bankers who steal and lie with impunity. He is in all respects the outlier, the rotten apple, the guy you love to despise, the exception. He is the rotten apple, but with some charm added (which is the charm of someone breaking the rules). He is the guy you wish to be but are ultimately also relieved not to have become. 

This is all analytically inadequate, as (rotten) apples are not a satisfactory unit of analysis: one has to look at the trees, indeed the forest. Of course there is plenty of decadence, fornication, and lying in the financial sector and I have no doubt that all these vices are overrepresented in the financial districts. But these are symptoms rather than the disease. The other way round, it would be very surprising if young males, earning lots of money, taking lots of risk (albeit with other people’s money), operating without meaningful oversight, cheered on by the media (until 2008 at least) and with bosses recruited from WASP-fraternities, would not be(come) decadent. Any adequate analysis has to be scaled up one or two levels. How did bankers waste, speculate and steal other people’s money? And how did they get this opportunity?

 

The Big Short

The aforementioned remark of Wijnberg is interesting for yet another reason. Wijnberg stated that one of the main characters of the Big Short, played by Christian Bale, was the only one who saw the crisis coming. This is incorrect. It is a myth that no one saw it coming. As Dutch economist Bezemer has extensively documented, there were several people who saw it coming and who clearly documented both the cause (build-up of private debt) of the crisis-in-the-making and the mechanism (the collapsing house-bubble) that would trigger it.[2] It is true that all these figures were (and have remained) somewhat peripheral figures in academia (no one received a Nobel prize for, well, seeing the GFC coming).

This all matters, since although the Big Short is already far more interesting than Wolf of Wall Street, it does not break with its individualistic and moralizing framework. The Big Short presents three asset managers -played by among others Christian Bale and Ryan Gosling- who established in 2005 that there was a gigantic housing bubble, with house-prices being higher than (stagnating) wages could ultimately sustain. Investment banks were however still massively trading financial products (so called mortgage-backed-securities or MBS), the value of which was based on the assumption of ever rising house prices. So the asset managers decide to short the housing market by shorting the MBS that investment banks so voluminously traded. If they are right and house prices will indeed decrease, they will earn big time. Much of the movie revolves around the question whether the asset managers can pull it off. And of course, the protagonists of the movie pull it off and walk away with a lot of money.

The great financial crisis certainly isn’t the David vs. Goliath-story that the Big Short takes it to be.

The movie exclusively depicts the perspective of the asset managers. They are the heroes, or at least they are heroic. The resulting lonely heroes vs. villain story is already more interesting than the WoWS as the villain is a group of investment banks. This set-up remains problematic however. For one thing, the asset managers are financial sector guys; they are supposedly the good guys but act on monetary motives only and thus confirm the capitalistic ethos. And of course they are all guys, so the audience can easily perceive them as heroic; this is further facilitated by them all being white, high-educated and urbanite (like of course virtually all bankers are). The victims of the banks who were tricked and seduced into debt, are absent. These deplorables, as Hillary Clinton called them, do not have a voice in the story and are thus denied any political agency.

On the positive side the Big Short tells the story from the perspective of people working against banks. The banks are here unambiguously on the wrong side. And so it should be. Banks however also remain anonymous. They are the big bad wolf and are thus also denied clear agency. They are just bad. It is then a fairy tale as well, but a rotten apples story in mirror image. The rotten apples are stored in dozens on Wall Street and they are taken on by some brave (albeit profit-maximizing) asset managers. Added to this is the suggestion that these people were the only ones who saw it coming (a suggestion Wijnberg reproduces). This is certainly not the case. This removes from the equation that the instability was obvious for numerous heterodox economists, while it is equally obvious why these people were (and still are) academically side-lined. Just like it is obvious that the post-2008 “recovery” is a charade, only being a recovery for creditors (id est banks) who saw their claims being underwritten by tax-payers, who subsequently paid the brunt when governments began to play the austerity-game. This is a serious long-stretching, contingent multi-level game. It is, in other words, politics. It certainly isn’t the David vs. Goliath-story that the Big Short takes it to be.

 

Margin Call

According to the voters on IMDB Margin Call is worse than the WoWS and the Big Short. I disagree. Margin Call goes where the Big Short do not thread. It looks the beast in the eye. It goes inside investment banks and shows the anatomy of fraud, the systemics of it. It shows organized crime. Margin Call dramatizes the predicaments of a fictional bank (though inspired on the downfall of investment banks Bear Stearns and Lehman Brothers). The hypothetical bank realizes that the financial products like the aforementioned Mortgage-backed-Securities are seriously overvalued. If they keep on to these worthless assets, the bank will go bankrupt. If they can sell them to unknowing investors (like Dutch pension funds) before news of the worthless subprime mortgages breaks, they’ll survive. Of course, the bank decides to do the latter.

Margin Call shows this decision-making-process, including the appointment of a fall guy (played by Demi Moore). The fall guy will take all the blame (of course in exchange for a golden parachute). The strength of Margin Call is that it shows how the crime of selling worthless securities is committed. The CEO, played by Jeremy Irons, understandably wants the firm to survive. The middle man, played by Kevin Spacey, just does what he is told. The junior guys don’t really know what is going on and also do what they are told to do (for which they are generously rewarded). And the only man who is sceptical about it all, well, he is fired. It’s a system that an individual cannot take on (as the Big Short suggests) and Margin Call shows that. It shows the criminogenic zone that we call the financial sector.

This is not to say that Margin Call is flawless. Again, the movie follows the motivations of white, male banksters, once again reducing all victims to voiceless anonymity. What is more, the movie depicts the predicaments of one bank. Although this bank can be taken as a pars pro toto, it also echoes the rotten apple-thesis scaled up a level. The problem is not that this or that bank was fraudulent, the problem is the whole political-economic system, including supervisors, journalists, academics and politicians. Margin Call still suggests that a well-meaning CEO might have made a different decision than the Jeremy Irons-played culprit and that things would be better then. But although investment banks are an important (and profitable) part of the system, they don’t control it. They too have to play along in the end (and of course they are happy to do so).

 

Wall Street 2 (WS2)

The fourth movie has the lowest rating. It is not difficult to see why. The love story that makes up a substantial part of Wall Street 2 is disconnected from the main story -without being interesting in its own right. The master-apprentice relation of the characters played by Shia Labeouf and Josh Brolin doesn’t come near the gripping admiration-turning-disgustment-relation of Charlie Sheen and Michael Douglas in the first 1987-version of Wall Street. So yes, parts of the movie are boring.

Yet Oliver Stone would not be the great director he is, if the movie did not also contain several good scenes. In the most important scenes, WS2 depicts the meetings at the American central bank (the FED) where the biggest political heist of all times was decided. In 2008 700 billion dollar (the so-called Troubles Asset Relief Program of Goldman Sachs banker-turned-treasurer Paulson) was poured into the financial sector, no strings attached. These so called “bail-outs” rescued all large banks, including Goldman Sachs, on which the investment bank in WS2 is seemingly based.

The victims are once again anonymous. And that is again problematic

Stone thus goes straight to the horse’s mouth, to the meeting of the capos di tutti capi. In doing so, Stone shows what cannot be shown because it cannot be known (as central bankers are unelected, unaccountable, unremovable and operate in secret, with minutes of meetings undisclosed). Stone fictionalizes. He shows that the difference between bankers and the mafia is that the first are legit. Any reform of the system that keeps these bankers in place is no reform at all, just a legitimation. Any reform that takes on a small fish like the WoWS-hustler or even this or that investment bank is just a version of the saying that for things to remain the same, something will have to change.

Although WS2 is the most interesting movie of all, it also is far from flawless. Besides the aforementioned redundant scenes, the victims are once again anonymous. And that is again problematic, but it is not even the most problematic aspect of WS2 as well of the other movies. In all four movies, interesting as three of them are, the straightjacket of plot-driven storytelling is the gravest limitation. Movies, or generally: storytelling, need a plot. It needs events. It needs protagonists. It needs action. But how to show a crisis which is not an event, not even a series-of-events. The crisis is the latest apotheosis of a crisis of democratic capitalism that has been in the making for at least 50 years. The Vietnam War not only discredited the last moral credibility the USA might have had once but also threw the post-war Keynesian, social-democratic consensus of its feet. The seventies subsequently saw the awakening of a neoliberal project which is liberal in its rejection of the welfare-state and is neo in its determination to not so much limit state power but to instead use it for the build-up of a crony Ersatzcapitalism, characterized by among other things, financialization. In 2008 the banks were not nationalized. The state was privatized. Bankers didn’t plunder the treasury, but turned out to outright own it.

It is far from obvious how to tell this story and how to do it in such a way that people want to watch the result (and producers want to finance the making of it). This is the problem of dramatization that every director always faces: how to tell a story in such a way that it doesn’t become a just-so story. I don’t have a solution here. I’m just hoping someone will pull it off. In the meantime the Big Short, Margin Call and Wall Street 2 are all fun and interesting to watch.

 

Notes

[1] J. Frederik, R. Bregman (2016), Een goed gesprek over het nieuws –met Rob Wijnberg, podcast deCorrespondent.

[2] D. Bezemer (2009), “No One Saw This Coming” Understanding Financial Crisis Through Accounting Models, mimeo.