Published on October 23rd, 2011 | by thevyne0
Financial Crisis 101: Get Your Knowledge Up
Think back to March 2008 when you first heard on the news that Bear Stearns was being sold to JP Morgan chase for an embarrassingly low $10 per share. Around that time newscasters began using terms like “bailout” and “financial crisis”. Maybe you paid attention, maybe you didn’t. But by the time September 2008 rolled around we all had no choice but to pay attention as Lehman Brothers was the next investment bank to take an unprecedented nosedive off a cliff taking the entire financial market with it. Then came more new terms on the news like “subprime mortgages”, “derivatives”, “CDO’s” and “securitization”. It was official, we were in a global financial crisis and everyone was trying to figure out how we got there. Well everyone, that is, except the folks on Wall Street who knew exactly how we got there.
Fast forward three years to present day and all across the nation the “Occupy Wall Street” movement is setting up tents like hotcakes. Whether you agree with the movement or not, it’s important that everyone understand the particulars of how we got here if for no other reason than to be a more informed citizen and therefore a more informed voter.
So, for those of you who are not financial experts, but need a relatively quick and thorough download of what and how it happened, here are three movie suggestions to help you put it all together (recommend you watch all three in this order):
Watch this First: “Inside Job” – This Academy Award winning documentary that was produced, written and directed by Charles Ferguson is a comprehensive look at what led to the downfall of the financial market. It includes actual interviews with thought leaders who tried to warn about the impending issue as well as controversial interviews with educators, policy makers and lobbyists who were all instrumental in the crisis. You’ll come away from this documentary with a firm understanding of “securitization”, “deregulation”, how AIG was involved, the role the rating agencies played and who was involved in creating the bubble before it burst. It is a stirring must see that will no doubt leave you thoroughly ticked off but equally well informed. BONUS: The site for the film contains a glossary of jargon, events and “cast” of characters. If you’re a teacher there is study guide available on the site too.
Watch this Second: “Too Big to Fail” – This is an HBO original film based on the book of the same name by Andrew Ross Sorkin and starring a fantastic assemble cast. The film picks up at the fall of Lehman Brothers. What you get from it is a look into the kind of conversation that reportedly occurred between the then Treasury Secretary Henry Paulson, Ben Bernake, Timothy Geithner and each of the CEO’s of the major investment banks. It’s quite gripping to say the least. Think of it as a “double click” on two very important aspects of the securitization food chain…the government and the investment banks.
Watch this Third: “Margin Call” – This film, out this weekend, written and directed by J.C. Chandor, gives a riveting glimpse into an investment firm just as its employees realize they owe more than they are worth due to being overly committed to risky, subprime real-estate loans or “financial products”. What’s interesting about this film is it is the only one that gets into the minds of the people in the firms as they had to make a moral choice to either walk away from their firms or sell garbage “financial products” at the eleventh hour in order to move the risk off their firms books and make one last run of money. It’s an intense character study that makes you wonder if anyone when faced with this moral dilemma actually did the right thing.