Have any of you seen and, if so, what are your thoughts?
t’s amazing how much more Oliver Stone could have done to expose the system. Stone admits that he dumbed down the movie so that Americans could get it but the entire scene where Gekko talks about the steroid dollar is incomprehensible to Americans. Stone should have gotten advice from Jim Rogers, not Geroge Soros*.
I personally liked the film a lot. I like most of Stone’s work in film, but I really appreciate how he talked about the difference between capitalism and corporatism/socialism when it came to the bailout during the board meeting. It’s hard for me to tell if other people know the difference between capitalism and corporatism, though. Did you happen to notice that two of the characters happened to look exactly like Henry Paulson and Tim Geithner?
I can’t wait to see Oliver Stone’s Secret History of America.
Is Josh Brolin supposed to be Lloyd Blankfein and his firm a fictionalised Goldman Sachs?
Prateek, it appears so.
That seems to be how it was played out. At least it’s what I assumed the entire time, but it didn’t really tell you whether Brolin’s firm was one of the TARP recipients, so who knows. I was trying to figure out if any CEO committed suicide before TARP because that would indiciate who LaBeouf’s mentor was in the movie.
The resemblances are uncanny in the film, but I figured I’d post the actors playing Paulson and Geithner for anyone who’s interested. Again, you really need to see the movie to see how much they look like them.
This has to be the one of the least subtle movies out there referencing real life people, since Dick Cheney appeared in Day After Tommorow.
Wall Street: Money Never Sleeps was a drama, not a comprehensive explanation for the U.S. housing bubble.
Gordon Gekko wrote a book called “Is Greed Good?” and during a speech to a group of people explained how greed motivated financially foolish behavior. He did mention a 1% interest rate after 9/11, but he did not explain how drastically expanding the money supply and making it cheap to borrow was a government, not free market event. People responded to incentives. Gekko omitted Fannie Mae, Freddie Mac, the Community Reinvestment Act and affirmative action in lending, the “pro-homeownership” tax code, a further explanation of the Federal Reserve System’s cheap credit, the “too big to fail” belief supported by former Federal Reserve chairman Alan Greenspan, and government bailouts.
Paul Rubin said, “that whenever there’s a corporate scandal, it’s typically blamed on an increase in greed, but when there’s a sex scandal, it’s never blamed on an increase in lust.”
Later in the film, Jacob “Jake” Moore blames Bretton James for the death of Keller Zabel Investments. Bretton James said, and was correct, that Keller Zabel Investments toxic assets destroyed the company, not him. Jacob Moore would have been more accurate to criticize Bretton James for opposing a bailout for Keller Zabel Investments, but not other banks.
Near the beginning of the film, there is a meeting in the New York Federal Reserve Bank of New York, where one member says that without a bailout the world will end. Nonsense.
During September 2008, libertarian economist Jeffrey Miron explained that bankruptcy was preferable:
The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company. Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable. In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This “moral hazard” generates enormous distortions in an economy’s allocation of its financial resources. Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time. Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen. Further, the current credit freeze is likely due to Wall Street’s hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents. The costs of the bailout, moreover, are almost certainly being understated. The administration’s claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion. If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth. The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients. Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take. The bailout will open the door to further federal meddling in financial markets. So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending. The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.
I liked the movie over all. And I thought it was great that it touched on a lot of things Austrians would like.
Here is a couple examples that I remember off the top of my head.
Visual illustration of corporate statism. e.g Big Banks colluding with the Federal Reserve.
Gecko stating that he was jailed for a victimless crime (Insider Trading)
