The reverberations continue. Though you may not know it from the current state of the stock market. Jobs gone, finances drained, lives altered.
Margin Call offers a glimpse into a single day at a nameless firm, one of the many around the world involved in selling and buying mortgages bundled together. A day that helped kick off the most recent financial crisis.
Although it is impossible to really know what happened in firms during that time, the movie offers a view into the different mindsets of players in the financial market—from the traders to low-level management to the executives—from the 23-year-old to the person who has been at the firm for thirty-four years. The movie takes us through various rationales for what they have done and are about to do.
The movie starts with layoffs and a long-term member of the firm leaving models he was working on about risk management with a young analyst. The young analyst fills in the missing pieces, which show how overleveraged the firm is and how that will help lead to the collapse of markets around the world.
And then we watch as the wolves eat each other in a great act of trying to survive. There seems to be no choice. Even the ones opposed to selling off all holdings have no alternatives to offer.
Selling and not buying would be the kiss of death for the firm. Selling and not buying sends the signal that the holdings are toxic….and the suitors stop lining up to buy. Selling off all holdings will destroy the firm. It will destroy the reputations and careers of the traders doing the selling. It will destroy the market around the world. It will destroy the lives of normal people. Of you and me.
But what is important is not the world, not others, not even the firm surviving. It is those at the top making money. And the rest go along because either they are so leveraged that they need the money dangled before them for their own personal survival or the only thing they know to do in a crisis is to follow their bosses.
The manager of sales in risk management is torn. How can the executives even consider selling assets to people that they know are worthless, that are toxic, that have no value? To do so would destroy the market for years. The mark of a good salesman is that you only sell things that you know have value. Otherwise, you destroy the people you sell to, the market, and your reputation.
A lower level sales manager justifies what they do for a living and might need to do differently. People—normal people—can live their lives only thanks to the likes of people at the firm, who move numbers, bundle mortgages, and sell assets. Without the magic they do, the normal people could not afford their cars, their huge homes. The number pushers, the market manipulators, the maligned financial industry are necessary. Normal people are simply being hypocritical. They want to pretend to be innocent so they can have things they cannot afford.
The owner of the firm justifies things a bit differently still. This fire sale that will bring down the firm, harm the market, destroy lives is nothing different from what they do normally. It has always been this way. He quotes year of financial crisis after year of financial crisis starting hundreds of years ago. The selling of toxic assets—assets that they know have no value—is no different from any other day, any other work they have done. Yes, the market will be damaged and people financially ruined, but that is how it has always been. The percentage of haves and have nots has never changed. And never will. It is the nature of the world.
The part of the film that sticks with me is the monologue by the lower level sales manager about how normal people want to pretend to be innocent so they can have their cars and huge houses. We go into debt for lifestyles we cannot afford, which is only possible with swaps of bundled assets. Fair enough. But the implication that we knowingly allow this to happen, looking the other way, gave me pause.
Do we, the normal people, really understand the financial instruments used, the risks and ethical issues surrounding them, that allow us to live lives of debt? I for one say no. My ignorance is real. Not pretend. That doesn’t justify my silent acquiescence, but it helps explain it.