run don’t walk RUN to see the movie ‘The Big Short’ to learn more about those crooks on Wall Street and the crooked big banks that WE THE PEOPLE bailed out and learn how nothing has changed
don’t be afraid, it was very well done. complicated but very interesting and entertaining. you won’t be disappointed
Rumrunner, rent Margin Call. Well worth the $3.00 or whatever fee if you can’t find it on Netflix etc. for free.
thanks. is it about the same stuff? betting on bad mortgages to fail?
Yes and no, it is a sort of a prequel.
Read the book “Margin of Safety”…by Sleth Klarman!
I liked The Big Short. Good movie although not my favorite of the Oscar contenders. I thought the camera work and cinematography was a little too cutesy and school, let’s throw in every trick in the book, in a way that detracted from the movie and the real story. I also thought many of the characters were portrayed a little too over the top. Still entertaining, though.
I thought Margin Call was a better movie.
I haven’t seen the Big Short but from what I have heard/read about it, I think Margin Call is the more accurate portrayal. The idea that nothing has changed is factually wrong. Dodd Frank legislation is in place in the US and Basel III on the international level. Banks have more capital today (which would help to absorb losses) and are significantly less leveraged. Dodd Frank established the Consumer Financial Protection Bureau to help address issues with fraud in banking, mortgage industry and economy in general.
I think in general, economists and folks in the financial institution industry believe that Basel III is the better legislation compared to Dodd Frank. The latter contains regulatory provisions which are costly but which do little to actually address systematic risks. And as Dodd Frank does not apply to international institutions, US institutions are at a something of a competitive disadvantage.
And ultimately, the financial meltdown was the result of stupidity more than fraud/corruption. Idea was that US real estate would never decline in value. By itself problematic but when real estate values fall people just lose money. But our real estate bubble was fueled with debt which magnifies the problems and leads to a downward spiral.
The idea that Wall Street didn’t feel any pain is not true. Institutions went bankrupt/were dissolved. Others were taken over by the government and others merged into/were taken over by competitions. Executives lost their jobs. Investors lost their investments. AIG didn’t insure mortgage bonds counting on a bailout. Everyone did what they did because they didn’t think real estate prices would fall.
For some, the idea that there were no prosecutions (at least not on large scale) is because the system is corrupt doesn’t really make sense. There are scores of politicians and prosecutors who would have loved to lead large numbers of bank CEOs into courts and then to jail. Huge financial mess that hurt a lot of people. Events like that always lead people to find someone to blame. Would have been heroes to jail the “crooks.” But reality is that none of that happened because there is no provable laws that were broken.
The history of economies shows booms and busts. Some bigger/longer than others. Not sure its realistic to think we can prevent that from happening. And the reality is a lot of people seem to be looking for the next bubble to inflate and then act surprised when it bursts.
I disagree with post 6. I think wall street understands what they do better than the regulators and politicians do which is why wall street gets away with stuff. This is besides wall street’s money supporting politicians.
Imo, Blankfein lied at a congressional hearing when he said GS was acting like a market maker when selling some cdos. GS was betting against the cdos they were setting up. GS was not being a market maker. GS wasn’t making two sided markets.
Wall Street would have felt a lot more pain if wall street wasn’t bailed out.
For cynical comic relief, follow them up with “Wolf of Wall Street”
Slightly off topic. Have you ever wondered if there was a (big) law firm or two involved in any of the financial blow ups, and if so, why they did not end up in the doghouse like the one Arthur Andersen got itself into when it got entangled in the Enron me$$? 
http://www.slate.com/articles/news_and_politics/jurisprudence/2002/06/scummery_judgment.html
LOL.
Some law firms failed/merged. There were definitely big billing losses and layoffs. Firms lost a lot of business, and banks and other corporations learned they could run ‘lean and mean’ and use less outside legal help if they had to.
Margin Call is on Amazon Prime for free, as is Too Big to Fail. Wolf of Wall Street was on Netflix (I thought it was a horrible movie).
Dodd Frank is very expensive for small banks to comply with. I think many of the smaller, community banks will be gobbled up. They may continue to operate under their old names, but they will be part of a bank holding company or just outright purchase by the biggies.
Second vote for Too Big to Fail. The casting was great, meaning hilarious to see movie stars in the roles of Wall Street leaders and government leaders. Paul Giamatti was Bernanke. Ed Asner was Warren Buffet. LOL.
The Big Short was very entertaining (although perhaps not to everyone’s taste) but I got a lot better understanding of this aspect of the financial crisis by reading the book after seeing the movie.
Really disliked Wolf of Wall Street. It’s about a different topic (like pushing penny stocks) too,.
Without the bailouts, more Wall Street firms fail. Good for them is the sentiment of many. Wouldn’t have helped those folks on “main street” so good, right? Problem is because of interconnections to the global finance system, defaults on Wall Street would have spiraled to other financial institutions. And that means that companies who depend on lines of credit and other debt to buy products they sell, pay employees, etc. now do not have access to credit and thus cannot buy products, pay employees, etc. At the time, numerous public companies were issuing public statements telling the markets (and their customers and suppliers) that they had sufficient liquidity to survive. Some companies established additional lines of credit (not because the business needed it but because they believed the markets (and their customers and suppliers) needed to see additional liquidity to avoid survival fears and prevent loss of business because of those concerns). With more financial institution failures, the economy would have struggled even more than it did and more people would have lost their jobs as companies are unable to access credit needed for daily operations.
The student loan market would have ceased to exist had the federal government not stepped in and started to make student loans directly. The commercial paper market that served as the basis for student loans dried up and with it so would the student loan market.
Bailouts cost less than predicted at the time (and again, cost of no bailouts would have been much larger – to everyone). In some instances, taxpayers actually made a profit. More of an investment than bailout in those cases.
Accounting firms and law firms perform very different functions. Accounting firms provide opinions with respect to the financial statements of their clients based on audits/reviews of the accounting system that serves as the basis for a company’s financial statements and their compliance with generally accepted accounting principles. Those opinions served as the basis for the Arthur Andersen issues with respect to Enron. Big Accounting firms took big hits with the S&L crisis in the 80s/90s though they survived.
Law firms typically only give opinions with respect to specific transactions and then limited to legal matters. Issue with financial meltdown wasn’t whether the documents were legally enforceable but rather were problematic as a business matter. And even if you believe Wall Street knew exactly what it was doing (despite reality that many firms didn’t survive, execs lost jobs and investors lost investments – and even more would have done so without bailouts which no one in the years leading up to the crisis knew for sure would happen) and the problem was fraud/corruption, legal opinions disclaim fraud/corruption.
^In other words, they were too big to fall? They still are and they shouldn’t be. The $500/glass wine stopped flowing only a few days after the crash. They started flowing again after the bailout. They continue to have a high life while everyone else tightened their belt. Need I say more?
So break up the big banks? Some are calling for that. I don’t see the benefits of that though at this point. Seems to me its better to address with regulations rather than losing the benefits of economies of scale (for both customers and the banks themselves who are competing globally with large international institutions). But I am not adverse to having a discussion (as long as its based on reality and not propaganda).
Are the domestic 3 automakers too big to fail? Bailouts would seem to indicate that. If so, should they be broken up too? Any other big companies that are interconnected to the larger economy in such a way which would cause major disruptions to the economy as a whole if such companies failed? Should they be broken up too? Or just regulated more?
I don’t recall seeing anything in Dodd Frank which covered $500/glass wine. Maybe the wine lobby got such provision removed in conference? 
How much regulation do you want over Wall Street and/or financial institutions in terms of their expenses? How many $500/glass wine is being sold?
^You must work in the finance industry. When it is too big to fall, there is no regulation that can stop them. They will just buy the regulators.They will say it will be for the best of everyone involved including their victims. Why? They are too big to fall. It will be too painful if they fail. The only thing we can do to avoid disaster is help them. Cute! Why did we break up Bell company when they were doing so well, cheap phones for everyone one?
We liked it a lot. I have to read the book now.
Economies of scale?
Trillions of dollars were lost.
Interest rates are at depression levels 8 years after the financial crisis.
The political power of wall street is huge.
Society doesn’t need that kind of economy of scale.
Moody’s and S&P were giving out ratings that were false to get business.
Goldman didn’t know they were peddling crap? Really?
AIG didn’t know what they were doing. That’s true.
Why were the banks made whole when AIG blew up?
Government could have helped main street by investing in infrastructure and creating jobs.
Instead, the amount of government jobs flattened or decreased.
Ma Bell was a monopoly. Banks/financial institutions are not.
Should we raise interest rates? What will that do to GDP growth which isn’t exactly knocking the lights out at this point?
The Fed went with essentially 0% interest rates to prevent deflation (which at the time of the crisis was a significant concern). Deflation can lead to essentially an economic death spiral which is much more difficult to pull out of than a recession (even a great one). Just ask Japan.
What would the costs have been without the financial bailouts? How many jobs lost and companies out of business? Credit is the life blood of the global economy. Without it, large majority of companies (particularly small businesses which provide huge portion of jobs in the US) cannot function. They can’t pay suppliers, rent, salaries, etc. Without the bailout, more banks/financial institutions fail which would have meant more companies would have lost access to credit meaning they die. How much would that have cost?
What happened to all those “shovel ready” jobs I heard politicians talk so much about?
Problem with movies like The Big Short is that the narrative in it becomes reality for people who don’t understand what actually happened and why. From what I have heard/read, it got something right but not everything. Scores of peoples’ understanding of the Kennedy assassination is based solely on the JFK movie. Problem is that movie just made up a lot of things that never happened or twisted them. But they become reality for people whose only understanding of what happened in Dallas that day are from the movie. And compared to the financial sector, the matters at issue in what happened in Dallas aren’t very complicated.