Amit Paranjape’s Blog

Random Thoughts – A New ‘Wall Street’ Trilogy?

Posted in Current Affairs, Financial Markets/Economics, TV, Entertainment & Movies by Amit Paranjape on December 3, 2008

Oliver Stone’s ‘Wall Street’ made in 1987, starring Michael Douglas and Charlie Sheen is one of my all time favorite movies. Who can forget the one and only ‘Gordon Gekko’?!

 

I was not following the financial markets back in 1987, and hence cannot relate first hand to that period. Still the way this movie captures the core human emotions; especially ‘Greed’ that transcends across generations, and multiple financial crises, is extremely revealing. And Michael Douglas is fantastic. I am surprised that a blockbuster sequel (or a set of sequels) has not been launched since.

 

Just think about it; this past decade has provided us with so many great real world plots and scenarios related to Wall Street turmoil! These should be a ‘Dream come true’ for fiction authors and script writers. They say, ‘Truth is stranger than fiction’…nothing proves this dictum more than what is happening in the financial world today!

 

I am writing this short summary piece to capture my random thoughts around three somewhat distinct financial crises during this decade – with specific emphasis on representative players, events, characters, themes and people psyche, as we lived through these tumultuous periods. These three crises can together form a nice new trilogy! Maybe we can all extol the Hollywood Greats to make these into movies. (As if someone is really listening –J… I for one will definitely watch these movies and also buy their DVDs!)

 

 

1. Wall Street 1 ‘The Super Bowl Of Crazy Ads’ – The Dotcom Boom & Bust

 

Think about Super-Bowl 2000. Even though this was one of the best ever Super Bowl games, it will probably be remembered for something other than the Rams-Titans classic. Who can forget that crazy ETrade Monkey ad?! And Pets.Com? This clearly was an era of ostentatious and over the top advertising of businesses and concepts that hadn’t made a single dollar of profit!

 

The crazy atmosphere in the Silicon Valley…The BMWs as sign-on bonuses… Stock options resulting in instant multi-millionaires! The new ‘internet’ based model…The doomsday scenario for ‘Brick & Mortar’ businesses… Overnight words like ‘B2B’, ‘B2C’ entering our lexicon.

 

All this should provide a nice cocktail for a heady movie about this period. You have many rags-to-riches stories. You have Geeks; lots of them. You have teenage CEOs. You have small companies buying out industry icons! And then you have the downfall…the flawed business model, the layoffs, the lawsuits, thousands of these ‘paper millionaires’ seeing their net worth vanish as fast as it had appeared…and the tragic cases of folks who got hit by AMT (Alternative Minimum Tax)…Oh, and through all this period, those naïve average mom & pop investors who chased those ‘hot’ stocks and lost everything? Remember those days when NASDAQ had crossed 5000?! And how very quickly it was

under 2000?!

 

The media played a part too…the constant hyping about the ‘new revolution’. The ‘This time it is different…’ editorials…new magazines coming out every week…and then, as things got tough, those first references to a ‘Bubble’ with artful depictions on cover pages…Treating Allan Greenspan as a rock star…and then pulling him down into the dumps and accusing him of everything that went wrong! Those few months were just astounding!

 

 

2. Wall Street 2 ‘How The Mighty Have Fallen!’ – The Enron-WorldCom Saga

 

How the Mighty Have Fallen! This probably best captures the 2001-2002 period. First Enron, then WorldCom… From extremely complicated financial dealings and transactions to some fairly straight forward ‘creative accounting’. From shredding documents, to massive companies disappearing overnight…From backroom dealings, to whistle-blowers. The court-room dramas, the extended trials (Aren’t court-room dramas an important staple of movies in the ‘Drama’ genre?) The laid-off employees, the retirees who lost majority of their retirement savings…that small sub-segment of fired workers who posed for Playboy!

 

The sentencing, the handcuffed CEOs, the somewhat vindicated stockholders…and last but not the least, the massive overhauling of accounting standards, procedures by the regulators, including the congress, resulting in a ground-breaking legislation…this drama extends to Washington as well!

 

 

3.  Wall Street 3 ‘The Return of the Great Depression’ – The 2008 Financial Crisis

 

Well…this one, we are still living through it for the past 6 months…Critics are quick to point out that this is the worst crisis since the Great Depression! Maybe we haven’t even seen the end of the beginning! But then that shouldn’t stop moviemakers and fiction writers from creating something around it! (It didn’t stop them in previous major transformational events in history…)

 

In my view, ‘Utter Disbelief!’ is what can best describe what we are seeing around us. Who would have thought that legendary century old firms that have driven the course of not just American, but Global Capitalistic Economies and the Free Market System, should just collapse?! This was not supposed to happen in a hundred years! Even the Great Depression had spared these firms.

 

Pivotal incidents would be quite a few – Bear Stearns to Lehman…One bailout followed by the other. Freddie & Fannie, AIG, CitiGroup, the list goes on…The extremely complicated hierarchical CDOs that no one had any idea about…The absurd levels of leveraging…On one side you have these clueless CEOs, and the other side a rescue team led by a man who until recently was part of that same group! How everyone seems to act like those blind men in that ‘Blind men and the Elephant’ tale.

 

There are enough grass-roots level themes to talk about here as well…The typical suburban American family that is leading a very comfortable life by leveraging on everything from the house, cars and credit cards. The Chinese factory worker who is fulfilling the needs for the increasingly materialistic American way of life…The Indian IIT Engineer who is solving tough technology problems… (How can we forget ‘Asok’ from Dilbert?)…the stereotypical Indian call center worker… (1 or 2 Bollywood movies have already been made on this character…). There is that classic geo-political agent of brinksmanship here as well; ‘Oil’! And a presidential election to add to the mix. There are enough things here for some exciting story –J

 

 

What are your thoughts? Any good books that you have read/you can recommend about the first two crises?

 

 

 

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  1. Shashank Jogi said, on December 4, 2008 at 10:46 am

    Yes, it would be interesting to watch movies made on these, though I wonder how CDOs and leverage would be explained on screen.

    Two books on investing/financial journalism that you may want to read are: ‘Bull!’ by Maggie Mahar and ‘When Genius Failed’ by Roger Lowenstein. Nice reads, you might have read them though.

    George Soros has recently written a book on the financial mess titled ‘The New Paradigm for Financial Markets’. Badly written though decent content.

  2. Unmesh Mayekar said, on December 5, 2008 at 6:46 am

    There is enough material on the wild-over-the-top parties that were thrown during the highs of the dot-com months to make a good bollywood flick. The pizzaz/glamour at these parties could rival the most ostentatious bollywood sets ever put on celluloid.

  3. Sam said, on December 5, 2008 at 2:11 pm

    The current state of affairs is really like a “great depression” all over again.
    Even Detroit is in trouble (all 3 major auto makers begging for money). GM said yesterday that their cash won’t last beyond this december !! You rightly described it as an “Utter disbelief”. This surely has potential for making a great hollywood movie (assuming hollywood itself doesn’t go bust).

  4. Ashok Vasan said, on December 6, 2008 at 6:48 am

    a few disconnected comments, but on the topic you’ve written about:

    1. Wall Street 2 has already been made into a movie..called “Fun with Dick and Jane” starring Jim Carrey, Tea Leoni and Alec Baldwin. Not a great movie. Interestingly, the film makers have thanked Ken Lay and Jeff Skilling in the credits🙂.
    2. A good movie that I recommend is “Rouge Trader” starring Ewan McGregor as Nick Leeson who brought down Barings Bank in the 90s. I found the movie to be rivetting.
    3. Am currently reading “Saving Capitalism from the Capitalists” – talks about regulation and continues to defend free markets.
    4. Financial markets…I understand the need for financing, I understand debt and public/private ownership of companies. What I fail to understand is valuations and how freely someone’s (analysts, traders, brokers, medias) opinion can so freely be used to drive share and bond prices up or down. As a friend of mine recently said “there is no such thing as ‘fundamentals’ anymore”.

    One thing is definitely clear in my mind…Greed is not Good.
    Anyway, good article. I’ll pass it along to a friend of mine at Sony Pictures🙂

  5. Amit Paranjape said, on December 6, 2008 at 3:03 pm

    Shashank,

    Thanks for book pointers.

    Amit

  6. Amit Paranjape said, on December 6, 2008 at 3:05 pm

    Unmesh, Sameer: Thanks for the feedback.

    Yes, the dotcom era corporate ‘spending’ on entertainment was literally through the roof! Thanks for reminding me about those lavish parties..also don’t forget those private concerts!

    Amit

  7. Amit Paranjape said, on December 6, 2008 at 3:07 pm

    Ashok,

    Thanks for your detailed comments and pointers. I will check out the ‘Rouge Trader’ for sure. Have heard about that book.

    Amit

  8. Mohan said, on December 8, 2008 at 12:53 am

    Nicely put.. three decades in three paragraphs.. re reading material I think the best books are Den of Thieves for the 80s, Liars Poker for the 90s and well, the 00 isnt done yet..

  9. Rahul said, on December 27, 2008 at 9:17 am

    Amit :
    One very good book is Bad Money by Kevin Philips. It covers a lot of aspects of what’s wrong today & how the US got here. A good comparison with former empires / world powers provides a context – Hapsburg Spain–Dutch–Britsh–US.
    The edition I read was easy to follow along however pie charts and such artifacts would have eased understanding of the topic(s) for both US & for former powers. I heard he is going to do a fresh edition next year & this may be there.


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