Margin Call

I just posted a film review on a classic by Alfred Hitchcock set in the 1950s and now lets move into the modern times. I caught another film: Margin Call which was set in modern times amidst the global financial crisis. The reason I picked up this DVD is not because I wanted to watch something related to finance- of which I written about quite often- but rather I want to watch how they bring drama into finance on the big screen. I was quite surprised it was quite a good film and very watchable but ultimately cliches and stereotypes remain quite divorced from reality.

The film is set in an investment firm of which the firm's name remain conspiciously left out- for fear of allusion to any existing firms I suppose. The firm is facing well- a margin call- as the accumulation of toxic debts meant that the firm might be insolvent as the losses on these debts might cost more than the firm itself. Think of the trading losses by certain banks and investment firms that you see in the papers the last couple of years.

Again like all films, once again the focus is on the drama and rather than on the wider picture. It explains what happens on the trading floor quite well actually and let's you know how does traders buy and sell securities but it cannot escape from glamourizing a job which really at the end of the day is not really that exciting 99.9% of the time. What they just described is once in  a life-time crisis of which swift and dramatic action is necessary but the rest of the lifetime non-crisis days are really just lots of grunt work and involving quite a lot less money for the 99.9% of us.

What they have described is really 0.1% of the investment people doing 0.1% of the scenarios. You would never get that scenario again if you were enter the same world. You would highly likely be shoving papers and taking much smaller positions and lesser leverage than you are a shouting match with people on the other end of the phones- this is even more likely so in this part of the world. Hence to me it was a good film but the stereotypes were used to tell a story and nothing else.

90% of us are not so wanton, and the best of us, makes good use of connections rather than blow it away. If you have a bank account, you would know who we are and if it didn't break you previously, what makes you think that it would break now. Hence if most of us are really just gamblers and just self-interested bastards- where did your money go the last 200 years it existed. I have to say something this out because I noticed the bad press and media coverage bankers have been getting recently and I do not think it is highly justified if this film is anything to go by.

A businessman, commodity broker, a real estate investor or even small-time business man would have sold bad stock asap if you are running a business. The moral difference that differentiates a small time gutless businessman that sell bad stocks to ignorant housewives and an investment bank that sells bad stocks to other investment banks is that one outsmarts the other while the other well just exaggerates I suppose.

The film itself is not really breakthrough hence I do not intend to comment on it's filmic qualities but rather the stereotypes that it brings to the table I find it rather misguided. The second stereotype that it brings out is the difference between the traders and risk managers. The traders are seen as pompous self-interested traders with a flair for silver tongue and sales pitching while the risk managers are engineers and mathematicians are safe and morally upright people who would saved the bank from the excesses of the former. Do let me tell me truth: the engineers wants us to be traders but they will never be because they are hardwired to think differently. And no, engineers and mathematician are not the saviours and guardians of the banks.

They rely on the traders for their own personal fat bonuses as well- they are in it as much as the traders. They just so happened to be at the right place at the right time, where crisis meant that protection rather demand generation is the name of the game. But in the last the 95 years of the last 100 of the banking worlds, engineers want to be traders: traders never want to be engineers. Engineers rely on the traders for a fat bonuses, traders are sitting on their hands now and have maintained a low profile but trust me, traders never rely on risk managers. The engineers, mathematicians and risk people are not absolved from the whole financial debacle: they are just as complicit. Where were they when they took the fat bonuses generated by the "silver tongued traders"- isn't that their job to prevent them in the first place. When they break the rules, aren't those "nice", soft-spoken and brilliant engineers and mathematicians created models that prevent them from doing so- doesn't the bonuses given earlier enough to do their job.

The film just stereotype traders as silver tongued and trigger happy and the risk managers and engineers as genial and really nice. I know people from both sides of the coin and trust me both are not stupid and both are equally cut-throat as each other: and none of them will hand you a dime without asking you a ton of questions. That much is pretty clear.