Margin Call

Margin Call is another offering in the growing list of movies and documentaries that attempt to explain the economic meltdown of 2007-08. This one gives an insider’s view of a giant financial institution–perhaps a Lehman Brothers, although the company is never identified– as its analysts suddenly realize that their company can no longer sustain its high levels of margin-driven debt against its falling asset values.
The film opens with a cadre of blue-suited vultures–most of them women–storming the office to let employees go. At the end of the day, nearly half of them have been fired, including middle manager Eric Dale (Stanley Tucci). Dale has been working out a logarithm that seems to be predicting financial catastrophe, but no one will listen as they usher him out the door. This scene is perhaps the most intense of the whole movie. Women literally tap men on the shoulder and signal for them to follow, an action reminiscent of the Rapture that will herald the beginning of Armageddon. It is hard to say which is better–to be summoned away, or to be left behind to face destruction.
As a parting gesture, Dale tosses a flash drive to his protégé, Peter Sullivan (Zachary Quinto), and warns him to be careful. Sullivan opens the file, and after adding a few mathematical computations of his own, discovers that the company’s net worth is less than the debts it owes. Considerably less. And with the multiplier effect caused by buying on margin, the gap will widen exponentially in a matter of days unless the markets as a whole turn around. An emergency meeting is called, with all the corporate bigwigs arriving in the middle of the night.
Here the film becomes heavy with pointed dialog intended to explain the problem to those of us in the popcorn gallery. It is not unreasonable to assume that every one of these high-powered business people in this high-powered room is a genius at math and finance. Yet CEO John Guld (Jeremy Irons), sinister in his impeccable gray suit, his impeccable British accent, and his frighteningly sharp face, threatens Sullivan, “Speak to me as you would a child, or a golden retriever.” This childlike explanation is designed for the audience’s benefit, of course, but it is almost laughable in the circumstances and reveals J. C. Chandor’s inexperience as a writer/director. He doesn’t yet know how to set up exposition believably.
What follows is intended to explain the financial meltdown in layman’s terms, but Sullivan’s explanation remains so abstract and obtuse that only someone who already understands it would be able to fill in the missing specifics in order to comprehend it. We know that the company has borrowed too much against assets that are diminishing in value, but we don’t gain any further light from having seen this movie, and we certainly don’t learn anything about how to prevent a similar meltdown.
More interesting is the ethical conversations that follow. After Guld reminds the Board of his motto of success: “Be first, be smarter, or cheat,” he adds, “I don’t cheat, and we aren’t any smarter, so we will have to be first.” This means that his brokers will have to sell all of their assets within hours of the market opening in the morning, before buyers realize that the asset values are dropping.
Sam Rogers (Kevin Spacey), a 34-year veteran of the firm, offers the free-market answer to government regulation when he argues, “But you’ll be selling something you know is worthless. They will never buy anything from you again.” He’s right, of course. The greedy business person looks for the quick profit that comes from offering inferior quality at an inflated price, and then hurriedly moves on. But the wise business person offers good quality at a fair price, knowing that satisfied customers will provide steady gains from repeat sales for a lifetime. Cynically Guld gives the opposite view of the free market: “We’ll be selling at the ‘fair market value.’ It’s not our fault if the fair market keeps falling.” Acknowledging Sam’s point about repeat customers, he continues, “This is the big one. We have to get out all at once.”
To entice their brokers to destroy their own careers by ruining all their customer rapport and good will, the company leaders offer the brokers huge incentive packages for unloading the majority of the company’s assets by the end of the day. The brokers might not be able to get a job for a while, but with this kind of compensation, they won’t have to. Integrity can’t be bought, but it can be sold.
Karl Marx argued that those who deal in money deal in nothing. They don’t produce anything of value, and they don’t consume anything of value. They just provide a medium of exchange. Thus, in a Marxist’s view, being a salesman or stock broker is the lowest form of labor. This point comes through in the film when Dale laments, “I used to be an engineer. I built a bridge once.” He then recounts how much time and energy he has saved for all the people who have used his bridge every day for years. The implication is clear: as an employee of this financial institution, his life has been meaningless.
Sam Rogers responds in a similar fashion when Guld says derisively, “You could have been a ditchdigger” instead of a successful, wealthy financial analyst. “Yes,” Sam agrees, “but then at least there would be some holes in the ground.” Guld continues in Darwinian style, “It’s just money; it’s made up. Pieces of paper with pictures on it so we don’t have to kill each other just to get something to eat. It’s not wrong. And it’s certainly no different today than it’s ever been….You and I can’t control it, or stop it, or even slow it….We just react. And we make a lot money if we get it right. And we get left by the side of the side of the road if we get it wrong.”
This cynical attitude about the role of financial institutions is continuing to drag down our economy as surely as investing on margin did. It willfully ignores the fact that financial institutions provide capital for funding those bridges and ditch-digging projects. It encourages viewers of films like this to ignore that fact too. These films continue to garner glowing praise while vilifying an economic system that allowed America to become the wealthiest, most powerful, and most generous country in the world.
For a relative newcomer (this is his first full-length feature film) Chandor managed to do several things right. He secured major funding and assembled an all-star cast that includes not only Tucci, Spacey and Irons but Paul Bettany, Demi Moore, Simon Baker, Mary McDonnell, and many others. He has garnered accolades from the mainstream critics. He has written a script that has, despite its schoolboy reliance on potty language, “gravitas.” But while it may seem “important,” it isn’t very entertaining, or very thrilling. Interesting is about as high as my praise will go. His direction is often affected and heavy handed, especially with his actresses. Wait for Margin Call to be available on Netflix.
Margin Call (2011). J. C. Chandor, director. Before the Door Pictures, 107 minutes. Rated R for language.