The movie margin call was based on what company

The movie margin call was based on what company

This article reveals the plot explained and the events detailed in j. c. the call to the margin of chandor, which reveals its meaning and its history. we recommend reading it only after watching the movie, and not before, to preserve the pleasure of the first viewing.

margin call is a 2011 film from debut director j. c. With an A-list cast including Kevin Spacey, Jeremy Irons, Paul Bettany, Stanley Tucci and Demi Moore, Chandor is considered one of the most gritty and realistic frescoes of how Wall Street works in modern times. The movie deals with financial issues that are a bit more technical than usual, and as the plot progresses it becomes clear that something really big is about to happen that day, but it’s not clear what this really means. bitterly, what you see in the film is inspired by what really happened in the financial crisis of 2007-08. let’s try to explain what happens.

the plot (simplified)

Those are tough times at a large US investment bank (whose name is unknown). there are layoffs in progress, it is necessary to contain costs. Among the employees fired that day is an important element, Eric Dale (Stanley Tucci), the head of the risk department. when eric leaves the company, he tries to convince several colleagues that he was working on something important, but no one takes him seriously. Finally, he hands a USB stick to one of the company’s newcomers, Peter Sullivan (Zachary Quinto).

Peter spends the afternoon working overtime and finds out what Eric wanted to warn them about: projections have been made about the likely volatility of the value of some particular products that the bank has been selling for years. based on a likely scenario of market trends, the value of these products could fall very soon, and if this happens, the entirety of the bank’s total financial holdings would not be sufficient to cover the losses. In simpler words: in the last few years the bank has exposed itself too much, selling and buying products that are quite risky for its clients, and if the value of those products falls as expected, the bank goes bankrupt.

This is very serious, and in one night the entire executive committee of the bank is involved, including the CEO, John Tuld. Sharing the nature of the risk, it is curious to see that none of the bank’s executives have the technical skills to understand precisely what these products consist of, a sign that the creation of these products was an undertaking that required so much complexity that no one really understood them. . we only know that they sold and sold well, and that was enough. In this, the film clearly shows how Wall Street works: the goal is to make money, and if you need to resort to unorthodox practices, that’s fine anyway.

At the meeting with the CEO, Tuld realizes that the markets crash is about to break. “I am here to guess what music could do in a week, a month or a year. And standing here tonight, I’m afraid I hear nothing. just… silence. The analysis of the situation and the predictions presented by Peter give a clear signal that it is time to save what can be saved. That is why he asks for an unprecedented operation: the sale of all the bank’s financial assets the following day, preferably before lunch, before the rumor begins to circulate and the value of the products they are selling begins to fall. This triggers Sam’s (Kevin Spacey) scruples, but he succeeds in the end: the bank sells everything, triggering the collapse of the markets and the looming financial crisis. in the film, at the end of the day, the CEO reassures the survivors of the operation, saying that there will also be a lot of money to be made this time and that the best men are needed.

the true story behind the film

the film does not mention or name any real-life characters or real stories, but the reference to the financial crisis of 2007-2008 is clear in all aspects, including the director’s final speech executive tuld to sam, in which tuld lists all the world’s major financial crises. history and arrives at the gates of 2008, a sign that this is precisely the crisis that is about to explode. thus, the film is inspired by the 2007 subprime crisis and lehman brothers, which went bankrupt in 2008. to confirm the reference, the name of the CEO of The movie, John Tuld, looks a lot like the real Lehman CEO, Dick Fuld.

the final explanation and the meanings of the film

the film is therefore a realistic mirror of how wall street works. Investment banks and brokers are traders who buy and sell for their clients, with the aim of making them (and themselves) earn. if there is an opportunity to earn more, even if it is risky, it is taken advantage of, often without being fully aware of the risks that this entails. this in the film is clear in how the risk analysis department is barely visible and heard by others, and how the products that the bank sells are not understood by practically anyone.

The day of the sale is precisely the day that triggers the margin call. In technical jargon, the margin call is a sale operation that is carried out when it is understood that the value of the product sold has fallen to the point that new liquidity would be needed to cover the loss. The CEO’s order that night is basically to sell all his real customers something that won’t be worth anything in a few hours, for cash. This triggers the scruples of Sam, who as a long-time salesman feels uncomfortable in the position of selling something to customers who will soon find out how much those products are actually worth. an immoral operation, which the CEO justifies in ethical terms (“we sell at the current market share”, technically true, but the bank is aware that these values ​​will soon collapse), but above all of survival: if the market collapses , our job is to save ourselves, whatever it takes. even cheating our loyal customers.

the metaphor of sam burying his beloved dog at the end of the film reflects the collapse of the markets: with the operation of that day, it is as if the bank had dug a ditch for the burial of a dying market. They are not specifically the architects of the crisis, but rather the ones who lit the fuse with the sudden sales. The market was bound to crash anyway, since Sam’s dog was bound to die from the tumor.

the way wall street interacts with the world of its customers is ambiguous. From the positions of the different characters in the film, it is clear that investment banks do in all respects what they are called to do: create the illusion of a possible and easy profit, to guarantee the expensive lifestyle of those who invest in they. crises happen. Bold decisions to use high-risk investments are part of the game. customers should know, and if they pretend to ignore the risks, it’s just hypocrisy. And in the end, as Tuld says, “it’s just money”. As professionals in the sector, brokers treat their work with the necessary nonchalance, and do not worry too much if a family is going to have large economic losses. it is part of the market.

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