Going to a seminar or reading financial books are great ways to learn about the relationship between finance and the economy. But sometimes it’s easier to just watch a movie. You are likely to take in and retain more information within a shorter time. So in today’s video, we’ll be sharing with you, 5 movies to help you learn about the past economic crash and what lead to them.
Here is why this video is important. With the recent corona virus pandemic, economic lockdown and the resulting effects, there is a big chance that we are at the wake of an economic recession. The world has broken many records over the past month. Oil price dropped to a negative value, selling at minus $37 per barrel of WTI. The stock market dropped at a record low; over 26 million people lost their job within one month in the United States alone. There are lots of uncertainties of what would happen in the next 3, 6 to 12 months economically.
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Although this 2020 crisis is not like past pandemics or economic recessions, we believe it’s wise to look to the past to gain some knowledge from a similar crisis. If you find it burdensome to read a 400 page book, movies make it a lot easier to sit down for a maximum of two hours and get entertained while you learn. With that said, here are 7 movies to help you learn about the cause and effect of the financial crisis.
- The Big Short
Based on the book by renowned journalist Michael Lewis, the film is likely the most well-known of the events leading to the 2008 financial crash. It examines conflicts of interest between several characters who foresaw the crash, including hedge fund managers, a Deutsche Bank salesman and the investors who benefited from it. This group of investors predicted the housing and credit bubble and made money betting against the bubble ahead of the nation’s economic collapse. One of the major pluses about the movie is how it explains complex financial instruments to easy understanding.
- Inside Job
Inside Job is one of the most well-done and informative documentaries on the 2008 housing and banking financial crisis. The movie won the 2010 Oscar for the best documentary picture. Broken down into five parts, the film takes the viewer through the U.S. policy changes and banking practices that led to the global financial crisis. It begins by highlighting how the economy was set up to fail, how the bubble grew between 2001 and 2007, how the crisis struck in 2008, who was accountable for the crisis and then a wrap-up of the aftermath.
For anyone interested in the financial world, this is the No. 1 documentary to watch. Through an understanding of the history of one of the largest financial crises, it’s possible to learn from past mistakes to foresee when something like this can happen again and prevent it from happening. That is if it’s not already too late.
- Too Big to Fail
Some financial companies are perceived to be so big and so interconnected that pulling them out of the system would lead to the collapse of the system itself. Adapted from Andrew Ross Sorkin’s book, the 2011 film chronicles the tense weeks leading up to the 2008 financial crash, from the government’s point of view. The narrative centres on the treasury secretary Henry Paulson and Federal Reserve chair Ben Bernanke as they try and secure the future of the country’s financial sector. It becomes obvious that while the banks are not large enough to avoid collapse, they are too big for the government to allow them to fail. This movie shines the spotlight on the game that is being played by the elite in the financial world.
Economists believe that if the Too Big To Fail’s feel they will be insulated against pressures of the market they will not self-regulate and resist any outside attempts to do so. Experts believe that no firm should be too big to fail. “If they are too big to fail, they are too big”.
- Wall Street: Money Never Sleep
This is a sequel to the 1987 movie, Wall Street. Wall Street’s most notorious banker Gordon Gekko makes his return to the Big Apple after a stint in jail for insider trading – just in time to watch the economy plummet. Gekko finds himself caught up in a mission to reconnect with his estranged daughter, help her young stockbroker boyfriend and get revenge on a heartless banker who is using the crash to destroy firms for personal profit. The movie shows how greed, envy, vengeance, rumour and market manipulation all play out in the financial world.
- Margin Call
For a more realistic look and a more humane understanding of the way financial markets work, the 2011 film Margin Call provides an excellent look at one dramatic day from the inside of a money-management firm before the economic crash.
The film shows that these firms were not, on the whole, driven by criminal malfeasance. Instead, they were obeying (and trying to anticipate) the market signals they had on hand, as is their job. They had cobbled together a model that presumed that past behaviour would persist into the future. This model worked — until it did not.
Once it became clear that bond markets were testing the limits of the models, the firm decided to become the first one out the door. At this point, it was a matter of life and death of the business. The rush to get out before the crash led to vast selling of soon-to-be worthless securities at current market prices. When the securities fell to a price of zero, heads rolled — and then the most powerful players in the industry were bailed out by politicians driving truckloads of taxpayer cash. Everyone on the trading floor lost their jobs, and the firm took a huge hit, but it survived because its managers acted with speed and insight.
Have you watched any of these movies? Which of them is your favourite? If you haven’t watched any of them, which are you going to watch first? Tell us in the comment section below.
