FAT CATS & STARVING DOGS
Although MARGIN CALL is fiction, it’s not science fiction. I usually do SF, but this drama deserves special attention. Mainly because it has a few monsters of it’s own— from which we can extract a pretty potent truth.
This compelling drama is about the machinations behind the financial crisis on Wall Street in 2007. A Wall Street stock trading firm discovers its mortgaged based securities are dangerously over-valued and will bankrupt the company, so an emergency board meeting is called in the middle of the night and a “fire sale” is proposed to dump these securities on an unsuspecting market.
“We are selling something that has no value.” Sam Rogers, the trading floor manager (played by Kevin Spacey) objects to the scheme.
“We are to selling to willing buyers at a fair market price,” replies John Tuld, the company CEO,“so that we may survive.”
Despite objections, Tuld orders the “fire sale”.
Sam Rogers reluctantly superintends the liquidation of these “toxic securities”, knowing that he and his staff are knowingly cheating their clients and will very likely cause the crash of the New York stock market.
After the dastardly deed is done, Sam Rogers hands in his resignation.
“I want out.” he tells his CEO, “I’m done. I want out.”
But Tuld will not let him resign.“It’s been a very difficult day for all of us,”
“I need you to release my options,” Sam pleads, “ if they’re worth anything after today. I want my bonus. I want out”
Tuld reassures Sam, “You’ll keep your bonus, your options, and keep your client base, but I need you to stay with me for the next twenty-four months.”
When Sam turns away in despair, John Tuld continues.
“Oh, come on Sam, you did some good today. You said that yourself.”
Sam is clearly crushed at the thought of having cheated so many people. John Tuld tells him, “What, so you think you may have put a few people out of business today? That it’s all for naught? You’ve been doing that, every day, for almost forty years, Sam. And if this is all for naught,so is everything out there…” (gesturing at the Manhattan skyline). “It’s just money.”
IT’S JUST MONEY
Here Tuld gives the most amazing private little pep talk…one that would absolutely floor every human being in the world, for it’s candid ruthlessness.
“It’s just money. It’s made up. Pieces of paper with pictures on it, so that we don’t have to kill each other to get something to eat.” Tuld is eating his lunch, as Sam sits listening, dumbfounded, “ It’s not wrong. And it’s certainly no different today than it’s ever been. 1637; 1797; 1937, 57. 84, 1901, 07, 29, 1937, 1974, 1987, (didn’t that bugger me up good!) 92, 97, 2000, and whatever you want to call this. It’s all just the same thing, over and over. We can’t help ourselves.”
“And you and I, Tom. [sic] Control it or stop it, or even slow it, or even so ever even slightly alter it, we just react. And we make a lot of money if we get it right. We get left by the side of the road if we get it wrong. And there have always been, and there always will be, the same percentage of winners and losers, happy thoughts and sad facts, fat cats and starving dogs in this world. Yeah, there may be more of us today than there’s ever been— but the percentages, they stay exactly the same.”
Sam looks away, ashamed.
“I’ll do it, John,” he says resignedly, “but not because of your little speech, but because I need the money. It’s hard to believe after all these years, but I….I need the money.”
As Sam gets up to leave, a young rookie trader (the one who discovered the impending disaster on the company books) enters the room.
“Are you going to keep the kid?” Sam whispers to Tuld.
“Keep him? He’s getting promoted. It’s all hands on deck now, Sam. There’s going to be a lot of money to be made coming out of this mess. And we’re going to need all the brains we can get around here.”
THE APPALLING TRUTH
In my own lifetime I’ve heard many of these speeches. When John Tuld says to his staff, “There’s three ways to make a living in this business: be first, be smarter, or cheat — now I don’t cheat.” When he says that, (“I don’t cheat”) Tuld is a liar — because the very next thing out of his mouth is a plan to cheat all his customers out of their money.
It’s hard to catch a liar in a lie. A good liar is practiced. He makes a living out of it. He is a master planner, always picking his words carefully. Of course, nobody in our society will ever admit he or she is a liar or a cheat. But there are many of them out there. Smooth talkers. Smooth operators.
Here Tuld is going to sell worthless stocks to his friends, his clients, even his mother (if she is buying) and yet he comes off as smooth as silk. And he manages to manipulate his staff into marketing his big lie to the world.
Right now smart operators all over the world are maneuvering around, preparing for the Big Crash. They are moving their assets away from their former bases of operation, to foreign countries. Why? Because home ground has become too volatile. The chances of making any money at home are evaporating quickly. (Why? Because stocks have been traded out of all proportion to their actual worth. ) So what to do? Move your money to a foreign country until your own county’s system collapses. Then, when house and land and resource prices bottom out, buy low and sell high.
Of course, there are several tricks to being a sharp operator. Don’t do anything underhanded if somebody’s watching. Don’t ever get caught. If you’re caught, find somebody else to blame. And whatever happens, pass the buck . Don’t ever get stuck holding the bag when the buck stops.
And this seems to work. But don’t be fooled. Remember that proverb that I’ve been mentioning in other episodes? “In vain is the net spread in the sight of any bird.” [Proverbs 1:17] This means don’t set your trap where your victims can see you doing it.
This piece of advice comes from the Bible. And it’s not just about catching birds. It’s about God catching men.
Atheists are fond of railing about how God cannot possibly exist, because He never shows his hand, and where is he when you really need him? And why would he allow so much death and suffering? In the case of a world-wide financial collapse, caused by some pretty clever stock market traders, if there was a God, how could he allow such things to happen?
What these folk forget is that God is keeping records. Jesus Christ told people, “ every idle word that men shall speak, they shall give account thereof in the day of judgment.” [Matthew 12:36] Every word spoken in secret, every illegal transaction ever done, will be exposed on Judgment day. That’s why God stays pretty well out of sight. He knows that wicked men wouldn’t do what they plan to do if they knew somebody was watching. All the illegal activity going on around the world, do you think it’s done by men and women who think that God is watching?
Take the Godfather. He killed people for a living and went to church on Sundays. Do you really think God looks the other way when criminals are churchgoers? When convicts are Christians?
MARGIN CALL is an exact analogy of what is going to happen one day soon. One day soon God is going to call all men to account. The religious criminals think they can anticipate God’s next move and beat him to the punch. When they sense God is going to call them up for judgment, they’ll run off to church and say a few Hail Mary’s. That way they get to stack up piles of money while they’re alive, and also supposedly go to heaven by saying a few nice words at the last minute before they die. Or, like Hitler, kill themselves to escape punishment.
As for the almighty dollar… the Bible clearly warns that one day soon all the markets will crash and no amount of money will be able to save anybody. Just read James 5:1-4:
“Go to now, ye rich men, weep and howl for your miseries that shall come upon you. Your riches are corrupted, and your garments are moth-eaten. Your gold and silver is cankered; and the rust of them shall be a witness against you, and shall eat your flesh as it were fire. Ye have heaped treasure together for the last days. Behold, the hire of the labourers who have reaped down your fields, which is of you kept back by fraud, crieth: and the cries of them which have reaped are entered into the ears of the Lord of the Sabbath.”
This means, literally, that in the last days God will judge all men for how they have manipulated their fellow human beings. And no, John Tuld, there will not always will be the same percentage of winners and losers, happy thoughts and sad facts, fat cats and starving dogs in this world— God soon will turn this world upside down and inside out.
No John, it’s not the smart operators who will win in the end. The meek will inherit the earth. [Matthew 5:5]. It’s to the meek that Jesus said, “Fear not, little flock; for it is your Father’s good pleasure to give you the kingdom.” [Luke 12:32]
Time to check out your options, Gentlemen.
LINK TO ESSAY: What no rich man can buy, but every poor man can afford.