The Column – Money Never Sleeps: On Fixing the Global Financial Crisis

Miguel Penabella | 27 June 2012

The Column is a Free Tea segment that serves as a forum with which to discuss random topics on cinema and topics outside of it in a pseudo-opinionated manner, much like your weekend newspaper column. A little more informal and more concise than your regular Free Tea feature, these pieces are meant to both inform and express personal thoughts on various issues.

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I once took an economics course, but most of that time sitting in lectures either witnessed me browsing Reddit or reading music reviews off Pitchfork. Naturally, I suppose I’m more than qualified to speak on the global financial crisis and potential approaches with which to solve such a quandary. I have to admit, I’m completely oblivious to the various G-20 summits held around the world and I have no idea what the term “hedge fund” means, but I do enjoy reading Bloomberg Businessweek and I did actually pay close attention in my Asian studies class, the syllabus of which focused on late 20th century and 21st century contemporary global issues ranging from glocalisation to critical media theory. By no means am I supposing that what I have to offer to economic discussion carries a profoundly intellectual, even mildly thoughtful weightiness. What I do hope is for an amusing spiel of a column that may or may not instigate some kind of appreciative consideration, or even an amused grin on one’s face.

Ever since the major turning point in 2007 when the global financial crisis and recession became an immediate thing within our society, global think tanks and politicians have been squabbling on how the bloody hell to go about solving the problem. I for one oppose austerity measures in Europe and champion the tried-and-true rules of elementary economics concerning expansionary fiscal policy. An increase in government expenditures and a cut in taxes will increase aggregate expenditures and real GDP growth, thus gradually lowering the rate of unemployment and balancing the budget. That’s the old route taken directly from economics’ fundamental level, and that tends to work in 20th century politics. Unfortunately, the 21st century has complicated the issue, what with the Eurozone, more recent changes in the Glass–Steagall Act, globalization, so on and so on. The truth is, people will hesitate in investing in such an unstable economic atmosphere no matter how safe it may seem; political mudslinging in the upcoming election and media spin will likely exacerbate already build-in anxieties for the future. On the other hand, people will also doubt the integrity of the banking system, especially considering how interconnected the world’s economies have become due to our incessant championing of the virtues of globalization. With vital countries on the brink of economic collapse (specifically Greece, Italy, and Spain), the thought of their failures causing a catastrophic domino effect on a majority of the European Union, and unavoidably, on the United States warrants uncertainty and anticipation lest people’s savings and pensions disappear should Greece ever implode from all the chaos. 

Even more distressing is how flawed our banking system operates, because if people decide to begin taking out their savings in a nice about-face to the global financial sector, then the entire industry would crumble. No matter how much we loathe the overpaid, underhanded Wall Street money machine, they’re here to stay simply because they’ve written themselves into the global financial system in such a way that their removal would sink economic conditions even further. And because unmitigated economic globalization has now become central to economic thought, the complex interactions within the market and its contribution to gross domestic product becomes a bit fuzzy. We’d like to spend more money in an effort to appease our government’s push for investment and consumption to stimulate the economy once again, but that’s not taking into account the actual goods produced. Because the manufacturing sector of developed countries like the United States and the United Kingdom have been outsourced to areas of cheaper industrial labor, namely developing countries China and India, buying imported goods only stimulates their GDP. Truth is, a majority of the goods we purchase are produced overseas, and this factor confounds the conversation on how to stimulate the economy once again.

So what does the cinema have to say about the global financial crisis? As history tells us, no other industry during the Great Depression in America prospered quite like the film industry. Granted, there were a number of theater closures and flops, but the classic, monopolistic studio system of RKO, MGM, Paramount, Warner Bros., and 20th Century Fox continued to make money all throughout the Depression to the point where the Supreme Court allowed these monopolies to exist because they were so vital to the economy. Hell, even a company as significant as 20th Century Fox emerged in the midst of the Depression in 1935. Clearly, if an industry that produces nonessential goods/services can subsist and even flourish in an era where entire populations waited in soup kitchen lines, the film industry can thrive in this era’s recession, right? For the most part, the 21st century has shown that cinema is recession resistant, but not necessarily recession-proof. MGM tanked in 2010 when it declared bankruptcy, but in the context of the modern movie industry spectrum where dozens and dozens of growing companies exist (and not just the five major studios back in the 1930s), MGM’s failure comes as no surprise. Even as one monolith lays low in a slow recovery process, numerous other studios are rising to take its place: Lionsgate (The Hunger Games), The Weinstein Company (The Artist, The King’s Speech), etc. People will always turn to the cinema as one of the cheapest sources of escapist entertainment because of the medium’s role as mass entertainment. An increasing number of films are being released with each passing year, and the top earners are already surpassing the billion dollar worldwide gross mark, regardless if the numbers are adjusted for inflation or not.

The widely successful Harry Potter series has earned $7,706,147,978 in the course of a decade, which is still greater than the total grosses for 24 James Bond films or 7 Star Wars films (including that animated one that nobody remembers), proving that even in the midst of the worst part of the economic crisis, the cinema will prosper. And let’s not forget the flourishing newcomer that is the Marvel Cinematic Universe, whose six films have entered into the pop culture consciousness as one of the surefire moneymakers at the box office. People go to the movies even when food needs to be put on the table and mortgages need to be paid because these troubles simply vanish in the dark, air-conditioned palaces where recession woes cannot enter. Movie theaters are the purest form of bread and circus to appease unruly masses – the junk food of the lobby paired with the bright, Orwellian screens looming over passive audiences. There are a number of exceptions to the rule, however, as some films also reflect social realities to comment on modern times. The critical and commercial results that come out of these films reveal significant insights on how many Americans feel about the political/economic topics implied within, and these results speak a lot about our current social atmosphere.

One recent example is Oliver Stone’s flop back in 2010 with Wall Street: Money Never Sleeps, a film that features the iconic Gordon “Greed is Good” Gekko (Michael Douglas) returning to the screen. While the film may be a sequel to a high profile title, box office returns have resulted in a much talked about failure amongst the film community. What Stone failed to anticipate was the worsening financial crisis and the tarnished image of Wall Street, and the film’s depiction of moneyed figures representing the corporations/financial institutions that played a major role in our current economic malaise simply alienated audiences. In contrast, 2010’s surprise hit The Town won over critics and audiences with its premise of populist everymen from a working class background combating the forces who’ve plagued the economy in the first place. Director Ben Affleck portrays his characters as bank robbers on surface level, but in the context of the financial crisis, a heist film as this pretty much serves as a middle finger to the banking system itself. Then there’s the Occupy-tinged Coriolanus and the upcoming The Dark Knight Rises, and you can see for yourself the vast majority of America sympathizing with working class woes and shunning the corrupted institutions that brought down the economy to begin with.

The populist-minded mood of filmgoing audiences couldn’t be farther away than the current American government, which many critics have derided as a “Wall Street government.” Indeed, such big names as Federal Reserve chairmen Alan Greenspan and Ben Bernanke (the latter of which is our current one) have been plagued with controversy over their support for Wall Street names. And let’s not forget Treasury Secretaries Henry Paulson and Timothy Geithner (the latter of which is also our current one), both of whom have worked in Wall Street and thus, to many Americans’ populist eyes, view them simply as out of touch with everyman misfortunes. What the government needs to recognize is its constituents’ disproval of Wall Street and major corporations – having them onboard may perpetuate our continuing financial crisis. Instead, as Mr. Smith reminded us back in 1939, even an earnest common man can make it to Washington. Added to this prospect the current “We are the 99%” movement of Occupy, the masses are beginning to reawaken to more direct action against less than stellar government policies.

One last consideration on the global financial crisis: world markets. I’ve brought it up numerous times before, and I’ll bring it up again. Globalization has changed the face of international relations, and if developed countries are to pull through an economic downturn, leaders absolutely must turn to developing countries. These emergent powers drive economic growth, specifically the much talked about BRIC – Brazil, Russia, India, China. In the realm of the cinema, the popcorn blockbusters of the summer have proved time and time again that overseas box office grosses are vital for considerable ticket sales – especially China. Men In Black 3 grossed over $75 million in the country, a considerable return that exceeds any other national audience besides the United States. Just like in the economic realm, reception from overseas markets remains absolutely vital if consumers in America are reluctant to spend money. As a result, many films have received international financial backing such as the upcoming Iron Man 3 and Looper (both from DMG Entertainment, a Chinese studio) and even production company Legendary Pictures have created a Chinese offshoot studio Legendary East and partnered with Huayi Brothers Media Corp. to release The Dark Knight Rises.

In conclusion, the most straightforward way to help the American economy would be to cater to China’s whims. After all, refusing to admit that the country isn’t a credible superpower would be a step towards doom, and of course, we want to avoid a Cold War-esque manufacturing race because we’ll surely suffer for it. So then, I suggest taking a step away from Wall Street and looking across the ocean to brighter prospects that lie beyond the horizon: for the greatest good of economic recovery, we should all probably watch The Dark Knight Rises then.

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