January 8, 2012

You Have Three Minutes, Give It Your Best Shot

Readers suggested a topic on future film plots. “Here’s an actual suggestion: movie plots for a decade from now, either set at that time or looking back as the 2000s. Here’s one: ‘Back to Vietnam.’”

“The head of the Chinese politburo calls the President of the United States. The Vietnamese have revolted and overthrown a Bejing-friendly puppet, and the Chinese want the interim regime overthrown. Send in U.S. special forces, he says, the they’ll allow the U.S. to skip a year of interest payments, with the resulting temporary tax breaks and spending helping to ensure the President’s re-election.”

“The rest could be a conventional war/action movie, until the final battle scene when the young hero/victim who joined the special forces because it was the only way to get a job and provide hope for his family, lies dying on the battlefield. A Vietnamese fighter takes the American flag from him and starts to rip it in half. Then he realizes it is two American flags stiched together on the outside, with another flag in the middle. He pulls out the Chinese flag, and roll the credits.”

A reply, “And as the credits roll the camera moves in for a close up of the flags and the audience gets to learn that all three of them were made in China.”

The Columbia Spectator, April 2011. “When filmmaker Charles Ferguson asked Business School Dean R. Glenn Hubbard to discuss the roots of the 2008 economic crisis with him, Hubbard was happy to oblige. Hubbard, the former chairman of President George W. Bush’s Council of Economic Advisers, sat down with Ferguson for an on-camera interview. The conversation, portions of which appeared in Ferguson’s 2010 documentary ‘Inside Job,’ started out calmly. But when the director asked Hubbard why his paid consulting arrangements with financial services companies were not disclosed on his curriculum vitae, Hubbard grew angry.”

“‘This isn’t a deposition, sir … I was polite enough to give you my time,’ he said. ‘You have three minutes. Give it your best shot.’”

ProPublica May 2011. “HBO’s ‘Too Big To Fail’—I just caught up with it last night; thank you, HBO On Demand—is extraordinarily revealing about the financial crisis. Only its revelations are almost entirely inadvertent. There’s Treasury Secretary Henry Paulson, steely eyed at the moment of truth. There’s New York Federal Reserve head Timothy Geithner, the athlete (he doesn’t just jog, but also plays what appears to be squash). And then there’s Federal Reserve chairman Ben Bernanke, the professor with a heart of gold and secret knowledge of the Great Depression.”

“The Movie isn’t the story of how the Three Musketeers saved the global economy. It’s a story of how the three didn’t see the financial crisis coming; hadn’t prepared for it; made mistake after mistake as it was cresting; and then, in their moment of triumph, made their most colossal blunder of all.”

The New York Times, August 2002, by Paul Krugman. “If the story of the current U.S. economy were made into a movie, it would look something like ‘55 Days at Peking.’ A ragtag group of ordinary people — America’s consumers — is besieged by a rampaging horde, the forces of recession. To everyone’s surprise, they have held their ground. But they can’t hold out forever. Will the rescue force — resurgent business investment — get there in time?”

“The screenplay for that kind of movie always ratchets up the tension. The besieged citadel fends off assault after assault, but again and again rescue is delayed. And so it has played out in practice. Consumers kept spending as the Internet bubble collapsed; they kept spending despite terrorist attacks. Taking advantage of low interest rates, they refinanced their houses and took the proceeds to the shopping malls.”

“But predictions of an imminent recovery in business investment keep turning out to be premature. Most businesses are in no hurry to go on another spending spree. And those that might have started to invest again have been deterred by sliding stock prices, widening bond spreads and revelations about corporate scandal.”

“Will the rescuers arrive in the nick of time? Not necessarily. This movie may not be ‘55 Days at Peking’ after all. It may be ‘A Bridge Too Far.”’

“As I’ve repeatedly said in this column, the arguments of the double-dippers made a lot of sense. And their story now looks more plausible than ever. The basic point is that the recession of 2001 wasn’t a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance.”

“To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. Judging by Mr. Greenspan’s remarkably cheerful recent testimony, he still thinks he can pull that off.”

Bits Bucket for January 8, 2012

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