‘Too big to fail’ describes financial institutions which are so large and interconnected that their failure is going to be critically disastrous to the economy. In times of economic difficulties, government bails them out so as to prevent any further economic downturns and possible crisis. Well, isn’t it a story that we have been heard a lot? Right, since the global financial crisis in 2008, there have been lots of talks on those ‘too big to fail’ financial institutions.
I am introducing you a movie ‘Too big to fail’ which chronicles the 2008 financial crisis, particularly the meltdown of ‘Lehman Brothers’. It is based on the bestselling non-fiction book (Too big to fail) by Andrew Ross Sobkin.
This movie is portrayed from the perspective of Secretary of the Treasury, Henry Paulson, who is opposed to granting bailout fund to Lehman Brothers. Why is he against bailing out too big to fail financial company? This is because he is concerned of ‘moral hazard’. Moral hazard means that a company that benefits from protective policies by the government will seek to profit by it. Henry Paulson quickly realizes that Lehman Brothers’ risk is influencing over the entire financial market. In other worlds, the fate of the world economy is in a matter of few weeks.
I guess it would be better not to spoil more details and an epilogue of the movie. Though there are some fictional factors in the movie, the movie depicts a good overview of how the global financial crisis initiated and the aftermath of the crisis. Even if you are not very much ‘financial’ or ‘economic’ person, the movie itself will tell you the story. As the after effects of the crisis is still largely looming, I recommend you watch it over the weekend
Click it, and Watch the movie trailer 🙂