Wall Street 2: The Original Version

The first writer of the long-awaited Wall Street sequel on how the greatest minds in finance envisioned the new Gordon Gekko—and how wrong they turned out to be.

The most startling single sentence I’ve ingested during the last startling month or so appeared on the front page of the Wall Street Journal on September 22. Noting the decision by Goldman Sachs and Morgan Stanley to become traditional bank holding companies instead of pure investment banks, the Journal announced, “With the move, Wall Street as it has long been known…will cease to exist.”

Um, wow. I’ve got to wonder what they’re going to be calling that nice newspaper of theirs from now on. But that’s their problem. I have worries of my own—not least the movie I spent the last year writing for Twentieth Century-Fox. It’s the sequel to Wall Street. Yep, the terrific 1987 film that Oliver Stone directed, featuring the now-legendary Gordon Gekko, the role for which Michael Douglas won a richly deserved Academy Award. You know: “Greed is good.” It’s called Money Never Sleeps.

Gordon Gekko would be well aware of the bubble-and-pop cycle that has been the story of international business since at least the nineteenth century.

Oh, I hasten to add that I have now moved on from Money Never Sleeps, and it from me. When I turned in my final draft on July 22, the world was a very different place, and in the ensuing months, my screenplay’s fate has lurched with the markets. I’m certain my former masters at Fox will find a way to make a Wall Street sequel for a planet on which Wall Street has ceased to exist, and I wish them every success. They’ll do a great job. (I imagine they’ll begin, as is the custom, by rewriting my script, starting with “Fade In.”) But I’m on to the next. Still, I keep thinking of the many months I spent researching, and how little that research predicted the scorched earth we now find ourselves circumnavigating.

What was Wall Street—before it ceased to exist, I mean? Certainly something very different from what it was when the first film came out. During the last decade or so, it has gone global, forcing me to do the same. I conducted my research in New York, London, and Dubai and I let my screenplay hopscotch to the former Soviet republics and China as well. In the new plutocracy I was discovering, Russian oligarchs, Emirati sheiks, and Macao gambling barons bestrode the markets along with the expected hedge fund gods and those once-mighty Ozymandiases known as investment bankers. Now, of course, the waves are engulfing them all.

As I conceived him, Gordon Gekko would be well aware of the bubble-and-pop cycle that has been the story of international business since at least the nineteenth century—and particularly of the panics and disasters in the two decades since the first Wall Street: Black Monday in October, 1987; Black Wednesday in 1992; the bond rout in 1994; the Asian collapse in 1997; the implosion of Russia and of Long Term Capital Management, both in 1998; the tech collapse in 2000; the post-9/11 collapse in 2001. Given such real-world uncertainty even in the best of times, what, I wondered, would Gekko do? Wouldn’t he try to find some means of transcending such gyrations, of securing a pot of gold whose value wouldn’t depend so entirely on the fickleness of markets?

But whenever I asked this very question, all anyone wanted to talk about was hedge funds. Bankers wanted to talk about hedge funds. Oligarchs wanted to talk about hedge funds. Journalists wanted to talk about hedge funds. Understandably. No one really comprehended what a hedge fund was or how it worked, but everyone knew that the people who ran them became incredibly rich incredibly quickly, and they suspected that whatever that legerdemain might be, watching it on the big screen had to be fun. Weren’t hedge funders the Gordon Gekkos of today?

Well, maybe. I hung around with a lot of hedge fund people, spent time on their trading floors, watched them work. All of them knew who Gordon Gekko was, and they all had thoughts about what he’d be doing in 2008. He’d be buying Damien Hirst’s diamond-studded skull. He’d sleep on a yacht, the way Gianni Agnelli used to do. He’d be an activist hedge funder, purchasing companies and managing them aggressively for a few years to make them more profitable, then selling them. He’d do a PIPE—a private investment in public equity—to get on an important board, and then he’d take over. He’d get involved with opium farmers in Afghanistan. With casino hotels in Macao. He’d own an auction house, like Sotheby’s or Christie’s. (No one ventured that he’d be flat broke.)

Here’s what one dazzlingly bright young thing told me: “He’d find some sitting duck company. First he’d buy some contracts for differences, accumulate stock quietly. Then he’d sell credit default swaps. See, when a company is about to be taken over, their credit rating falls, and the price of the credit default swap goes up. Then he’d leak to the market that there will be a leveraged buyout, and someone would leak that to the press. Then the share price goes up ten or twenty percent. The person who’s amassed all the shares closes all the contracts, he’s made his profit and goes on to the next one!”

Uh-huh. So let me get this straight. We live in an era in which the chief concern of the commercial cinema seems to be the pressing psychosocial problems of comic-book superheroes. Anyone want to see a movie about credit default swaps?

In fact, hedge funders generally aren’t very Gekko-esque. They tend not to be suspenders-wearing swashbucklers so much as computer geeks, staring into four screens at once and crunching numbers to the beat of abstruse algorithms that may mystify even the guy one desk over. They work very, very hard, and most of the action in their world takes place between about 6:30 and 10 am, when they’re moving at a blinding pace. Doing what, exactly? Barking into telephones? Hurtling down hallways in sharp suits shouting commands? No. They now do everything by IM, and when they talk telephonically it’s usually through a speaker stalk sticking out of a device called a “turret,” which speed-dials everyone in their universe instantly. And they never wear suits to the office. At their tensest, most dramatic moments, what they’re doing, mostly, is…typing.

Well, that’s okay. Cops spend the bulk of their time doing paperwork and cowboys mostly sit in the middle of nowhere scratching themselves, but those things aren’t what cop movies and Westerns are about. The truth about hedge fund life had to be part of the picture, but there was a bigger picture too. Maybe it was there that we’d find the drama.

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So I asked everyone I talked to what their imagination of disaster would be. What were they afraid of? What would cause the Big Meltdown? The funny thing is, not one of them mentioned the crash in housing prices. Not one mentioned subprime mortgages or mortgage-backed securities. No one imagined Bear Stearns going under, or Lehman Brothers, or AIG. No one foresaw banks Like WaMu and Wachovia crumbling.

The most common answer I got was a terrorist attack. The suitcase nuke in Central Park. An Al Qaeda assault in Dubai or Abu Dhabi. Something big and bad in The City of London. But terrorism seemed like another movie to me. When I steered my interlocutors back toward finance, it soon became clear what the number one fear was: China. China devouring the world. China breaking a nail and the ripples building into a tsunami elsewhere.

China essentially owns the American economy because of its enormous investment in our treasury bonds, and therein lay the biggest bugaboo: what if they pulled out? Our T-bills have terrible interest rates, and the dollar is notoriously feeble. We’re a crap investment. What if China came to its senses and said, “The hell with American treasuries; let’s sell them off and invest our money elsewhere”? What would happen? Interest rates would skyrocket, American corporations would disintegrate, unemployment would soar, and, who knows, maybe Oklahoma would turn into a Dust Bowl again. Arguably, the Chinese would never ever dream of such a thing, because we’re also China’s most crucial market, and if we can’t afford to buy from them, their economy will spinter too. Still, it seemed to me a situation ripe for Gekko-esque manipulation…

But that was then. Of all the swords of Damocles hanging over Wall Street, the one that finally lopped our financial heads off had nothing to do with China, nor with terrorists, oil sheiks, evil-genius short-sellers, or any other of our several night terrors. What killed us was good old greed. Our own.

Greed good? Not even Gordon Gekko would say so now.