Director: Jed Rothstein
With: Dan David, Matthew Wiechert, Carson Block, James Chanos, Soren Aandahl, Wesley Clark.
This movie starts bang on the backdrop of 2008-09 financial crisis. USA was no longer a growth story it once was and people were reeling under a deep financial turmoil. All of a sudden people with money were searching for new opportunities for investing and they found their answer in the growth story of China.
And man they made a whole lot out of the entire story of it. I am sharing my own personal account here. When you visit Shanghai ,the first thing that hits you is their Airport and Several Buick cars that take you from Airport to your Hotel. And the roadways and bridges make you feel like you are in a one of the biggest Metro of the world. Then Nanjing street makes you feel like you are at the New York Square. Before you visit the 100th floor of the sprawling world tower of Shanghai financial world tower center you are shown the comparison between New York and Shanghai and how fast the skyline of Shanghai has been drawn compared to New York. This is enough to convince you about the China’s growth story. And you need some financial wizard’s marketing through some “George Bushes” and “Ex Army Sergeant” to convince you that this is the place to invest in. And if it’s couple with some well organised parties inclusive of Cocktails and Women you’ve got them hooked.
There are companies listed in USA which are shell companies and they become the vehicles for Chinese company who want to get listed on New York Stock exchange. Finance wizards come up with a new term “Reverse Merger”and Voila. You have a new magic trick at your disposal. Many Chinese companies looking for deep pockets of USA investors start listing on New York Stock exchange and shareholders start buying them because they look promising on paper.
And then “Shorters” join the party. Or may be they are the ones who started it in the first place. They are the ones who make money if the companies stocks fall against which they are betting. And self helping vigilantism starts. If the companies that Dan David has bet against fail he will make handsome money. Dan David is one of the shorters around whose discoveries this movies is centered around . And some of the points made by him are Bingo. “There are no good guys in this story, including me,” he proclaims and we can’t agree more to him.
Dan David is our de facto Tour guide and he was also one of those who made buck-load of money when this boom started. But then he realized something fishy was going on and grew a conscience. He started educating people about dangers of investing in the “Muddy waters”. The catch phrase mentioned entire time in the movie which is based on an ancient Chinese proverb. “You can only catch fish if the waters are muddy”. Which means that to run a successful business/marketing campaign you need to hide some facts. If you don’t do some cosmetics / make up you wont be able to sell your product. He realizes that and tries to bring it to the congress’ attention to make them take some action. But isn’t that what the entire marketing is always about anywhere in the world ?? And who says there are not many people benefiting from it.
The investigations taking place are shown in details and they also highlight the pitfalls of a communist regime. Because every company in China has government’s money also equally invested in it and going behind any of them makes you indirectly target the Chinese government/ officials. Which results in some collateral damages on the ground. Makers of the movie try to highlight these differences between two countries economic environment. They say that every company in USA can be investigated transparently without any backlash while in case of any company located in China you can’t. Not completely true but yes up to a lot of extent. Any country in the world has its fair share of fraudsters and legitimate businesses. Be it a democratic or a communist country.
And then they go on and drag Jack ma of Ali baba’s name also in the mud. And that’s where they lose me. They question the wealth that he has and nos that he is putting up every year. Accounting fraud is not new to the world!! And may be what they are saying might come true in future. But there have been enough examples of these kinds of wrongdoings in their own backyard too. So I would rather prefer to look at things as Grey and not completely as black and white. China is itself a huge country and if Alibaba was a fraud it wouldn’t be such a successful name in it’s own country let alone worldwide.
And these scams of illegitimate listings are still ongoing. Major highlight is that a lot of legitimate and honest/small investors are losing their hard earned money on this ponzi schemes. Recently a lot of pensions funds are feeling the brunt of it as more and more of illegitimate run businesses are unearthed by the Dan David and team. Is this one more side effect of Capitalism? This reminds me of a dialogue from similar movie “Wolf of Wall Street” which starred the famous Leonardo DiCaprio and Matthew McConaughey. “The name of the game, moving the money from the client’s pocket to your pocket.”
While we are at it I would like to draw your attention to the video below.
China was traditionally a growing nation and no 1 nation world wide with the highest GDP till the defeat of their last emperor by westerners. May be ancestors of the same westerners who have made this movie. There might be some variance in the figures above but they seem to be very much close to the facts.
Today almost all the Major MNCs have their head quarters located in China. And one can doubt their growth story. But then one needs to be careful enough while making investments. Question is how can you do that??
This is a must watch for all those serious watchers while ones who are only interested in entertainment might also find some in it.
Courtesy & References
Forbes , Variety, The washington Post , common sense media, IMDB, Youtube, Magnolia Pictures and Magnet Releasing.