E-mail a friendDavis Guggenheim
airdate August 14, 2009
Davis Guggenheim directs and produces features, TV shows and documentaries. He exec produced the film Training Day and has TV directing credits that include The Shield, 24 and Deadwood, which he also produced. His documentary The First Year, which addresses the need for qualified teachers nationwide, received a Peabody Award, and his An Inconvenient Truth won an Oscar. A graduate of Brown University, Guggenheim moved to L.A. to pursue filmmaking. His latest project is the music documentary, It Might Get Loud.
Filmmaker comments on the natural talent of great musicians versus their passion to say something. (1:23)
Full interview. (12:19)
Davis Guggenheim
Tavis: David Faber is an Emmy and Peabody Award-winning anchor and correspondent for CNBC. He is now a New York Times best-selling author as well with his new text, And Then the Roof Caved In: How Wall Street's Greed and Stupidity Brought Capitalism to Its Knees. He joins us tonight from CNBC headquarters in New Jersey. David, nice to have you on.
David Faber: Tavis, thanks for having me.
Tavis: So I read the book and the title. What are you really trying to say here (laughter)?
Faber: (Laughter) Yeah. Even hearing it, I kind of laugh a little bit. It's pretty straightforward, but, hey, that's what ultimately I think I proved to be the case.
Tavis: You got to get David Faber to come out of his shell and tell us what he really thinks about this practice. Before I get into the book specifically, let me start by asking your thoughts on how the American public should read the numbers, the news that we keep getting every day about the economy.
I cover this stuff; not as much as you do, obviously, and not as intricately as you do on the money matters, but just being in this chair every day, I'm watching what's happening and I'm not even sure I know who to believe. You get one spin from the White House; you get one economist saying one thing, another group saying another thing. I don't know if we're in recovery now. What do you make of how we ought to read these numbers, David?
Faber: You know, you're absolutely right, I think. Even I also find myself scratching my head in part because you look at some of the numbers that we get from the government which seem to be indicating that we certainly may have bottomed and that the economy has, at the very least, hit bottom.
And at the same time, there are many also who say we're already beginning a strong recovery. But then I'll speak to a number of senior executives or CEOs at a variety of very large companies who are not nearly as positive as many of the forecasters are. So, Tavis, it's very hard to know exactly where we are.
I think it's safe to say that we did hit some sort of a bottom in the economy and that the worst may very well be behind us. But it's a lot more difficult to say that we're going to have a very strong recovery in any short timeframe. There, I think, we still have to wait and see and there still could be some tough times ahead.
Tavis: This might be more philosophical or psychological than it is practical or political, but let me ask it anyway. Is there really a recovery if the everyday people don't feel it?
Faber: Well, no. In a lot of ways, there isn't. Of course, unemployment is certainly the key indicator for so many people out there. When you lose your job, more or less nothing else really matters in terms of your ability to live a life that you'll enjoy.
Right now, we're still looking at a loss of jobs in the economy. That has slowed considerably. The last employment report from last week was certainly showing some good signs on that front and we may get to the point by the end of this year where we start to actually see no more job losses. But that being said, you're talking about fifteen million people out of work, probably closer to eighteen million when you really consider people who are no longer even in the hunt for a job.
That creates its own dynamic. That means people are simply not going to be spending that much money. That means people are not going to have a great amount of confidence. So while that is a lagging indicator, as we like to say, of an economic recovery, job growth comes later. Nonetheless, it's still a key.
Tavis: You say there were good signs recently. What you see as good signs, I heard CNBC report to me a one-tenth of a percent drop. How is that a good sign, or are you referencing something else?
Faber: Well, one-tenth of one percent drop in the unemployment rate from 9.5 to 9.4 percent, which probably will end up going higher; that has some seasonal impact in it. It's hard to say that losing 230,000 or 240,000 jobs in a month is a good sign, but it is a better sign than when you were losing 400,000 or 500,000 jobs a month.
The job losses are slowing. The key question really is whether or not we're ultimately going to see any significant growth in employment that we absolutely have to have in this economy if we're going to get back to rates of growth and to standards of living that people hope for.
That is where I think we still have a lot of questions. Corporations are very good at cutting jobs. The harder part will be whether in fact they're going to be hiring back a lot of those people.
Tavis: Just so that I'm clear before I move on to the book, give me some sense of those good signs that you were referencing that we should take solace in even if it doesn't mean as yet that jobs are aplenty.
Faber: Well, we've got some good signs in terms of industrial production. We've had pretty good earnings from a lot of corporations. Corporate America is earning money. At some point, one would hope they'll start reinvesting that money back in their businesses and that will take the form of added employment.
The housing market, we're starting to see some signs. You know, given how much work I've done on this, I think it's far from clear, but there are some signs that we're seeing a bottom in housing, so important to peoples' ability to want to spend money. You know, if you feel like the value of your home continues to decline, it affects a lot of your decision-making in terms of big purchases and the like.
The same way it acted in reverse, of course, when housing prices were soaring, everybody was going out and spending a lot of the money that they were accruing in terms of the value of their home.
Tavis: Let's move now to the text, the new book, And Then the Roof Caved In. The thing that I found fascinating about your book as compared to others that have tried to delve into what's happening here and how we got to where we are, economically speaking, is that you go all the way back not just to two or three years ago, but to 9/11. Make the case for me how what we're dealing with today can be traced back to 9/11.
Faber: Well, after 9/11 and the attacks, of course, of that horrible day, Alan Greenspan who was then the Chairman of the Federal Reserve thought that our economy might come to a complete standstill and he almost immediately moved to lower interest rates.
We already had been seeing interest rates come down because the economy had already slowed, if you remember, and actually stopped growing entirely after we were coming out of our last bubble, that being the big technology bubble of the 1990s.
But those interest rate cuts that took place in September and October and December of 2001 set the stage for what then became historically low interest rates, historically low mortgage rates, that encouraged a lot of people to say, "Hey, you know what? It's not a bad time to think about buying a home." So that is when the housing boom itself began and that is, I would argue, one of the reasons it began.
Tavis: So if the argument is that we can trace this drama that we are now enduring all the way back to 9/11, how much leeway then should the current President Obama, that is, be given when he says - how much credit should be given to him when he says it's gonna take us a while to come out of this?
Faber: You know, it's so early in the Obama presidency. He's been dealing with so many different things. The factors he's dealing with now in this economy were largely not of his making. I don't think there's any way or anyone could really argue, after six or seven months of a presidency, that he's anywhere near responsible for where things stand right now. He's trying desperately, of course, to revive the economy.
We had a stimulus bill that spent $760 billion dollars over time in trying to help revive the economy. The excesses that we saw built up in the system began over many, many years and, if you really want to get broad, go way, way back, but ultimately were not of certainly the current administration's making.
Tavis: One of the problems that a number of folk have pointed out with regard to this crisis that we're in right now economically is that there were too many people doing things that nobody knew they were doing, too much privacy, too many things that the American people didn't know about, too many things the SEC didn't know about.
One of the examples - I think probably the best example you give of this whole notion of privacy that I'm raising now is the example of Stan O'Neal, former head of Merrill Lynch. I'll let you tell the story of him as an example at Merrill of this privacy issue that got us in the mess that we're in.
Faber: Yeah. You know, Merrill Lynch is a great example and one I use in the book to try to connect the dots for people. You hear, well, housing and people not paying back their mortgages. I don't quite understand. How did that end up with Wall Street suffering? So I try to connect all those dots for readers.
The example I use is Merrill Lynch, which we don't talk about quite as often as we Lehman Bros. or Bear Stearns, because Merrill did not ultimately go bankrupt; it was sold, but it would have gone bankrupt. I don't think there's much doubt about that if BankAmerica had not bought it almost a year ago on September 14 of 2008.
If you were a regular investor, this issue of privacy you discussed, you would not have known based on the press releases from Merrill Lynch and even a lot of its public filings, you would not have known that this company had become one of the greatest mortgage companies in the world. You simply wouldn't have understood that.
It's funny. I went back and looked at my own reporting, I went back and looked at a lot of their press releases from the time and their government SEC filings and it would have taken a lot to really get a sense as to how much risk Merrill Lynch was taking on by buying all of these mortgages that were being made and actually giving a lot of mortgages as well to so much of America.
A huge mortgage operating masquerading as a big brokerage firm is what Merrill became and ultimately, to O'Neal's enduring shame, he only really dug in and understood that when it was too late.
Tavis: David Faber, of course, award-winning journalist at CNBC. His new book is And Then the Roof Caved In: How Wall Street's Greed and Stupidity Brought Capitalism to Its Knees. David, thanks for the text. Nice to have you on the program.
Faber: Thanks a lot for having me, Tavis.
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