Is there no end to the carnage wrought by subprime madness? Far from being "contained," the fallout is now spreading to fictional realms populated by some of the mightiest icons of human civilization. On Wednesday afternoon, the Financial Times published a scoop breaking the news that funding for a slate of upcoming blockbuster movies may be delayed because of Wall Street's current woes.
The studio in question is MGM: The movies on the list include "The Hobbit" and the next installments in both the Terminator and James Bond sagas.
It seems that in recent years Hollywood has moved to a relatively new financing model in which it raises funding for a slate of upcoming films by having investment banks tap the pockets of private equity funds, hedge funds and institutional investors. In this case, MGM had contracted with Goldman Sachs and Deutsche Bank to raise as much as a billion dollars.
But all these heavy hitters play with other people's money, and right now, the cost of borrowing that money has shot up. Access to credit has withered. Buyout and merger action has come to a screeching halt. The initial impetus for this crunch came from homeowners failing to make their mortgage payments, but the damage is spreading far and wide.
Unlike Wall Street's traders, we will not panic at the approach of this unholy subprime nemesis, more deadly than Sauron, SPECTRE and an army of artificially intelligent robots intent on extinguishing all human life. The Financial Times says that MGM "is understood to be relaxed about the delay because none of the films in line to receive funds from the financing is due to start production imminently."
But still: When Bilbo Baggins, James Bond, and the Terminator are stopped in their tracks, what hope is there for the rest of us?