TAL Money Memo 01-14-09: Horror Films Reflect Horrible Economics

"Markets are driven by animal spirits."
—John Maynard Keynes

"The horror, the horror…"
—Joseph Conrad

Hollywood studio executives (possibly an oxymoron in more ways than one) tend to reflect the feelings and zeitgeist of their time.  When economic times are good, Hollywood cranks out flicks that fit the joyous mood of the times - Herbie movies, and recent hero epics like Superman, Batman, and Iron man.

I think it is reasonable to assume that when times get crappy, the studio studs produce films that reflect their own fears.  In 1981, when economic times were bad, and gold markets were good, Hollywood released "Rollover," a Jane Fonda epic about the collapse of the NY banks, and the consequent buying of gold by Middle Easterners.  The fact that Reagan's inauguration in 1981 forestalled the Hollywood forecast isn't important.  Gloomy movies were green lighted representing a gloomy time.

Making movies is NOT a science.  As Sam Goldwyn said, "As an art form, movies are a lousy business.  And as a business, movies are lousy art form."  The collective enterprise of agents, stars, studio lots, et al must create and sell 400-500 movies a year to the theaters, TV and Netflix representing the buying public.  And while sequels may have a slightly higher probability of success based on the success of the predecessor, the decision to green light a given picture is mostly sophisticated guesswork.

So, with no fear whatsoever of being mistaken for Joe Bob Briggs, I submit the following wildly speculative hypothesis, that horror films reflect something about our economy as seen through the eyes of studio guys.

My hypothesis is based perhaps on nothing more than the coincidence (?) that most of the really great horror movies were released back between 1931 and 1936.  Several writers have noted how crappy the economy was during those days, it was in all the papers.  Those moves reflected the Zeitgeist of the Dirty Thirties, and produced some real monsters.  (Pun intended.)  The following is a relatively complete list compiled from www.netflix.com:

The 1930s

1931 - Frankenstein: with Boris Karloff, the first of some 25 Frankenstein movies.

1931 - Dracula: with Bella Lugosi, a vampire attracted to pretty girls.

1932 - The Mummy: with Karloff again, the first of many mummies.

1932 - Murders in the Rue Morgue: a Poe offering, with Bela Lugosi.

1932 - Dr. Jekyll and Mr. Hyde: starring Frederic March.

1933 - King Kong: big monkey terrorizes pretty girl, and New York City.

1933 - The Mystery of the Wax Museum: Vincent Price begins a career involving waxy buildup movies.

1935 - Werewolf of London: the first of the werewolf breed, costarring Warner Oland, a future Charlie Chan.

1935 - The Wolfman: with Lon Cheney.

1936 - Sweeny Todd: the original source for the later Sondheim musical.

Ok, the thirties are remembered by some to be nothing but a gangster/Cagney/Edward G. Robinson era, but wow!  Even if you don't like horror (and I don't particularly), the odds are you've seen or at least heard of every one of these 10 horrifying films.

There were a few horror movies in American cinema prior to the 30's, but not many.  During the Roaring Twenties, which were pretty good years economically, people didn't seem to be interested in scary stuff.  They wanted to dance and drink.  The FED was pumping money into the economy.  Horror in the twenties consisted of The Cabinet of Dr. Caligari in 1920, the first Dr. Jekyll and Mr. Hyde, a silent with John Barrymore in 1920, and the first Phantom of the Opera with Lon Cheney in 1925.  When times are good, who wants to make a schlocky terror thing?

So, lets move forward, and watch Hollywood reflect its times.  Art imitating life.  In the 1940s, there were war movies (pro-war movies), reflecting the second World War, most of them with John Wayne, winning battles pretty much single-handedly.  Who needed horror films when you've got tanks, flamethrowers, and aerial carpet bombing?

The 1950s and '60s, Horror as Low Budget Sideshow

In the 1950s and early 1960s, American life was peaceful and conformist.  Hollywood produced lots of movies about stultifying American conformism along with low budget creepies by Roger Corman.  The Eisenhower movie years were filled with a lot of westerns, big musicals or bikini epics with people named Gidget, or Annette, or Frankie.  Gag me with a surfboard.

What horror there was came from mutant creatures created from atomic energy.

1954 - The Creature From the Black Lagoon

1955 - Tarantula, and the Mole People

1956 - Godzilla: King of the Monsters: Japanese movie creates dubbing industry.

1958 - The Fly:  Co-starring Vincent Price.

1958 - The Blob: with Steve McQueen.

1959 - Little Shop of Horrors: house plants gone bad with Jack Nicholson.

1959 - A Bucket of Blood: a Corman quickie starring Robert De Niro.

1960 - Psycho: the Hitchcock classic showing showers as dangerous.

1962 - Whatever Happened to Baby Jane: revives the career of Betty Davis.

1963 - Cleopatra:  (Well, it was a horror for 20th Century Fox, and for Debbie Reynolds, wasn't it?)

The 1970s, Horror Becomes Big Budget

The 1970s brought us peak US oil production, Nixon's resignation, the Arab/Israeli war, Vietnam, inflation and a Jimmy Carter speech grumbling about our loss of morale.  When hard economic times returned, horror returned.  If economics are cyclical, (and they are) so are movie tastes.  Horror movies, now called horror films, got scary again.  The 70s brought us the following:

1972 - Tales From the Crypt: tourists, including Joan Collins, lose their way, .

1973 - The Exorcist: child becomes head turning, green filth spewing devil.

1974 - The Texas Chain Saw Massacre: Texas guy runs short of bullets, reaches   for his chain saw.

1976 - The Omen:  Satan plays stork, delivers baby, causes problems.  Even Gregory Peck, a big `Hollywood star, could appear in horror movies now.

1975 - Jaws: big shark moves to beach near rich people, and Steven Spielberg had a career.  Created the whole "tent pole" concept for Hollywood, "Hey, let's do really profitable horror movies!"

1976 - Carrie: made Sissy Spacek's career.

1978 - Halloween: invented the whole slasher genre, and created new careers for women who could scream really really well, including Jamie Lee Curtis

1979 - Amityville Horror: bad house…naughty house.

1979 - Alien:  horror meets politics and sci-fi.  Special effects gets an award.

1980 - The Shining:  Jack Nicholson yells, "Here's Johnny."  Perhaps not much of a stretch for Jack after all of those Roger Corman screamers.

1978 - Animal House: a horror for college administrators?  Call it comic relief.

1978 - Cheech and Chong's Up in Smoke: police nightmare - a cool drug flick.

(The early 1970s also brought us Laugh In, and Monty Python, and comic relief is probably as predictable as horror in bad economic times.

The 1970s also saw the horror of changeover from the old studio system.  The old studio chiefs just weren't making any money; they couldn't connect with young audiences, and had to give way to independent productions and the film school crowd like Spielberg, Scorsese, and George Lucas.  But the studios had all these sunk costs in sound stages, back lots, and had to make something so they made horror in house.

The 1980s, Horror Becomes FX

The 1980's were the "Me Decade."  Big hair bands, cocaine, Quaaludes, tuxedos, and wine cellars.  Along with Michael Milken, junk bonds, takeovers and the scaring of the entrenched management classes.  The baby boomers were investors now.  The mutual fund industry went from a total of $200 billion invested in funds in 1982, to $10 trillion by the end of the century.  Michael Lewis was writing about excess at Salomon Brothers in Liar's Poker.  (He says now that he can't believe that that the '80s' excesses went on for so long.  PANIC, is his latest book.)

But times were mostly good in the 1980s.  Horror became practically a mainstream genre - but only as long as it did good business.  And it did good business if it had lots of special effects:

1982 - Poltergeist: with future coach Craig T. Nelson.

1984 - Nightmare on Elm Street: with Johnny Depp!

1983 - Christine: Plymouth attacks other cars, after Chrysler got a bailout.

1987 - Hellraiser: the beginning of Clive Barker's career.

1987 - Wall Street:  demonstrated an ancillary principle that when Hollywood green lights a big movie about Wall Street investing, the top is pretty much in.

In the year 2000, just as the dot com, telecom, and equity bull markets were blowing off and peaking, TNT put six episodes of new series called "Bull" on the air about hot, young investment bankers.  I thought then that it was eerily timed.

The 1990s, Horror becomes a "vehicle"

Again, when times were good, true horror movies don't seem to get made.  And the few that did appear seemed more like "vehicles" for young stars, or franchise sequels than real horror stories.  Frankenstein Meets Abbot and Costello, or Bride of Chucky, or Jurassic Park 3 don't count as real horror offerings.  Netscape's public offering was in August of 1995, and that year was the beginning of the end for many newspapers, magazines, and prime time TV shows because of the emergence of the web.    The following movies also provided gratuitous mayhem, proving yet again that you don't need violence to create fear, and that slashing isn't necessarily horror:

1996 - Scream: slasher attacks against attractive girls in underwear.  Oh my…

1996 - Mystery Science Theater 3000: sarcastic robots comment on previous horror films.

1997 - I Know What You Did Last Summer:  And I care why?  Perhaps there were just no more original ideas out there.  The Hollywood agent was packaging    everything now, and their interests had to do with money, not art.

1997 - Titanic; a love story.  There are over a dozen Titanic films now, including retrospectives, and non-fiction Discovery movies ad infinitum.  This big '97 epic was directed by James Cameron, after his "art house Terminator" series.

1999 - Blair Witch Project: black background, jerky camera action, and pretend    monster equal big box office.

With Blair, student filmmakers have moved in on horror.  Students could take a Super 8 out into the woods and produce a fright show.  Low cost, big returns.  What's not to like?  Blair may have been the only really innovative horror film of the decade.  At least if evidenced by all the widespread imitation of it now.

The 2000s, Horror Becomes Parody

In a decade where Wall Street ran on cheap money, slutty real estate finance, securitization of everything, and a desire to keep the bonfires burning, Hollywood became unwilling to take any horror film risk at all.  Times may not have been as good as they were in the fabulous 90s, but if you wanted to deny it, you'd have lots of company.  Horror had become comedy.

2000 - Scary Movie: the parade of horror parody movies begins.

2001 - Mulva: Zombie Ass Kicker: Kung fu horror.

2002 - Satan's Cheerleaders.  What team are they cheering for?  Is there a tryout   show?

2003 - Bubba Ho-tep:  Elvis horror, creepy spiders…what, no sound track album?

2004 - Club Dread:  Island with coconuts, pretty girls….and a slasher?

2004 - Saw:  The promo says, "Would you die to live?"  A philosophical horror film?  Fear is a visceral, stomach thing.  You shouldn't be asking          metaphysical questions during a horror flick, should you?

2004 - Hellboy:  Big red guy, action-adventure, heavy sarcasm.  Were you scared?

2006 - Mad Cowgirl: What, sex and beef?  Microrganism as monster?

2006 - Severance: weapons salesmen targeted by vengeful commandos.  Sales horror?  Hey, terrorists are not horror types, they're just nasty political guys.

2006 - Snakes on a Train (sic):  To quote Dave Barry, "I am not making this up."  Sequels make money, so lets stay true to the dud Snakes On A Plane thing?

2006 - Tooth Fairy:  Childhood pillow benefactor goes bad.

2006 - Deer Woman: woman with antlers seduces men, then tramples them."  Directed by John Landis, who did Animal House.  John has apparently fallen waaay off the Hollywood A list of directors.

2006 - Bikini Bloodbath:  Horror at the beach.  If Annette were dead, she'd be whirling in her grave at this pathetic picnic.

2007 - Trailer Trash: A compendium (Should I use the word compendium in a reference to the word trailer?) offered by Netflix of trailers for such horror non-hits as Playmate of the Apes, Women's Prison Massacre, and Erotic Witch Project.  Fun for the whole trashy family.

2008 - Zombie Strippers:  Just when you thought it couldn't get any sillier…with Porn star Jenna Jameson, and Robert Englund of Freddy Krueger fame.

2008 - Twilight: a vampire love story that prompted my interest in this whole topic.  When did vampires become soap opera stars?  Where are the Dracula cartoons?  (Oops, sorry, Blood, the Last Vampire was a cartoon in 2000.)  Enough.  Frankenstein has become Pokemon.

Looking at recent horror vintage, and ignoring the whole holiday-horror things (Black Christmas, My Bloody Valentine 2, Halloween 4.  How about Arbor Day Revenge?) my point would be, current horror movies are NOT horrifying!

And until 2007, when a mess of mortgage companies started going broke, and Bear Stearn's hedge funds blew up, horror movies didn't reflect any horror (risks) in any financial asset class anywhere.  Wall Street had been on a boistrous bonus spending rampage, ignoring risk in real estate, equities, junk bonds, collateralized debt obligations (CDOs), credit default swaps, options, Fannie Mae preferred shares, art, oil, and commodities. And for most of this decade, consumers mindlessly threw money at "stuff."  We loaded up on oversized cars, supersized meals, and McMansions filled with all manner of granite countertops, designer gee gaws, over-dressed teddy bears, and horror movie tickets.

And through all of this risk-be-damned-spending, Wall Street guys became folk heroes.  The NY Times bloated up the Society pages with wedding announcements of betrothed young debutants and hedge fund masters of the East Hampton universe.  This was the pinnacle of a social achievement movement!

Mortgage companies threw money at NINJAs - borrowers with No Income, No Job, or Assets.  Some mortgage company in Bakersfield California gave a strawberry picker $700, 000 to buy a house based on $14,000 a year annual income.  Said mortgage company packaged the garbage, and shipped it to a leveraged hedgie somewhere managed by a 28 year old with nerves of Freddy Krueger.

Rating Agencies, Ambac and MBIA, didn't care if the CDO crap would ever be repaid, they just stamped it AAA, and marched it to a pension plan home.

In 2006, CEO Stanley O'Neal pushed $40 billion of Merrill Lynch money into CDOs because he wanted "market share."  Call it tier 3, and see if the accountants salute it.  Who cared in 2006 if it made any financial sense whatsoever.

Money Center Banks shoved securitized mortgages out the door, then bought other banks' real estate CDOs and declared themselves "diversified."  Or the banks pushed crap off the balance sheet, pretended they didn't own it, and borrowed more money at the overnight money trough to lever up to the far reaches of Saturn.

Govamint regulators all went on vacation.  Nobody even watched the store, much less guarded it in our new young century.  Phooey!  A real horror show!

What Now?

The past decade's lousy horror movies got made because filmmakers coulde get easy financing.  And audiences had so much borrowed money in their wallets that they actually bought tickets to horror stinkeroos.

Well, the silly spending show is over.  I don't think Hollywood horror parody or financial fearlessness will return for quite a while.  I believe true horror and true financial intelligence is on the way to a cineplex and a household near you.

The good(?) news is that the movie theater companies went broke five years ago, and dumped their bad debts, so there will probably be a few multiplexes around when real horror stories appear.  Whether consumers have any discretionary money to go SEE a new horror film remains to be seen.

If I had a way to bet on these things, I'd also lay some money down on 3D movies becoming big in horror. (Although why they can't make clip-on blue and red viewers for an audience that increasingly wears glasses I'll never know.)

I'll also predict there will be a few movies made about gold and silver.  Hollywood executives are running toward real money like everybody else right now.  Something tells me the execs will make movies about gold as real money, E.g., Goldfinger, instead of all those movies with gold in the title and nothing about gold in the movie…like Goldeneye.

Maybe they'll reissue Rollover - bad acting, bad music, bad direction, but accurate economics.  Tough economic times require honest money, or they'll just drag on and on…like a bad horror show.