Aspects of the financial system explored, people might have missed
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Kiers77 — 12 years ago(August 17, 2013 02:26 PM)
LESSON FOUR:
Senior Management "Downsizes"
regularly
based on a balance between
(1)self preservation (from immediate threats from the middle management) and
(2)need for competence to outperform benchmarks
Result: fire the old geezers, keep the youngthings work out nicely.
I can't tell you how many times in the movie they kept asking "who are these young boys?" again and again, even from within their own department (by Demi Moore)! LOL.
Yet when Spacey gave his "firing" night (night of the layoffs) speech, on the trading floor, he said "you are all here for a reason, you have been hand pickedsurvivors etc etc etc."
all BS! as the future stress situation showed.
LESSON FIVE:
Senior management, manages more by "gut feel" and "intuition from experience" rather than analytic logical thought.and usually it pulls them through! After years in the trenches and all that mental toil, it finally distills down to those few pithy phrases about
how things really work
.
Examples:
Jeremy Irons: "either be smartest, or cheat, and while I like to think we are the very brightest, others too will see the same thing; so we can be first (first to buy and first to sell is always a winner)"
Jeremy Irons: "there are more of us (bankers) now, but the percentages (who win or lose) are the exact same"
Spacey: "We have to BOTH buy and sell, the minute we stop to buy, we are dead" and "we only survive by getting the people who buy from us to come back for more the next day".
Nice quotes those. I liked them.
(But really finance is much more corrupt than the simple quotes would have us believe). -
StoicBlade — 12 years ago(September 20, 2013 02:44 PM)
Thanks for that explanation. I have college degree and I still has no idea what was going on in that movie. I mean, I got the gistWall Street sells things that have the illusion of value. As long as the illusion holds, then the thing still has value. Of course, I think I learned that from watching "Wall Street" back in 87'. Your explanation helped out a lot.
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DanPhx — 12 years ago(October 23, 2013 04:49 PM)
Fantastic post!
One small quibble
This is the market, you think this is overvalued so you sell it. this is undervalued so you buy it. you are in effect bankrupting, swindling the person you are dealing with.
If I sold MSFT at $35 this morning to someone who thinks it's worth more, but it fell to $33 by closing, I didn't swindle him any more than I go bankrupt if it skyrockets to $42.
If both parties are operating in good faith with the same information available, it's far from a swindle.
If either party's solvency is resting on a single trade or even all of their trading, they are fools who have no one to blame for the consequences of taking that risk but themselves.
It's not an indictment of the street light system on roadways that some people die in the process of jaywalking.
Now in the specific case of derivatives it was first and foremost a collapse of information but that would be another movie
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hoov-4 — 12 years ago(February 22, 2014 11:37 AM)
thornsthorns, this is such an excellent post that I missed the first time I watched the movie. Now watching it for a second time right now on Sundance, I came on here to read some comments. Your comment is the best. Thanks kindly for explaining it like this.
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svetiev_b — 11 years ago(April 26, 2014 04:26 PM)
This is one of the greatest explanation posts I have ever read on these forums.
I believe you should put this under some heading in the FAQ section of this movie. It is a wealth of information about everything that's wrong with our society at this point in time. Thank you. -
internethero — 11 years ago(June 23, 2014 02:47 PM)
It makes me sad that so many of you are misinformed to such a degree that you would actually believe this propaganda.
Banks do not lend out money that does not exist http://en.wikipedia.org/wiki/Fractional_reserve_banking
(or see ECON101)
Financial markets are not a zero-sum game (see ECON101 yet again). How would you propose start-ups raise money without investors?
The assets they sell are priced according to market sentiment (and what you call "the masses" are other banks primarily). If you want to assume the risk of holding an asset it is your choice, no one is forcing you. There are risks inherent in owning a house as well, or crossing the street.
I don't have time to address all the erroneous claims in your text. But the above is a start.