This documentary compares Iceland to America, explores the effects of the global economic crisis, and also explores the lifestyles of those involved in the financial sector in order to take a closer look at what brought about the financial meltdown of 2008.
“The global economic crisis of 2008 cost tens of millions of people their savings, their jobs, and their homes”
The documentary begins with the comparison of Iceland and America. Iceland went from the perfect place to live, to the collapse of Iceland’s banks, unemployment tripling in six months, privatized banks, and the eventual ruining of the economy. While all of this was taking place, the government’s regulators did nothing, with one third of the financial regulators going to work for the three major, now privatized banks. The situation in Iceland is very similar to the situation in America. After the great depression, there was strict regulations, which led to 40 years without a crisis. Starting with the Reagan administration, and banks going public in the eighties, people working in the financial sector started getting rich. This led to a thirty year period of financial deregulation. Similarily to Iceland, there were dangerous incentives and there was a general disregard for the impact of their actions. This rise of the U.S financial sector due to these incentives has led to a series of increasingly severe financial crisis, with this documentary focusing on the global economic crisis of 2008. I always knew that Wall Street and the stock market effected the entire economy and everyone’s lives, but this documentary gave me the connection and the reasoning as to why the financial sector effects everyone’s lives, and the 2008 crisis is a great example of this. The risky investments cost tax payers 124 billion dollars, while people on Wall Street were getting rich, and leading ridiculously lavish lifestyles. These lifestyles included the use of drugs, specifically cocaine, prostitutes, and strippers. The people leading these lifestyles had no problem with spending the day with a prostitute and going home to their wife and children. I think that all the money laundering and lying and rule breaking and drug use shows that the people involved in the financial sector lack morals, and therefore it isn’t a big deal for them to be betting against bad investments at the same time they’re telling customers they were good investments, in order to make money and benefit personally. And because these people lack morals and ethics, and a general disregard for their impact, the economy crashed, but they continued and still continue to live their lavish lifestyles, with little legal consequences. Overall, this documentary shows the effects of the deregulation and dangerous incentives on the average American, which is something I always knew but never had a good argument for. And while Flash Boys went into detail how this unethical behavior took place, this documentary makes the connection as to why its important to care about this unethical behavior, and how it effects everyone. And I see a solution to this unethical behavior as more regulations, like how if was after the great depression. However there are many problems that arise with that solution, and I think that is one reason why Wall Street is such a challenge, not only to understand, but to fix.
Chapter eight ties up loose ends with Aleynikov’s trial and the development of his character, while leaving more questions unanswered about the motive and the trial, and the overall motive of the big players in Wall Street. The epilogue sums up the overall book, while addressing the relationship between Goldman Sachs and Alenynikov, Goldman Sachs and Brad Kaysuyama, and The HFT code and the stock market. The overarching theme of the effects of time was also addressed and summed up.
“how they could have gone from bringing the wrath of US prosecutors[ the FBI ] down upon Serge Aleynikov for emailing their high-frequency trading computer code to himself, to helping Brad Katsuyama change the US stock market in ways that would render Goldman’s high-frequency trading computer code worthless.
One thing I found interesting in chapter 8 was how many more discrepancies existed in Aleynikov’s trial, such as all of the jurors lacking experience programming computers. Also, Goldman Sachs never asked him to explain himself, and the FBI did not look for help from anyone who understood computers or HFT. I think it is also fascinating how the justice system is set in place to dig out the truth, but to have uneducated jurors and police officers and the sorts, how can they successfully dig out the truth? That presents the question of who would have control over that sort of manipulation, as well as why someone would manipulate the system in such a way. This is one problem I always thought there was with prosecuting Wall Street workers high up the social ladder and of high importance of power. So this chapter also presented the issue of how to deal with the lying and cheating and stealing that takes place in Wall Street, and I am planning on researching more before I attempt to answer that question. The motives were also questioned, such as why Goldman Sachs called the FBI, why Aleynikov stole the code and never opened it, and why Goldman Sachs would help Katsuyma change the market so that the stolen code would become worthless. And I do not have answers to those questions, and I hope to research more before I attempt to answer those questions. One thing I learned is that Wall Street and the stock market is a dangerous game, and that people need to think twice before getting involved in any way.
This chapter focuses on Zoran Perkov, and how 9/11 taught him that he handled crisis situations well, and liked being in the drama. This new found passion caused Perkov to leave the tech support side of Wall Street to work for NASDAQ running the electronic stock market there, and eventually led him to Katsuyama and the other main characters throughout this book. This led to the opening of their own market at IEX. (IEX is a dark pool)
“If Goldman Sachs was willing to acknowledge to investors that this new market was the best chance for fairness and stability, the other banks would be pressured to follow. The more orderes that flowed onto IEX, the better the experience for the investors, and the harder it would be for the banks to evade this new, fair market”
IEX represented a choice and made the point that the market which had become overly complicated might be understood by not being rigged in someones favor, all it needed was for investors to take responsibility for understanding it. The backbone of the market is investors coming together to trade. Without that backbone, there would be no market. I am moving closer to the end of the book, and I find it really interesting how everything is starting to tie together, and things are making more sense. I think it is fascinating the roles each individual plays, and I would like to do more research to find out how lasting this agreement was, and look into more of the effects that this has had, especially the effects on the average joe. The U.S financial system has experienced many changes, and a lot of these changes are shown in this book. I would be curious to compare and contrast these changes in more detail. The costs and benefits of each, and develop an opinion about what system is more successful and should be used. I am really glad that I picked this subject and book for my project, because this entire subject was unknown to me, and I love learning more about it, and its effects. I am wondering how I will present my project in class without making it seem boring and using to much jargon and technical terms.
Chapter Six, appropriately titled,”How To Take Billions From Wall Street”, focuses on IEX(a dark pool) and the introduction of a new character, Don Bollerman, and Puzzle Masters, who decoded different order types as subsequently led to a greater understanding of HFT, dark pools, and the “hidden passages and trapdoors” that existed.
“Out there, where the twin symbols of American capitalism once loomed, reduced in a few hours to a blizzard of office memos and a ruin. Out there, where idealism was either a ruse or a species of stupidity, and where the people who basle needed them to succeed hadn’t the faintest idea of their existence”
I think one thing is interesting is the meeting that was explained, where the group was split between people who wanted to pick a fight with the biggest wall street banks and the people who thought it was insane to pick that fight. I am curious to see what will eventually happen in terms of that, will they pick the fight or not. I predict that they will pick that fight because up until this point, they have done all they can to stop the corruption and even the playing field in the market, and I can’t imagine them stopping now. Also, another thing I find interesting is the recurring theme of how important the instances in the book are, however, the world outside of Wall Street; and part of Wall Street, is unaware of what is happening. The purpose of the entire book is to draw the picture of the new stock market. I wonder how things would’ve played off differently if the outside world was aware of what was happening, and I can only begin to imagine the political implications. I think this chapter was especially important because it reiterated the fact of how naive the outside world is, and I would be interested to learn how naive the outside world is still. I know the majority of my peers couldn’t care less about Wall Street and the stock market and I find that interesting because the innocence of the outside world is one of the major themes in this book.