Gordon Gekko

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pages: 430 words: 109,064

13 Bankers: The Wall Street Takeover and the Next Financial Meltdown by Simon Johnson, James Kwak

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Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, banking crisis, Bernie Madoff, Bonfire of the Vanities, bonus culture, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Edward Glaeser, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, financial intermediation, financial repression, fixed income, George Akerlof, Gordon Gekko, greed is good, Home mortgage interest deduction, Hyman Minsky, income per capita, interest rate derivative, interest rate swap, Kenneth Rogoff, laissez-faire capitalism, late fees, Long Term Capital Management, market bubble, market fundamentalism, Martin Wolf, moral hazard, mortgage tax deduction, Ponzi scheme, price stability, profit maximization, race to the bottom, regulatory arbitrage, rent-seeking, Robert Shiller, Robert Shiller, Ronald Reagan, Saturday Night Live, sovereign wealth fund, The Myth of the Rational Market, too big to fail, transaction costs, value at risk, yield curve

Also in 1987, Oliver Stone’s movie Wall Street was released, with its memorable antihero, corporate raider Gordon Gekko (played by Michael Douglas). Although the movie’s story shows the corruption and ultimate downfall of Gekko, it is remembered for his “Greed is good” speech, which justified the pursuit of money above all else. As screenwriter Stanley Weiser wrote recently, many people would later tell him the movie made them want to work on Wall Street: “A typical example would be a business executive or a younger studio development person spouting something that goes like this: ‘The movie changed my life. Once I saw it I knew that I wanted to get into such and such business. I wanted to be like Gordon Gekko.’ ”73 Liar’s Poker, Michael Lewis’s 1989 memoir, an ironic antibildungsroman in which the hero is fascinated but ultimately repelled by life at Salomon Brothers, popularized life on Wall Street for a generation of college students.

Its strategy was to take large risks on its own account rather than simply taking fees for providing advice or executing trades. As Bianco put it, “What sets Salomon apart is the sheer scale on which it oper-ates in the markets, reflecting an appetite for risk unrivaled among financial middlemen.” Four years later, Liar’s Poker, Michael Lewis’s memoir of his years at Salomon, would cement its status as the paradigmatic bank of the 1980s, the same decade that produced the original Oliver Stone Wall Street movie, with Gordon Gekko’s famous “Greed is good” speech. Looking back, however, Salomon seems so … small. When the Business Week story was written, it had $68 billion in assets and $2.8 billion in shareholders’ equity. It expected to earn $1.1 billion in operating profits for all of 1985. The next year, Gutfreund earned $3.2 million.3 At the time, those numbers seemed extravagant. Today? Not so much. If the financial crisis of 2007–2009 produced a king of Wall Street, it would most likely be Jamie Dimon, CEO of JPMorgan Chase and the “Last Man Standing,” according to the title of a recent book.4 (Lloyd Blankfein of Goldman Sachs would be the other contender.)

Even if the government’s strategy was to let the banks earn their way out of their problems, that strategy was being undermined by a bonus culture that diverted the excess profits to employees rather than to capital reserves. High risk and huge payouts—nothing changed, except a strengthened government guarantee. Defending the huge bonuses in St. Paul’s Cathedral in London in October 2009, Goldman Sachs executive Brian Griffiths went Gordon Gekko one better by invoking Jesus: “The injunction of Jesus to love others as ourselves is a recognition of self-interest.… We have to tolerate the inequality as a way to achieving greater prosperity and opportunity for all.”72 Goldman CEO Lloyd Blankfein even claimed to be “doing God’s work” (because banks raise money for companies who employ people and make things).73 The rest of us were not so lucky.

 

pages: 240 words: 73,209

The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment by Guy Spier

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Albert Einstein, Atul Gawande, Benoit Mandelbrot, big-box store, Black Swan, Checklist Manifesto, Clayton Christensen, Daniel Kahneman / Amos Tversky, Exxon Valdez, Gordon Gekko, housing crisis, Isaac Newton, Long Term Capital Management, Mahatma Gandhi, mandelbrot fractal, NetJets, pattern recognition, pre–internet, random walk, Ronald Reagan, South Sea Bubble, Steve Jobs, winner-take-all economy, young professional

In most cases, these are not things that are written about in textbooks. Because it’s a story about how things happen in the real world—and because the real world is messy—the topics are broad in scope. They range from the most insignificant of habits that I’ve developed, like what to read first, to the grandest: whom to choose as heroes and mentors and how their wisdom can change your life. This book traces the arc of a transformation. I started off as a Gordon Gekko wannabe—brash, shortsighted, and entirely out for myself. Then a series of transformations and self-realizations led me on a path from Benjamin Graham’s The Intelligent Investor to Ruane Cunniff to Poor Charlie’s Almanack to Robert Cialdini, then to meeting Mohnish Pabrai and lunch with Warren Buffett. That $650,100 meal had a life-changing impact on me, as you will see. Within one year of my meeting with Buffett, I let two-thirds of my staff in New York go, stashed half of my family’s belongings in storage, and shipped the other half to Zurich, where we went to live.

Television cameras from CNBC and elsewhere were already stationed outside the restaurant. With Warren’s permission, we had also hired our wedding photographer to memorialize the event. I was so nervous that I was run down and had a cold. I knew that Buffett was a penetrating judge of character, and I was afraid of being exposed. What if he saw through me and detected any lingering remnants of the Gordon Gekko side of my nature? But I was also enormously excited. From my meals with Mohnish, I’d seen what a huge impact it can have simply to hang out with a person you revere. So I was thrilled at the prospect of seeing Warren up close, of observing what made him tick. This would be the ultimate capitalist master class. At around 12:30 p.m., the seven of us sat down for lunch in a cozy, wood-paneled alcove near the kitchen.

Better still: Play the spy yourself. In polite social encounters, learn to probe. Ask indirect questions to get people to reveal their weaknesses and intentions. There is no occasion that is not an opportunity for artful spying.” In some ways, this scheming Machiavellian, approach to life and business is quite seductive. In my youth, there was a part of me that certainly identified with it, fancying myself as a budding Gordon Gekko, with the intelligence and cunning to manipulate my way to the top. And as my experience at D. H. Blair taught me, there is plenty of opportunity on Wall Street for cynical operators to get rich by putting their own interests first. But as I later discovered, there is also a more enlightened path to success, even within the dog-eat-dog financial world—an approach that I have come to think of as “The Buffett-Pabrai Way.”

 

pages: 257 words: 71,686

Swimming With Sharks: My Journey into the World of the Bankers by Joris Luyendijk

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bank run, barriers to entry, Bonfire of the Vanities, bonus culture, collapse of Lehman Brothers, collective bargaining, credit crunch, Credit Default Swap, Emanuel Derman, financial deregulation, financial independence, Flash crash, glass ceiling, Gordon Gekko, high net worth, hiring and firing, inventory management, job-hopping, London Whale, Nick Leeson, offshore financial centre, regulatory arbitrage, shareholder value, sovereign wealth fund, the payments system, too big to fail

The general ignorance about the current threat posed by the financial system came across very clearly every time anyone asked me at parties, over dinner or at the school gates what had surprised me most about ‘those bankers’. The question often came with a cynical laugh as if nothing genuinely serious was at stake; they seemed to anticipate my answer would be ‘greed’, ‘cocaine’ or ‘arrogance’. Many referred to the Gordon Gekko character from the iconic 1987 film Wall Street and his famous quote: ‘Greed, for want of a better word, is good.’ I would resist pointing out that Gordon Gekko was not a banker but a ‘corporate raider’ or ‘activist shareholder’ taking over companies against their will, and instead I’d tell them how some of the things I’d learnt about bankers had ‘lightning-bolted me off my horse’, as the Flemish expression goes. I had had no idea just how much damage the financial sector can do to society let alone how terrifyingly close to the brink we were in 2008.

I feel there’s a particular kind of insecurity to many bankers, a form of neediness and a deep desire to compensate for something. The absence of love, perhaps?’ Many people in banking try to project an image of perfection, he had found. ‘Banks play to that, trying to make you look perfect and feel invulnerable. It’s very easy to get hooked into that life, to become addicted to work and the money. I am sure it would have happened to me, had I done this for too long.’ When doing research for the Gordon Gekko character in the famous film Wall Street, scriptwriter Stanley Weiser spoke to a great number of top financial workers. In an interview on the DVD Weiser echoes the idea of finance as an existential trap for those with addictive personalities: ‘The Gekkos of the world are people who have a complete inability to process the reality of … of death. It’s the game, the energy, the momentum of continuing to play the game …’ The first few times I heard about delusional bankers I thought, well, that’s too bad but every profession must have vulnerable people who develop an unhealthy addiction to their jobs.

 

pages: 385 words: 111,807

A Pelican Introduction Economics: A User's Guide by Ha-Joon Chang

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Affordable Care Act / Obamacare, Albert Einstein, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, discovery of the americas, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, interchangeable parts, interest rate swap, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, laissez-faire capitalism, land reform, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, Scramble for Africa, shareholder value, Silicon Valley, Simon Kuznets, sovereign wealth fund, spinning jenny, structural adjustment programs, The Great Moderation, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Washington Consensus, working-age population, World Values Survey

That is, professional managers may maximize sales rather than profit or may inflate the corporate bureaucracy, as their prestige is positively related to the size of the company they manage (usually measured by sales) and the size of their entourage. This was the kind of practice Gordon Gekko (you’ve met him in Chapter 3) was attacking in Wall Street, when he pointed out the company that he was trying to take over had no less than thirty-three vice presidents, doing God knows what. Many pro-market economists, especially Michael Jensen and Eugene Fama, the 2013 Nobel Economics Prize winner, have suggested that this principal-agent problem can be reduced, if not eliminated, by aligning the interests of the managers more closely to those of the shareholders. They suggested two main approaches. One is making corporate takeover easier (so more Gordon Gekkos, please), so that managers who do not satisfy the shareholders can be easily replaced. The second is paying large parts of managerial salaries in the form of their own companies’ stocks (stock option), so that they are made to look at things more from the shareholder’s point of view.

It has also significantly changed the way in which non-financial corporations are run. The change was particularly pronounced in the US and the UK, in which new finance has advanced the furthest and in which, unlike in Germany or Japan, stakeholders other than shareholders have had little influence on how companies are managed. The first important change has been a further shrinking time horizon in management. With the rise of hostile takeovers in the 1980s (recall Gordon Gekko from Chapter 3), companies had already been put under increasing pressure to deliver short-term profits, if necessary at the cost of long-term competitiveness. But with the proliferation of so many financial instruments that provide quick and high returns, shareholders have become even more impatient in the last couple of decades. For example, in the UK, the average period of shareholding, which had already fallen from five years in the mid-1960s to two years in the 1980s, plummeted to about 7.5 months at the end of 2007.15 This has resulted in the formation of an ‘unholy alliance’ between the professional managers of corporations and the growing band of short-term shareholders, under the rallying call of ‘shareholder value maximization’ (see Chapter 5).

 

pages: 262 words: 93,987

The Buy Side: A Wall Street Trader's Tale of Spectacular Excess by Turney Duff

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asset-backed security, Berlin Wall, buy low sell high, collateralized debt obligation, fixed income, Gordon Gekko, high net worth, urban sprawl

—Brian O’Dea, author of High: Confessions of an International Drug Smuggler “The Buy Side is Wall Street meets Breaking Bad—except that this book is fact not fiction. Turney Duff yields to temptation at every turn, and the sheer volume of criminal behavior he saw, and even participated in, is astonishing.… If you want to see Wall Street’s seamy underbelly firsthand, read this book.” —Frank Partnoy, bestselling author of F.I.A.S.C.O. and Infectious Greed “If you took Gordon Gekko, Bud Fox, a copy of Bright Lights, Big City, and threw them in a blender with an ounce of cocaine, a bottle of Patrón Tequila, and your favorite teddy bear, you’d have yourself a Buy Side smoothie. Turney’s my kind of guy; a madman with heart. I couldn’t put the book down.” —Colin Broderick, author of Orangutan Copyright © 2013 by Turney Duff All rights reserved. Published in the United States by Crown Business, an imprint of the Crown Publishing Group, a division of Random House, Inc., New York.

I’ve only seen Uncle Tucker twice in ten years, both times at my sisters’ weddings. All I know is, he moved to San Francisco with his second wife. He still works in finance. He shaved his mustache and traded in the Corvette for a navy blue Mercedes 560 SL that he calls the Boesky Benz. He named the car after his biggest client, Ivan Boesky, who was at least partly the inspiration for Wall Street’s Gordon Gekko. Because of Uncle Tucker, the Wall Street world has always seemed magical to me. But the idea of working there has never even entered my mind. He must know successful, influential people, even in the world of journalism. I jot down his number and say goodbye. Tucker answers the phone on the first ring. “Trading,” he says. I tell him it’s his nephew Turney and he’s surprised but happy to hear from me.

Over the next two hours, suits are whisked into the room. I have a “yes” rack and a “no” rack, both of which fill quickly. I feel like I’m in the movie Pretty Woman, but I’m unsure if I’m Julia Roberts or Richard Gere. I look in the mirror at myself draped in Dolce & Gabbana, Gucci, and Prada. With each suit I try on I feel more powerful. “Hi there, buddy,” I say to my reflection clad in the navy blue Prada. Peter is confused by my Gordon Gekko portrayal. “Sandbagged me on Bluestar, huh? I guess you think you taught the teacher a lesson that the tail can wag the dog, huh? Well, let me clue you in, pal. The ice is melting right underneath your feet.” Kevin, who has seen the movie, laughs at my performance. I end up buying five suits, two pairs of shoes, and a bunch of shirts. I don’t even look at the amount on the American Express receipt.

 

pages: 231 words: 71,248

Shipping Greatness by Chris Vander Mey

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don't be evil, en.wikipedia.org, fudge factor, Google Chrome, Google Hangouts, Gordon Gekko, Jeff Bezos, Kickstarter, Lean Startup, minimum viable product, performance metric, recommendation engine, Skype, slashdot, sorting algorithm, Steve Jobs, Superbowl ad, web application

“Eventually we have to stop dancing and get down to business.” Yuck! Do yourself a favor and avoid warning-level offenses: don’t use these icky aphorisms. If you find someone using them, let such phrases be a reminder to you that he or she is in stage 1. Ask the individual to stop and move on to stage 2. Stage 2: Being Fair and Using Data Now that you’ve put away the “I have to get the lowest possible price because that’s what Gordon Gekko would do” attitude, you can go about negotiating reasonably. The most reasonable way to negotiate a number is by trading data. For example, you volunteer some data: “I can get bandwidth from AT&T for $1/Gb.” Then the other party will volunteer additional data: “Our costs are $0.95 per Gb.” Hopefully things end nicely at this point, settling at $0.98 or $0.97 per gigabit (depending on who’s more of an a-hole), and both parties win.

Stage 5: Walking Away and Thinking It’s possible that after throwing in a few pot sweeteners and a few months of negotiation, everyone is so tired that you’re ready to do a deal. So you just do it. If this is you, proceed to stage 6 and light a candle at the chapel on the way home. Also, some money to the Salvation Army Santa might be in order. Most of us are not so lucky because fatigue makes everything worse (or so my new-mother friends tell me). It’s possible that stage 1 (in which you wanted to be Gordon Gekko, master of the universe) may rear its ugly head again. Posturing may ensue: “OK, we’re too far apart; I guess we’ll have to build it ourselves.” Threats may be made: “We’re going to put you out of business anyway…” Phones may be put on mute and warning-offense quality curses uttered. It’s at this point that a necessary cooling-off period is introduced organically. One party walks away from the deal, or gets upset and stops returning calls, or whatever.

 

pages: 356 words: 105,533

Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market by Scott Patterson

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algorithmic trading, automated trading system, banking crisis, bash_history, Bernie Madoff, butterfly effect, buttonwood tree, cloud computing, collapse of Lehman Brothers, Donald Trump, Flash crash, Francisco Pizarro, Gordon Gekko, Hibernia Atlantic: Project Express, High speed trading, Joseph Schumpeter, latency arbitrage, Long Term Capital Management, Mark Zuckerberg, market design, market microstructure, pattern recognition, pets.com, Ponzi scheme, popular electronics, prediction markets, quantitative hedge fund, Ray Kurzweil, Renaissance Technologies, Sergey Aleynikov, Small Order Execution System, South China Sea, Spread Networks laid a new fibre optics cable between New York and Chicago, stealth mode startup, stochastic process, transaction costs, Watson beat the top human players on Jeopardy!

Acquaintances quickly discovered this when they met the intense gaze of his copper brown eyes. It was 1986. The bull had come roaring back in the financial capital of the world after the punishing doldrums of the 1970s. Peter Lynch was in the midst of his historic run at the helm of Fidelity Investments’ Magellan Fund. Warren Buffett, the Oracle of Omaha, was becoming a household name. It was the Wall Street of Michael Lewis and Gordon Gekko, of hostile takeovers and the Reagan Revolution. Times were good and getting better. Denizens of the Street were more than ready to celebrate. Levine couldn’t have cared less about the bull market. The programmer had little interest in trading or making money. His mind was focused on a single subject: changing the world through computers. Heading west toward Trinity Church on the western terminus of the famed street, yellow cabs darting by along the deep and narrow canyon of skyscrapers, worried-looking men storming out of subway stations, Levine glanced up at the sculpted Georgia marble façade and Corinthian columns of the New York Stock Exchange, imperious as a Roman temple.

A flimsy grass hula skirt encircled a rickety card table. Sans electricity, Levine sat in shadows—surrounded by brightly lit booths with flashy displays from deep-pocketed competitors like Instinet. Levine tried to hand out dollar bills or Susan B. Anthony coins impressed with an Island stamp, since it cost just a buck to execute a trade on Island. Most attendees—think Armani-clad traders with Rolex watches and greasy Gordon Gekko hairdos—didn’t want the free dollar. Levine decided to stick to programming. He’d find others to pitch Island. Better yet, Island would sell itself. FROM the beginning, Levine’s trading pool was humming like a Formula One race car. Using Island, Watcher users could blast trades into the market at speeds never before seen. Market makers were utterly outclassed and outgunned. While Island had many orders flowing in from Watcher traders and a handful of other SOES firms, it wasn’t enough to turn it into a substantial business.

 

pages: 284 words: 92,688

Disrupted: My Misadventure in the Start-Up Bubble by Dan Lyons

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Airbnb, Bernie Madoff, bitcoin, call centre, cleantech, cloud computing, corporate governance, dumpster diving, fear of failure, Filter Bubble, Golden Gate Park, Google Glasses, Googley, Gordon Gekko, hiring and firing, Jeff Bezos, Lean Startup, Lyft, Mark Zuckerberg, Menlo Park, minimum viable product, new economy, Paul Graham, pre–internet, quantitative easing, ride hailing / ride sharing, Rosa Parks, Sand Hill Road, sharing economy, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Skype, Snapchat, software as a service, South of Market, San Francisco, Steve Ballmer, Steve Jobs, Steve Wozniak, telemarketer, tulip mania, Y Combinator, éminence grise

(The investor later walked back that comment, saying it was a “poor choice of words.”) Start-ups seem to believe it is okay for them to bend rules. Some, like Uber and Airbnb, have built their businesses by defying regulations. Then again, if laws are stupid, why follow them? In the World According to Start-ups, when tech companies cut corners it is for the greater good. These start-up founders are not like Gordon Gekko or Bernie Madoff, driven by greed and avarice; they are Rosa Parks and Martin Luther King Jr., engaging in civil disobedience. There’s also a sense among start-ups that it’s okay for them to break the rules because they’re underdogs competing against huge opponents; they’re David, firing his slingshot at Goliath. Another argument is that the big guys break just as many rules as the little guys.

But anyway, I’m a two. I’m below average. As with my first score, I don’t argue with Trotsky or try to haggle or negotiate. I just listen. The third category is VORP, the scoring system that Halligan borrowed from Major League Baseball. VORP stands for value over replacement player. VORP is a cruel, heartless metric, and it’s weird to set it right alongside HEART. It’s like putting a photo of Gordon Gekko next to a photo of the Dalai Lama. VORP is the opposite of HEART. It’s the anti-HEART. It’s HEART-less. In this category I figure I will get a one, or a zero, or even a negative number, if that’s possible. I’m being paid a lot of money to do a job that a summer intern could do, a job that originally was created as a part-time assignment for Cranium’s administrative assistant. Scheduling people for a podcast and fetching glasses of water for Cranium and his guests in the studio are not challenging tasks.

 

pages: 137 words: 36,231

Information: A Very Short Introduction by Luciano Floridi

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agricultural Revolution, Albert Einstein, bioinformatics, carbon footprint, Claude Shannon: information theory, conceptual framework, double helix, Douglas Engelbart, George Akerlof, Gordon Gekko, industrial robot, Internet of things, invention of writing, John Nash: game theory, John von Neumann, moral hazard, Nash equilibrium, Norbert Wiener, phenotype, prisoner's dilemma, RAND corporation, RFID, Turing machine

All this involves the elaboration of intermediary, internal constructs, which are stored, transformed, manipulated, and communicated over variable lengths of time, from short-term memory to over a lifetime. In humans, it involves the unique capacity to gather, store, and retrieve, exchange, integrate, and update, use and indeed misuse semantic information acquired by other people, including past generations. It is this social and economic sphere of information that will be explored in the next chapter. In Oliver Stone's film Wall Street (1987), the main character, Gordon Gekko (Michael Douglas), declares that `the most valuable commodity I know of is information'. He was probably right. Information has always had great value, and whoever has owned it has usually been keen on protecting it. This is why, for example, there are legal systems regulating intellectual property. Intellectual property rights concern artistic and commercial creations of the mind, and hence the relevant kinds of information and intangible assets.

 

pages: 374 words: 114,600

The Quants by Scott Patterson

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Albert Einstein, asset allocation, automated trading system, Benoit Mandelbrot, Bernie Madoff, Bernie Sanders, Black Swan, Black-Scholes formula, Bonfire of the Vanities, Brownian motion, buttonwood tree, buy low sell high, capital asset pricing model, centralized clearinghouse, Claude Shannon: information theory, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, Doomsday Clock, Emanuel Derman, Eugene Fama: efficient market hypothesis, fixed income, Gordon Gekko, greed is good, Haight Ashbury, index fund, invention of the telegraph, invisible hand, Isaac Newton, job automation, John Nash: game theory, law of one price, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, margin call, merger arbitrage, NetJets, new economy, offshore financial centre, Paul Lévy, Ponzi scheme, quantitative hedge fund, quantitative trading / quantitative finance, race to the bottom, random walk, Renaissance Technologies, risk-adjusted returns, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Sergey Aleynikov, short selling, South Sea Bubble, speech recognition, statistical arbitrage, The Chicago School, The Great Moderation, The Predators' Ball, too big to fail, transaction costs, value at risk, volatility smile, yield curve, éminence grise

The next day, it soared 186.84 points, its biggest one-day point advance in history at the time. But the damage had been done. The mood around the country turned decidedly anti–Wall Street as the junk bond scandals hit the front pages of newspapers. An October 1987 Newsweek cover queried, “Is the Party Over? A Jolt for Wall Street’s Whiz Kids.” In December 1987, audiences in movie theaters listened to Gordon Gekko, the slimy takeover artist played by Michael Douglas, proclaim the mantra for the decade in Oliver Stone’s Wall Street: “Greed is good.” A series of popular books reflecting the anti–Wall Street sentiment hit the presses: Bonfire of the Vanities by Tom Wolfe, Barbarians at the Gate by Wall Street Journal reporters Bryan Burrough and John Helyar, The Predators’ Ball by Connie Bruck, Liar’s Poker by Michael Lewis.

At the time, the quants were known as rocket scientists, since many came from research hotbeds such as Bell Labs, where cell phones were invented, or Los Alamos National Laboratory, birthplace of the atomic bomb. Wall Street’s gut traders eventually proved to be no match for such explosive brainpower. Michael Lewis’s Wall Street classic, Liar’s Poker, exemplified and exposed the old-school Big Swinging Dick trader of the 1980s, the age of Gordon Gekko’s “greed is good.” Lewis Ranieri, the mortgage-bond trader made famous in the book, made huge bets based on his burger-fueled gut. Michael Milken of Drexel Burhman for a time ruled the Street, financing ballsy leveraged buyouts with billions in junk bonds. Nothing could be more different from the cerebral, computerized universe of the quants. Those two worlds collided when Aaron Brown strode onto Kidder’s trading floor.

 

pages: 481 words: 120,693

Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland

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Albert Einstein, algorithmic trading, banking crisis, barriers to entry, Basel III, battle of ideas, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Branko Milanovic, Bretton Woods, BRICs, business climate, call centre, carried interest, Cass Sunstein, Clayton Christensen, collapse of Lehman Brothers, conceptual framework, corporate governance, credit crunch, Credit Default Swap, crony capitalism, Deng Xiaoping, don't be evil, double helix, energy security, estate planning, experimental subject, financial deregulation, financial innovation, Flash crash, Frank Gehry, Gini coefficient, global village, Goldman Sachs: Vampire Squid, Gordon Gekko, Guggenheim Bilbao, haute couture, high net worth, income inequality, invention of the steam engine, job automation, joint-stock company, Joseph Schumpeter, knowledge economy, knowledge worker, linear programming, London Whale, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, NetJets, new economy, Occupy movement, open economy, Peter Thiel, place-making, Plutocrats, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, postindustrial economy, Potemkin village, profit motive, purchasing power parity, race to the bottom, rent-seeking, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, self-driving car, short selling, Silicon Valley, Silicon Valley startup, Simon Kuznets, Solar eclipse in 1919, sovereign wealth fund, stem cell, Steve Jobs, The Spirit Level, The Wealth of Nations by Adam Smith, Tony Hsieh, too big to fail, trade route, trickle-down economics, Tyler Cowen: Great Stagnation, wage slave, Washington Consensus, winner-take-all economy

“You had people in their thirties, through hedge funds and Goldman Sachs partner jobs, people who were making twenty, thirty, forty million a year. And there were a lot of them doing it. They started hanging out with each other. They became a pack. They started roaming the globe together as global high rollers and the differences between them and the rest of the world became exponential. It was no longer just Gordon Gekko. It developed into a totally different stratosphere.” — Ms. Peterson’s dinner party observations are borne out by the data. In America, the gap between the top 1 percent and everyone else has indeed developed into “a totally different stratosphere.” In the 1970s, the top 1 percent of earners captured about 10 percent of the national income. Thirty-five years later, their share had risen to nearly a third of the national income, as high as it had been during the Gilded Age, the previous historical peak.

But at a moment of hyperinflation and slightly lower state interest rates, banking offered an opportunity to make the first big post-Soviet windfall. Even more important, the fortunes earned using state credits provided the future oligarchs with the capital and the connections to muscle their way into the real windfall, the 1995 loans-for-shares giveaway of Russia’s natural resources. Because of Gordon Gekko, Bendukidze missed out. — Soros learned about revolutions the hard way. He compares 2008, with its cataclysmic events and his survival of them, with 1944, when as a Jewish fourteen-year-old in Nazi-occupied Budapest he and his family eluded the Holocaust. The Soroses and their circle of friends had lived comfortable, largely secular lives before the Germans arrived. Many in their community were unable to grasp that that life was over and they needed to flee at once.

 

pages: 421 words: 128,094

King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone by David Carey; John E. Morris; John Morris

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asset allocation, banking crisis, Bonfire of the Vanities, carried interest, collateralized debt obligation, corporate governance, credit crunch, diversification, diversified portfolio, fixed income, Gordon Gekko, margin call, Menlo Park, mortgage debt, new economy, Northern Rock, risk tolerance, Rod Stewart played at Stephen Schwarzman birthday party, Sand Hill Road, sealed-bid auction, Silicon Valley, sovereign wealth fund, The Predators' Ball, éminence grise

.… Financiers who celebrate fast fortunes made while workers face stagnant pay and declining job security risk becoming targets for a growing dissent.” When, on the eve of Blackstone’s IPO four months after the party, new tax proposals were announced, they were immediately dubbed the Blackstone Tax and the Journal blamed Schwarzman, saying his “garish 60th birthday party this year played into the hands of populists looking for a real-life Gordon Gekko to skewer.” Schwarzman’s exuberance had put the industry, and himself, on trial. It was easy to see the sources of the fears. Private equity embodies the capitalist ethos in its purest form, obsessed with making companies more valuable, whether that means growing, shrinking, folding one business and launching another, merging, or moving. It is clearheaded, unsentimental ownership with a vengeance, and a deadline.

Hill had also been an architect of some of the most iconic friendly mergers of the age: Bendix Corp.’s $1.8 billion merger with Allied Corp. in 1983, American Stores’ $2.5 billion takeover of Lucky Stores in 1988, and Time Incorporated’s $14 billion merger with Warner Communications in 1989. He dressed the part to perfection, from his back-combed coif to his impeccably tailored Paul Stuart suits and tasseled loafers. Rumor had it that Gordon Gekko in the movie Wall Street was styled after Tom Hill. In 1993 Hill was ousted as Lehman’s co-CEO, and Blackstone soon tapped him to cohead M&A and assume Roger Altman’s mantle as a brand-name rainmaker. From the moment Altman left, Schwarzman and Peterson had searched doggedly for a worthy replacement, Schwarzman remarked when Blackstone hired Hill. “Tom fills that bill,” he said. The timing seemed propitious.

 

pages: 311 words: 130,761

Framing Class: Media Representations of Wealth and Poverty in America by Diana Elizabeth Kendall

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Bernie Madoff, blue-collar work, Bonfire of the Vanities, call centre, David Brooks, declining real wages, Donald Trump, employer provided health coverage, ending welfare as we know it, framing effect, Georg Cantor, Gordon Gekko, greed is good, haute couture, housing crisis, illegal immigration, income inequality, lump of labour, mortgage tax deduction, new economy, payday loans, Ponzi scheme, Ray Oldenburg, Richard Florida, Ronald Reagan, Saturday Night Live, telemarketer, The Great Good Place, Thorstein Veblen, trickle-down economics, union organizing, upwardly mobile, urban planning, working poor

Leach was the master of price-tag framing, showing viewers some of the lavish residences, luxury vehicles, and exotic travel destinations enjoyed by the world’s wealthiest people.93 At the end of each episode, Leach wished his viewers “champagne wishes and caviar dreams.” As that tag line suggests, the lifestyles of the rich and famous shown on Leach’s program were nothing more than “wishes” or “dreams” for the typical viewer. However, the series supported one of the key tenets of the gospel of materialism—namely, “Greed is good,” as stockbroker Gordon Gekko (played by Michael Douglas) declares in the 1980s film Wall Street. During the economic crisis of the 2000s, in Wall Street 2: Money Never Sleeps, Michael Douglas reprises his role as Gordon Gekko, who emerges twenty years later from prison and seeks to rebuild his career and repair his relationship with his daughter. She is engaged to a young, ambitious Wall Street trader with goals much like Gekko himself had when he became involved in chicanery resembling much of what has contributed to many of this country’s financial problems in the twenty-first century.94 Like the original Wall Street and other films such as the 1980s classic Bonfire of the Vanities, Wall Street 2 highlights price-tag framing: everything (and everybody) has a price, and the higher the price, the greater the zeal with which people will pursue wealth and power at any cost. 9781442202238.print.indb 48 2/10/11 10:46 AM Twenty-Four-Karat Gold Frames 49 Not only does price-tag framing tell media audiences how much the rich pay for their possessions, but it also may suggest that ordinary people can live like millionaires, even if on a reduced scale.

 

pages: 455 words: 138,716

The Divide: American Injustice in the Age of the Wealth Gap by Matt Taibbi

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banking crisis, Bernie Madoff, butterfly effect, collapse of Lehman Brothers, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, Edward Snowden, ending welfare as we know it, forensic accounting, Gordon Gekko, greed is good, illegal immigration, information retrieval, London Interbank Offered Rate, London Whale, naked short selling, offshore financial centre, Ponzi scheme, profit motive, regulatory arbitrage, short selling, telemarketer, too big to fail, War on Poverty

Wall Street in 2003 was a very different place from the world Ben Graham had written about in his 1934 Security Analysis. A more definitive portrait of modern finance would probably be the movie Wall Street, which had a profound effect on the city’s business culture, although probably not the effect its heavy-handed lefty director Oliver Stone expected. While the rest of America understood Michael Douglas’s iconic Gordon Gekko character as a villain, and saw his famed “greed is good” speech as incisive satire, many aspiring Wall Street traders sincerely thought—and still think—that Gekko was the movie’s hero. In the early 1990s, Wall Street saw a massive influx of young Gekko wannabes who thought waiting any amount of time to get fabulously wealthy was for losers, or at the very least for people who had never read Sun Tzu.

Another SAC analyst, Jon Horvath, pleaded guilty to being part of a “criminal club” that swapped nonpublic information about technology companies. For a while, it looked as if Cohen himself might get away. In March 2013 the SEC settled insider trading charges with Cohen for $616 million, and Cohen was so depressed by the paltry fine (which was only a fraction of his rumored $8 billion personal fortune) that he immediately went out and bought a $155 million Picasso (Le Rêve) and a $60 million, Gordon Gekko–style beach house in the Hamptons (right next to his existing $18 million house on the same beach). But later in the year, SAC itself was criminally indicted on insider trading charges, and Cohen was also charged civilly by the SEC for failure to supervise in the Martoma case. As of this writing, it appears that at the very least, SAC will be shut down. Meanwhile ten former SAC employees have been charged or implicated in illegal trading, and five have admitted guilt.

 

pages: 504 words: 139,137

Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined by Lasse Heje Pedersen

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algorithmic trading, Andrei Shleifer, asset allocation, backtesting, bank run, banking crisis, barriers to entry, Black-Scholes formula, Brownian motion, buy low sell high, capital asset pricing model, commodity trading advisor, conceptual framework, corporate governance, credit crunch, Credit Default Swap, currency peg, David Ricardo: comparative advantage, declining real wages, discounted cash flows, diversification, diversified portfolio, Emanuel Derman, equity premium, Eugene Fama: efficient market hypothesis, fixed income, Flash crash, floating exchange rates, frictionless, frictionless market, Gordon Gekko, implied volatility, index arbitrage, index fund, interest rate swap, late capitalism, law of one price, Long Term Capital Management, margin call, market clearing, market design, market friction, merger arbitrage, mortgage debt, New Journalism, paper trading, passive investing, price discovery process, price stability, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, random walk, Renaissance Technologies, Richard Thaler, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, shareholder value, Sharpe ratio, short selling, sovereign wealth fund, statistical arbitrage, statistical model, systematic trading, technology bubble, time value of money, total factor productivity, transaction costs, value at risk, Vanguard fund, yield curve, zero-coupon bond

If you think the earnings will come out higher than others expect, you buy before the announcement and sell after the announcement. More generally, such opportunistic traders try to put on a position before something is broadly known and unwind the position when the information gets incorporated into the price based on the motto: Buy on rumors, sell on news. If you know a rumor to be true, then you could be engaging in illegal insider trading (as Gordon Gekko, played by Michael Douglas, in the movie Wall Street). Whereas equity long–short managers often have more long positions than short, the reverse is true for dedicated short-bias managers. They use similar techniques as equity long–short managers, but they focus on finding companies to sell short. Short-selling means taking a bet that the share price will go down. Just like buying a stock means that you profit if the stock price goes up, taking a short position means that you profit if the price goes down.

That said, I believe that the methods described in this book are essential for all managers, whether discretionary or quantitative. Indeed, many serious discretionary traders often analyze the historical performance of a trading idea before implementing it in large size. For example, in my interview with Lee Ainslie, he told me how his Maverick Capital has built a quantitative system that informs their fundamental process and helps manage the risk. Macro Strategies If Gordon Gekko was an equity trader in the movie Wall Street, the Duke brothers and Eddie Murphy were macro traders in the movie Trading Places, using futures markets to bet on the direction of orange juice prices. I divide macro strategies into global macro and managed futures. Global macro traders bet on economy-wide phenomena around the world. They take the view that the overall stock market will go up or down, that inflation will lead to a spike in gold prices, or that emerging-market currencies will rise or collapse.

 

pages: 494 words: 132,975

Keynes Hayek: The Clash That Defined Modern Economics by Nicholas Wapshott

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airport security, banking crisis, Bretton Woods, British Empire, collective bargaining, complexity theory, cuban missile crisis, Francis Fukuyama: the end of history, full employment, Gordon Gekko, greed is good, if you build it, they will come, Isaac Newton, Joseph Schumpeter, liquidationism / Banker’s doctrine / the Treasury view, means of production, Mont Pelerin Society, mortgage debt, New Journalism, Northern Rock, price mechanism, pushing on a string, road to serfdom, Ronald Reagan, Simon Kuznets, The Chicago School, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Malthus, trickle-down economics, War on Poverty, Yom Kippur War

Adjustments were made and priorities altered. The freewheeling Reagan years had altered the mood in America. Private enterprise replaced communal action as the preferred way to change society. The free-loving flower children of the 1960s’ “Love Generation” had given way to the self-centered “Me Generation” of the ’80s and ’90s. Bob Dylan’s call to action “The Times They Are a-Changin’” had been superceded by Gordon Gekko’s mantra “Greed Is Good.”21 The national battle for civil rights for minorities was replaced by a demand for smaller government, states’ rights, and more individual rights. By the early 1990s, Taylor’s rule, showing the trade-off between interest rates and the rate of inflation, named after the Stanford economist John Taylor,22 came to replace the Phillips curve, the trade-off between employment and inflation, as the equation of choice for those running the economy.

Bush’s Council of Economic Advisers (2005–6). 16 Ben Bernanke, remarks at “A Conference to Honor Milton Friedman,” University of Chicago, Chicago, November 8, 2002. 17 Michael Kinsley (1951– ), American political journalist. 18 Michael Kinsley, “Greenspan Shrugged,” The New York Times, October 14, 2007. 19 Greenspan, Age of Turbulence, p. 68. 20 George H. W. Bush (1924– ), ambassador to the UN, director of the CIA, and 41st president of the United States (1989–93). 21 The “Greed Is Good” speech by Gordon Gekko, the hero of Oliver Stone’s 1987 movie Wall Street, was based on a commencement address at the University of California, 1986, by the convicted inside-dealing stock trader Ivan Boesky, who said, “I think greed is healthy. You can be greedy and still feel good about yourself.” 22 John Brian Taylor (1946– ), American economist and Robert Raymond Professor of Economics at Stanford University. 23 George H.

 

pages: 219 words: 61,334

Brit-Myth: Who Do the British Think They Are? by Chris Rojek

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British Empire, business climate, colonial rule, deindustrialization, demand response, full employment, Gordon Gekko, Isaac Newton, Khartoum Gordon, Mahatma Gandhi, means of production, post-industrial society, Red Clydeside, Stephen Hawking, the market place, urban planning, Winter of Discontent

By the same token, the British model of reserve is well suited for representations of villainy because it smacks of innate superiority. Of course, the villainous traits that Hollywood associates with the British are not exclusively typical of the nation. Other non-British characters in the afi’s Top 50, such as Nurse Ratched (Louise Fletcher in One Flew Over 133 CELLULOID HEROES AND VILLAINS The Cuckoo’s Nest, 1975), Mr Potter (Lionel Barrymore in It’s A Wonderful Life, 1946), Gordon Gekko (Michael Douglas in Wall Street, 1987) and Kaiser Soza (Kevin Spacey in The Usual Suspects, 1995), have comparable characteristics. Indeed, it would be absurd to maintain that Hollywood regards the British as holding all the cards in the portrayal of villainy. All the same, it is striking that Hollywood repeatedly identifies the British, with their fancy accents, emotional reserve and public school demeanour as ‘naturals’ to play the part of the baddie.

 

pages: 162 words: 50,108

The Little Book of Hedge Funds by Anthony Scaramucci

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Andrei Shleifer, asset allocation, Bernie Madoff, business process, carried interest, Credit Default Swap, diversification, diversified portfolio, Donald Trump, Eugene Fama: efficient market hypothesis, fear of failure, fixed income, follow your passion, Gordon Gekko, high net worth, index fund, Long Term Capital Management, mail merge, margin call, merger arbitrage, NetJets, Ponzi scheme, profit motive, quantitative trading / quantitative finance, random walk, Renaissance Technologies, risk-adjusted returns, risk/return, Ronald Reagan, Saturday Night Live, Sharpe ratio, short selling, Silicon Valley, too big to fail, transaction costs, Vanguard fund, Y2K, Yogi Berra

Susan Krakower, Mark Hoffman, Nik Deogun, Melissa Lee, Scott Wapner, Mary Duffy, John Melloy, Patty Martell, Lydia Thew, Gary Kaminsky, Maria Bartiromo, David Faber, Guy Adami, Joe Terranova, Tim Seymour, Amanda Drury, Carl Quintanilla, Jim Cramer, Brian Steel, Brian Sullivan, Maneet Ahuja, Pete and Jon Najarian, Steve Grasso, Steve Cortes, Karen Finerman, Brian Sullivan, Samantha Wright, and a legion of others who always make my time on the network a great learning experience. I also want to acknowledge my brother David; my sister Susan; my mom and dad, Al and Marie Scaramucci; the mother of my children, Lisa; and if you read my first book Goodbye Gordon Gekko, my first business mentor Uncle Salvatore Defeo, Sonny, Bobby, and Augie Defeo. If I have left anyone out, I offer an apology. The oversight, while unintentional, is more of a function of a publishing deadline and a warning by my publisher not to make this too long.

 

pages: 237 words: 50,758

Obliquity: Why Our Goals Are Best Achieved Indirectly by John Kay

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Andrew Wiles, Asian financial crisis, Berlin Wall, bonus culture, British Empire, business process, Cass Sunstein, computer age, credit crunch, Daniel Kahneman / Amos Tversky, discounted cash flows, discovery of penicillin, diversification, Donald Trump, Fall of the Berlin Wall, financial innovation, Gordon Gekko, greed is good, invention of the telephone, invisible hand, Jane Jacobs, Long Term Capital Management, Louis Pasteur, market fundamentalism, Nash equilibrium, pattern recognition, purchasing power parity, RAND corporation, regulatory arbitrage, shareholder value, Simon Singh, Steve Jobs, The Death and Life of Great American Cities, The Predators' Ball, The Wealth of Nations by Adam Smith, ultimatum game, urban planning, value at risk

In the end he was forced out of his post at Sunbeam, the appliance manufacturer, amid allegations of accounting abuse and profit manipulation. The corporation went bankrupt. Dunlap was spared possible civil and criminal suits only after he agreed to pay penalties and restitution of fifteen million dollars.10 The history of the last two decades is littered with fallen idols who, like Dunlap, stridently asserted the primacy of wealth. Gordon Gekko, the antihero of Oliver Stone’s 1987 film Wall Street, famously proclaimed: “Greed is good.” Gekko was partly based on Ivan Boesky, a notorious corporate raider of the 1980s, who was reported as telling a class at Columbia: “I want you to know that I think greed is healthy. You can be greedy and still feel good about yourself.”11 Soon after, Boesky went to prison, convicted of insider trading.

 

Global Financial Crisis by Noah Berlatsky

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accounting loophole / creative accounting, asset-backed security, banking crisis, Bretton Woods, capital controls, Celtic Tiger, centre right, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, deindustrialization, Doha Development Round, energy security, eurozone crisis, financial innovation, Food sovereignty, George Akerlof, Gordon Gekko, housing crisis, illegal immigration, income inequality, market bubble, market fundamentalism, moral hazard, new economy, Northern Rock, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, reserve currency, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, South China Sea, structural adjustment programs, too big to fail, trade liberalization, transfer pricing, working poor

He argues that while regulations would help, a moral transformation and a renunciation of greed is what is really needed. As you read, consider the following questions: 1. According to Oskari Juurikkala, what are derivatives? 2. What act does Juurikkala explain was passed after Enron to create a new layer of regulations? 3. According to Juurikkala, what really destroyed Enron? “G reed is good,” insisted Gordon Gekko in the 1987 film Wall Street. Most of us disagree. Recent events in the mortgage lending industry prove us right. The “subprime loan crisis” has been making headlines since it began in August [2007]. It refers to the fact that a relatively high percentage of mortgages offered to people with significant probability of default have gone sour. Oskari Juurikkala, “Greed Hurts: Causes of the Global Financial Crisis,” Acton Commentary, January 16, 2008.

 

pages: 282 words: 26,931

The Five-Year Party: How Colleges Have Given Up on Educating Your Child and What You Can Do About It by Craig Brandon

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Bernie Madoff, call centre, Donald Trump, en.wikipedia.org, Gordon Gekko, helicopter parent, impulse control, new economy, Ponzi scheme, Ralph Nader

This created a schism within the academic community, with one side advocating dumbing down the curriculum to the incoming students’ level to keep them in school and the other half demanding that rigorous standards be maintained, even if it meant a high percentage of students failed. This tended to break down along age lines, with the older professors defending academic standards and the younger ones advocating dumbing down the college. It was at this crucial point that a new kind of administrator began taking over the reins of power at American colleges. These new administrators had more in common with Gordon Gekko than they did with Aristotle. They were armed with degrees in business administration rather than in education and had backgrounds or at least training in subjects like marketing, public relations, and management. These new administrators saw that the real problem with colleges was that they were not being run like what they really were—businesses. To these new administrators, colleges were models of inefficiency because they refused to listen to the demands of their customers—the students—and were therefore always in danger of losing their market share to colleges that did a better job of customer relations.

 

pages: 306 words: 78,893

After the New Economy: The Binge . . . And the Hangover That Won't Go Away by Doug Henwood

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accounting loophole / creative accounting, affirmative action, Asian financial crisis, barriers to entry, borderless world, Branko Milanovic, Bretton Woods, capital controls, corporate governance, correlation coefficient, credit crunch, deindustrialization, dematerialisation, deskilling, ending welfare as we know it, feminist movement, full employment, gender pay gap, George Gilder, glass ceiling, Gordon Gekko, greed is good, half of the world's population has never made a phone call, income inequality, indoor plumbing, Internet Archive, job satisfaction, joint-stock company, Kevin Kelly, labor-force participation, liquidationism / Banker’s doctrine / the Treasury view, manufacturing employment, means of production, minimum wage unemployment, Naomi Klein, new economy, occupational segregation, pets.com, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, statistical model, structural adjustment programs, Telecommunications Act of 1996, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, total factor productivity, union organizing, War on Poverty, women in the workforce, working poor, Y2K

Underperforming companies—those generating insufficient profits to satisfy shareholders—^were taken over, either by allegedly more competent rivals or by corporate raiders (or, as Alan Greenspan dubbed them at the time, "unaffiliated corporate restructurers"), or they were taken private by a management team in partnership with outside investors using lots of borrowed money. Regardless of the financial maneuver, the operational strategy was similar: shut or sell weak divisions, lay off workers, cut wages, break unions (where they existed), speed up the Hne, get the profit rate up. The moral philosophy of this period was nicely summed up by Oliver Stone's Gordon Gekko, channeUng the most famous inside trader of all time, Ivan Boesky: "Greed is good." Unfortunately, these maneuvers usually involved lots of debt, and the debt load proved crippHng by decade's end. So there was a shift of strategy toward shareholder activism. Led by large pension funds, particularly the CaHfornia PubHc Employees Retirement System (Calpers), institutional investors drew up hit lists of saggy companies, and pressed management to shape up or ship out.

 

pages: 267 words: 71,123

End This Depression Now! by Paul Krugman

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airline deregulation, Asian financial crisis, asset-backed security, bank run, banking crisis, Bretton Woods, capital asset pricing model, Carmen Reinhart, centre right, correlation does not imply causation, credit crunch, Credit Default Swap, currency manipulation / currency intervention, debt deflation, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, Financial Instability Hypothesis, full employment, German hyperinflation, Gordon Gekko, Hyman Minsky, income inequality, inflation targeting, invisible hand, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, labour mobility, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, low skilled workers, Mark Zuckerberg, moral hazard, mortgage debt, paradox of thrift, price stability, quantitative easing, rent-seeking, Robert Gordon, Ronald Reagan, Upton Sinclair, We are the 99%, working poor, Works Progress Administration

In the 1980s owners of savings and loans made big profits by taking big risks—then left taxpayers holding the bag. In the 2000s bankers did it again, amassing vast fortunes by making bad real estate loans and either selling them to unwitting investors or receiving a government bailout when crisis struck. But it’s also true of a lot of private equity, the business of buying companies, restructuring them, then selling them off again. (Gordon Gekko, in the movie Wall Street, was a private-equity player; Mitt Romney was one in real life.) To be fair, some private-equity firms have done valuable work by financing start-ups, in high-tech and elsewhere. In many other cases, however, profits have come from what Larry Summers—yes, that Larry Summers—called, in an influential paper of the same name, “breach of trust”: basically, breaking contracts and agreements.

 

pages: 272 words: 64,626

Eat People: And Other Unapologetic Rules for Game-Changing Entrepreneurs by Andy Kessler

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23andMe, Andy Kessler, bank run, barriers to entry, Berlin Wall, British Empire, business process, California gold rush, carbon footprint, Cass Sunstein, cloud computing, collateralized debt obligation, collective bargaining, computer age, disintermediation, Eugene Fama: efficient market hypothesis, fiat currency, Firefox, Fractional reserve banking, George Gilder, Gordon Gekko, greed is good, income inequality, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, Joseph Schumpeter, knowledge economy, knowledge worker, libertarian paternalism, low skilled workers, Mark Zuckerberg, McMansion, Netflix Prize, packet switching, personalized medicine, pets.com, prediction markets, pre–internet, profit motive, race to the bottom, Richard Thaler, risk tolerance, risk-adjusted returns, Silicon Valley, six sigma, Skype, social graph, Steve Jobs, The Wealth of Nations by Adam Smith, transcontinental railway, transfer pricing, Yogi Berra

Markets value those profits and set the price for the enterprise so they can raise more money to grow. The stock market allocates precious capital to companies it thinks can maximize profits and starves those that can’t. In other words, the stock market is democracy’s half-evil henchman, whose tool is the size of the carrot, not the use of the stick. The tenets of capitalism’s great economists, from Adam Smith’s Invisible Hand to Joseph Schumpeter’s Creative Destruction and Gordon Gekko’s Greed Is Good, are all powerful concepts, but it’s profits and the stock market that carry out the dirty work. No Five-Year Plans. All men are created equal, but a few of you need to be canned and retrained so progress can happen again. New industries get funded and start hiring again. But which ones? The ones with the best prospects for profits. Remember, markets don’t create wealth. They allow for price discovery and for productivity to be priced into the value of companies.

 

pages: 289 words: 77,532

The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders by Kate Kelly

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Bakken shale, bank run, Credit Default Swap, diversification, fixed income, Gordon Gekko, index fund, locking in a profit, London Interbank Offered Rate, Long Term Capital Management, margin call, paper trading, peak oil, Ponzi scheme, risk tolerance, Ronald Reagan, side project, Silicon Valley, sovereign wealth fund, supply-chain management, the market place

Like Pierre Andurand, Ruggles had grown up with a liberal-minded father who was suspicious of financiers. The indoctrination was worse for Ruggles, though: his father was a professor of finance in Ohio and had actually researched the system as part of his living. In 1987, his father took him to see the movie Wall Street, the portrait of corporate greed starring Charlie Sheen as an ambitious young stock trader and Michael Douglas as Gordon Gekko, his sleazy, amoral business mentor. “We left the movie and we had very, very different views,” Ruggles remembers. “I had a hard time understanding that Gekko was the bad guy. I’m thinking, ‘This is what I want to do when I grow up.’” After graduating from what he joked was “the 200th best high school in Ohio” in the depressed steel town of Youngstown, Ruggles attended the University of Michigan, where he remembers maintaining a 4.0 for a while.

 

pages: 280 words: 79,029

Smart Money: How High-Stakes Financial Innovation Is Reshaping Our WorldÑFor the Better by Andrew Palmer

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Affordable Care Act / Obamacare, algorithmic trading, Andrei Shleifer, asset-backed security, availability heuristic, bank run, banking crisis, Black-Scholes formula, bonus culture, Bretton Woods, call centre, Carmen Reinhart, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Graeber, diversification, diversified portfolio, Edmond Halley, Edward Glaeser, Eugene Fama: efficient market hypothesis, eurozone crisis, family office, financial deregulation, financial innovation, fixed income, Flash crash, Google Glasses, Gordon Gekko, high net worth, housing crisis, Hyman Minsky, implied volatility, income inequality, index fund, Innovator's Dilemma, interest rate swap, Kenneth Rogoff, Kickstarter, late fees, London Interbank Offered Rate, Long Term Capital Management, loss aversion, margin call, Mark Zuckerberg, McMansion, mortgage debt, mortgage tax deduction, Network effects, Northern Rock, obamacare, payday loans, peer-to-peer lending, Peter Thiel, principal–agent problem, profit maximization, quantitative trading / quantitative finance, railway mania, randomized controlled trial, Richard Feynman, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, short selling, Silicon Valley, Silicon Valley startup, Skype, South Sea Bubble, sovereign wealth fund, statistical model, transaction costs, Tunguska event, unbanked and underbanked, underbanked, Vanguard fund, web application

But there is nonetheless an echo of what went on in the mortgage industry—namely, the industrialization of credit, as the crunching of data enables lenders to make rapid decisions on risky borrowers without so much as a handshake. That bothers a lot of people. Many critics of banks look wistfully back to a golden age of finance, when the bank manager was the gateway to credit, when judgment prevailed over equation-filled models. This was a world of conservatism and integrity, where taxpayers slept easy in their beds and bankers were more Jimmy Stewart than Gordon Gekko. Since then, modern finance has evolved toward replacing decentralized judgment by mechanical process and substituting relationship lending with arms-length transactions. You can apply for loans online in minutes without speaking to anyone. Thanks to securitization, your mortgage may no longer be owned by the bank you got it from. The risks associated with extending your mortgage can be hedged on the basis of mathematical formulas.6 At first glance, it looks hard to argue against a relationship-­based approach to lending.

 

pages: 274 words: 66,721

Double Entry: How the Merchants of Venice Shaped the Modern World - and How Their Invention Could Make or Break the Planet by Jane Gleeson-White

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Affordable Care Act / Obamacare, Bernie Madoff, Black Swan, British Empire, carbon footprint, corporate governance, credit crunch, double entry bookkeeping, full employment, Gordon Gekko, income inequality, invention of movable type, invention of writing, Islamic Golden Age, Johann Wolfgang von Goethe, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, means of production, Naomi Klein, Ponzi scheme, shareholder value, Silicon Valley, Simon Kuznets, spice trade, spinning jenny, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, traveling salesman, upwardly mobile

It was to chart the glorious rise of accounting in the second half of the twentieth century to the lofty heights of the professional Olympus and then trace its collapse in the wake of scandals like Enron and WorldCom, and in Australia, HIH, One.Tel and ABC Learning. However, not only has no such fall ensued but it turns out that these accounting scandals are a regular feature in the landscape of accounting. They are as old as the profession itself, dating back to the earliest days of the formalised use of collective capital: the corporation. Corporations and accounting scandals go together like Gordon Gekko and greed. The nineteenth and early twentieth centuries are rife with corporate collapses of the magnitude of Enron’s and comparable in their elements. And they all stem from significant accounting misstatements orchestrated by influential senior managers. Equally, the responses of lawmakers and watchdogs have been the same over the past one hundred years: tinker around the edges of the law, found new watchdogs, proclaim a new era of greater scrutiny and let accountants and auditors out to play with the managers of vast sums of other people’s money.

 

pages: 244 words: 79,044

Money Mavericks: Confessions of a Hedge Fund Manager by Lars Kroijer

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Bernie Madoff, capital asset pricing model, diversification, diversified portfolio, family office, fixed income, forensic accounting, Gordon Gekko, hiring and firing, implied volatility, index fund, Jeff Bezos, Just-in-time delivery, Long Term Capital Management, merger arbitrage, new economy, Ponzi scheme, risk-adjusted returns, risk/return, shareholder value, Silicon Valley, six sigma, statistical arbitrage, Vanguard fund, zero-coupon bond

Our first meeting was with David Totti. Mr Totti had been a senior partner at Lazard Frères, although we didn’t know each other. He was one of those people we minions knew to fear. He had since left Lazard and set up his own wealth-management firm next door. Entering Mr Totti’s lavish office, I thought I was in the movie Wall Street. Although I had heard of him terrorising associates, I had not imagined the mirror image of Gordon Gekko. At Lazard, he did not even deal with us analysts, who were one step too low for consideration, but left it to the associates, and I had therefore never met him. I felt as if he ought to launch into a tirade of abuse, calling me a useless piece of shit and how his two-year-old grandchild could do better financial models than me. You know. The usual stuff. He gave us the look of someone who had seen too many young Turks pass through his office, and asked me if I was friends with Felix Rohatyn and Steve Rattner.

 

pages: 270 words: 79,992

The End of Big: How the Internet Makes David the New Goliath by Nicco Mele

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3D printing, 4chan, A Declaration of the Independence of Cyberspace, Airbnb, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, Apple's 1984 Super Bowl advert, barriers to entry, Berlin Wall, big-box store, bitcoin, business climate, call centre, Cass Sunstein, centralized clearinghouse, Chelsea Manning, citizen journalism, cloud computing, collaborative consumption, collaborative editing, crony capitalism, cross-subsidies, crowdsourcing, David Brooks, death of newspapers, Donald Trump, Douglas Engelbart, en.wikipedia.org, Exxon Valdez, Fall of the Berlin Wall, Filter Bubble, Firefox, Galaxy Zoo, global supply chain, Google Chrome, Gordon Gekko, Hacker Ethic, Jaron Lanier, Jeff Bezos, jimmy wales, Julian Assange, Kevin Kelly, Khan Academy, Kickstarter, Lean Startup, Mark Zuckerberg, minimum viable product, Mohammed Bouazizi, Mother of all demos, Narrative Science, new economy, Occupy movement, Peter Thiel, pirate software, Ronald Reagan, Ronald Reagan: Tear down this wall, sharing economy, Silicon Valley, Skype, social web, Steve Jobs, Steve Wozniak, Stewart Brand, Stuxnet, Ted Nelson, Telecommunications Act of 1996, telemarketer, The Wisdom of Crowds, transaction costs, uranium enrichment, Whole Earth Catalog, WikiLeaks, Zipcar

We have frequently in our history relied upon high-quality, big productions to help us work through pressing social and political issues. The 1967 film Guess Who’s Coming to Dinner offered a compelling view of interracial marriage, which at the time was intensely controversial (the year of the film’s release, interracial marriage was illegal in seventeen U.S. states). Oliver Stone’s 1987 movie Wall Street opened up a public discussion about corporate greed, so much so that the lead character, Gordon Gekko, is frequently mentioned in the context of the current financial crisis. Films and books (like Harper Lee’s To Kill a Mockingbird) and songs (like Creedence Clearwater Revival’s “Fortunate Son”) that offer a meaningful critique of our culture help us progress and push the ball forward. Radical connectivity allows creative criticism of our culture to “go viral,” but such criticism doesn’t have the staying power of a big, blockbuster film or novel that changes the way a generation thinks about a subject or a topic.

 

pages: 741 words: 179,454

Extreme Money: Masters of the Universe and the Cult of Risk by Satyajit Das

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affirmative action, Albert Einstein, algorithmic trading, Andy Kessler, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Basel III, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, bonus culture, Bretton Woods, BRICs, British Empire, capital asset pricing model, Carmen Reinhart, carried interest, Celtic Tiger, clean water, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, debt deflation, Deng Xiaoping, deskilling, discrete time, diversification, diversified portfolio, Doomsday Clock, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, eurozone crisis, Fall of the Berlin Wall, financial independence, financial innovation, fixed income, full employment, global reserve currency, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, happiness index / gross national happiness, haute cuisine, high net worth, Hyman Minsky, index fund, interest rate swap, invention of the wheel, invisible hand, Isaac Newton, job automation, Johann Wolfgang von Goethe, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Kevin Kelly, labour market flexibility, laissez-faire capitalism, load shedding, locking in a profit, Long Term Capital Management, Louis Bachelier, margin call, market bubble, market fundamentalism, Marshall McLuhan, Martin Wolf, merger arbitrage, Mikhail Gorbachev, Milgram experiment, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, Naomi Klein, Network effects, new economy, Nick Leeson, Nixon shock, Northern Rock, nuclear winter, oil shock, Own Your Own Home, pets.com, Plutocrats, plutocrats, Ponzi scheme, price anchoring, price stability, profit maximization, quantitative easing, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Ray Kurzweil, regulatory arbitrage, rent control, rent-seeking, reserve currency, Richard Feynman, Richard Feynman, Richard Thaler, risk-adjusted returns, risk/return, road to serfdom, Robert Shiller, Robert Shiller, Rod Stewart played at Stephen Schwarzman birthday party, rolodex, Ronald Reagan, Ronald Reagan: Tear down this wall, savings glut, shareholder value, Sharpe ratio, short selling, Silicon Valley, six sigma, Slavoj Žižek, South Sea Bubble, special economic zone, statistical model, Stephen Hawking, Steve Jobs, The Chicago School, The Great Moderation, the market place, the medium is the message, The Myth of the Rational Market, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trickle-down economics, Turing test, Upton Sinclair, value at risk, Yogi Berra, zero-coupon bond

The banks that expected to refinance the bridge loans later found themselves stuck with loans. Drexel found itself tangled in a web of allegations and investigations into insider trading. In 1986, Dennis Levine, a Drexel investment banker, was charged with insider trading. Drexel traders joked: “Anybody who had to do 54 trades to make $12 million couldn’t be any good.”44 Levine implicated Ivan Boesky, the model for Gordon Gekko in the 1987 movie Wall Street. In 1986, Boesky had declared: “Greed is all right...greed is healthy. You can be greedy and still feel good about yourself.”45 Boesky saved himself by cooperating with the Securities and Exchange Commission (SEC) and informing on Milken. The SEC and Rudy Giuliani, the U.S. attorney for the Southern District of New York, launched wide-ranging investigations into Drexel’s operations.

Rupert Murdoch’s third wife, Wendy Deng, told a woman’s magazine that her husband, worth more than $8 billion, wore $9 shirts bought at U.S. discount store Wal-Mart. But Buffett and Murdoch also owned top-of-the-line business jets to ease the rigors of frequent business travel. The Physical Impossibility of Spending the Amount Earned by Someone Living Life imitated fiction as wealthy bankers mirrored Wall Street’s fictitious, art collecting villain—Gordon Gekko. Art was an alibi for networking, providing natural opportunities to meet members of the financial elite and identify deals. Hedge fund manager Steve Cohen was typical of new buyers who increasingly drove the market for high-end art. His $700 million art collection included Damien Hirst’s The Physical Impossibility of Death in the Mind of Someone Living. Given a net worth of $8 billion and an annual income of $500 million, the work cost a few days’ income: “after you have a fourth home and a [Gulfstream] G5 jet, what else is there?”

 

pages: 686 words: 201,972

Drink: A Cultural History of Alcohol by Iain Gately

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barriers to entry, British Empire, California gold rush, delayed gratification, Deng Xiaoping, Edward Lloyd's coffeehouse, Fellow of the Royal Society, Gordon Gekko, greed is good, Haight Ashbury, Hernando de Soto, imperial preference, invisible hand, joint-stock company, Louis Pasteur, megacity, music of the spheres, Peace of Westphalia, refrigerator car, Ronald Reagan, South Sea Bubble, spice trade, strikebreaker, the scientific method, Tim Cook: Apple, trade route, traveling salesman, Upton Sinclair, V2 rocket, working poor

The new ethos was apparent in the 1985 movie Wall Street, a Faustian tale about Bud, a young stockbroker eager to share in the immense fortunes being made in the markets at that time. Bud solicits the attention of Gordon Gekko, a corporate raider, who epitomizes the new model capitalist. “Lunch is for wimps,” he declares at their first encounter, and Bud pointedly calls for Evian when he meets Gekko in a restaurant at night. The old order is represented by Bud’s father, a union leader at Bluestar Airlines, who does his business with the men he represents over a few beers in the local bar. Gekko aims to take over Bluestar in order to break it into pieces and rob its pension fund, and Bud is forced to choose between old-fashioned beer-drinking, metal-bashing America and the greed-is-good philosophy of Gordon Gekko. After a bottle of whiskey he decides to do the right thing—intoxication leads to an epiphany that restores his moral perspective.

 

pages: 602 words: 207,965

Practical Ext JS Projects With Gears by Frank Zammetti

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Albert Einstein, create, read, update, delete, database schema, en.wikipedia.org, Firefox, full text search, Gordon Gekko, loose coupling, Ronald Reagan, web application

We also got to see the Gears WorkerPool in action, allowing us to implement an efficient multithreading mechanism in JavaScript. In the next chapter, the final chapter of this book, we’ve put together an application for tracking our finances that will allow us to see a few new capabilities that we haven’t seen before, including the charting capabilities Ext JS provides. Stick around—the final adventure is about to begin! 495 CHAP TER 9 Managing Your Finances: Finance Master t o quote the immortal words of Gordon Gekko:1 “Greed, for lack of a better word, is good.” Greed probably most frequently comes in the form of money, so therefore money is good. A big part of making money is simply being able to track your assets and liabilities and understand where your money is and how it’s working for you in terms of return on investments. With that in mind, the final project in this book is my special gift to you: a tool that will not only teach you more about Ext JS but will, hopefully, assist you in making boatloads of money.

What’s this application do anyway? There are some top-notch financial tracking/planning software products out there. Quicken is probably the most well-known name. That product is developed by a team of dedicated engineers and has been developed over a very long period of time to be the polished, powerful solution it is today. At the end of the day, however, it all comes down to the relatively simple 1 Gordon Gekko is the main antagonist in the classic movie Wall Street. Gordon, a corporate raider played by Michael Douglas, embodies all that was wrong with those involved in the stock market in the 80s (and now too it seems!). 497 498 Ch apt er 9 n Ma Na G ING YOU r FINa NC eS : F I N a N C e M a S t e r concept of a diary2 for your money! That’s exactly what Finance Master is. It won’t tell you how to invest your money and it won’t balance your checkbook or simulate investment scenarios.

 

pages: 598 words: 169,194

Bernie Madoff, the Wizard of Lies: Inside the Infamous $65 Billion Swindle by Diana B. Henriques

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accounting loophole / creative accounting, airport security, Albert Einstein, banking crisis, Bernie Madoff, British Empire, centralized clearinghouse, collapse of Lehman Brothers, diversified portfolio, Donald Trump, dumpster diving, financial deregulation, forensic accounting, Gordon Gekko, index fund, locking in a profit, mail merge, merger arbitrage, Plutocrats, plutocrats, Ponzi scheme, Potemkin village, random walk, Renaissance Technologies, riskless arbitrage, Ronald Reagan, short selling, Small Order Execution System, sovereign wealth fund, too big to fail, transaction costs, traveling salesman

Over time, he invested about $620 million in actual cash and securities with Madoff. With Madoff’s steady rates of return, Picower’s account balances ultimately ran up into the billions of dollars. As early as 1986 he was wealthy enough to invest $28 million in an arbitrage fund run by Ivan Boesky, the notorious trader who boosted his fund’s profits illegally by buying tips from Wall Street insiders and who was the model for the Gordon Gekko character in Oliver Stone’s 1987 film Wall Street. By the late 1990s, Picower’s trading account at Goldman Sachs—almost certainly just one of his many Wall Street brokerage accounts—was reportedly worth $10 billion. At one point, he arranged a $5 billion margin loan in that account, which indicates he was so rich that Goldman knew that he could easily cover the loan if the market turned against him.

Lynch, Charles Colfer, and Tomas Kukla, “Flash: Rogerscasey’s Buy-Rated Hedge Fund Managers Have No Exposure to Madoff Investment Securities LLC,” Rogerscasey Inc. internal publication, December 2008. 132 Rogerscasey’s rating for the Madoff-related Tremont funds was “sell”: The warnings surfaced in the course of lawsuits filed in Colorado by Madoff victims against units of Fiserv that provided IRA custodial services to more than eight hundred retirement savings accounts invested with Madoff. 132 “The Madoff exposure is a potential disaster”: Lynch, Colfer, and Kukla, “Flash,” p. 2. 133 he invested about $620 million: Diana B. Henriques, “Deal Recovers $7.2 Billion for Madoff Fraud Victims,” New York Times, Dec. 17, 2010. 133 the model for the Gordon Gekko character in Oliver Stone’s 1987 film Wall Street: James B. Stewart, Den of Thieves (New York: Simon & Schuster, 1991), pp. 202–3. Stewart noted that a Boesky aide, Reid Nagle, “had no idea where Picower’s money came from; he occupied an unmarked office suite in an anonymous Manhattan tower.” 133 Picower’s trading account at Goldman Sachs: Henriques, “Deal Recovers $7.2 Billion,” and reporting notes made available to the author by her colleague Peter Lattman. 133 Available records show that Picower and his wife withdrew $390 million: Jake Bernstein, “Madoff Client Jeffry Picower Netted $5 Billion—Likely More Than Madoff Himself,” ProPublica.org, June 23, 2009 (subsequently updated), and the accompanying graphic, Dan Nguyen and Jake Bernstein, “Chart: The Picower-Madoff Transfers, from 1995–2008.” 135 a posthumous memoir called Leukemia for Chickens: Roger Madoff, Leukemia for Chickens: One Wimp’s Tale About Living Through Cancer (New York: privately published, 2007). 135 One hospital staff member would poignantly recall Peter gently rubbing ointment: Ibid., pp. 273–74.

 

pages: 269 words: 104,430

Carjacked: The Culture of the Automobile and Its Effect on Our Lives by Catherine Lutz, Anne Lutz Fernandez

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barriers to entry, car-free, carbon footprint, collateralized debt obligation, failed state, feminist movement, fudge factor, Gordon Gekko, housing crisis, illegal immigration, income inequality, inventory management, market design, market fundamentalism, mortgage tax deduction, Naomi Klein, Nate Silver, New Urbanism, oil shock, peak oil, Ralph Nader, Ralph Waldo Emerson, ride hailing / ride sharing, Thorstein Veblen, traffic fines, Unsafe at Any Speed, urban planning, white flight, women in the workforce, working poor, Zipcar

Meanwhile, Cerberus Capital, the private equity firm that bought Chrysler in 2007, escapes,49 while the American public is likely on the hook for ten billion or more.50 And the much larger and far more costly General Motors restructuring resulted in the U.S. taxpayers’ owning a majority of the company’s stock, a $50 billion investment so risky no one else would take it. HEDGE FUND HANDS IN OUR POCKETS In the auto sector, as elsewhere in American business, manufacturing is no longer seen as the royal road to riches. Eerily echoing the reviled Gordon Gekko of Oliver Stone’s morality tale Wall Street, Ray Diallo, founder of hedge fund Bridgewater Associates, noted, “The money that’s made from manufacturing stuff is a pittance in comparison to the amount of money made from shuffling money around.” 2007 was the year many first learned 124 Carjacked the terms “predatory lending” and “hedge fund,” both of which have come to hit American car owners, not just home owners, with a vengeance.

 

pages: 336 words: 90,749

How to Fix Copyright by William Patry

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A Declaration of the Independence of Cyberspace, barriers to entry, big-box store, borderless world, business intelligence, citizen journalism, cloud computing, crowdsourcing, death of newspapers, en.wikipedia.org, facts on the ground, Frederick Winslow Taylor, George Akerlof, Gordon Gekko, haute cuisine, informal economy, invisible hand, Joseph Schumpeter, Kickstarter, knowledge economy, lone genius, means of production, new economy, road to serfdom, Ronald Coase, Ronald Reagan, semantic web, shareholder value, Silicon Valley, The Chicago School, The Wealth of Nations by Adam Smith, trade route, transaction costs, trickle-down economics, web application, winner-take-all economy

Copyright Office observed, “licensors have rarely turned down the opportunity in the digital age to seek royalties, even when the basis for their requests is weak at best. Online music companies rightly complain that they need certainty over what rights are implicated and what royalties are payable so that they can operate without fear of being sued for copyright infringement.”15 Greed is not good, as Michael Douglas’s character Gordon Gekko once argued in the movie Wall Street. Obstructionists in the music industry would do well to follow the advice of another movie character: actor Alec Baldwin’s character’s Blake in David Mamet’s 1992 film Glengarry Glen Ross. Sent in by corporate headquarters to motivate real estate salesmen, he harangues them about going after prospective buyers: “They’re sitting out there waiting to give you their money.

 

pages: 353 words: 98,267

The Price of Everything: And the Hidden Logic of Value by Eduardo Porter

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Asian financial crisis, Ayatollah Khomeini, banking crisis, barriers to entry, Berlin Wall, British Empire, capital controls, Carmen Reinhart, Cass Sunstein, clean water, Credit Default Swap, Deng Xiaoping, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, Ford paid five dollars a day, full employment, George Akerlof, Gordon Gekko, guest worker program, happiness index / gross national happiness, housing crisis, illegal immigration, immigration reform, income inequality, income per capita, informal economy, invisible hand, Jean Tirole, John Maynard Keynes: technological unemployment, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, loss aversion, low skilled workers, Martin Wolf, means of production, Menlo Park, Mexican peso crisis / tequila crisis, new economy, New Urbanism, pension reform, Peter Singer: altruism, pets.com, placebo effect, price discrimination, price stability, rent-seeking, Richard Thaler, rising living standards, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, Silicon Valley, stem cell, Steve Jobs, Stewart Brand, superstar cities, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, transatlantic slave trade, transatlantic slave trade, ultimatum game, unpaid internship, urban planning, women in the workforce, World Values Survey, Yom Kippur War, young professional

Today, they get to take home almost a quarter. That amounts to very few elephant seals eating all the fish. FARMERS AND FINANCIERS The biggest seals work for banks. Banks pay enormous bonuses to draw the brightest MBAs or quantum physicists. These bright financiers, in turn, invent the fancy new products that make banking one of the most profitable endeavors in the world. Remember the eighties? Gordon Gekko sashayed across the silver screen. Ivan Boesky was jailed for insider trading. Michael Milken peddled junk bonds. In 1987 financial firms amassed a little less than a fifth of the profits of all American corporations. Wall Street bonuses totaled $2.6 billion—about $15,600 for each man and woman working there. Today, this looks like a piddling sum. By 2007 finance accounted for a full third of the profits of the nation’s private sector.

 

pages: 318 words: 87,570

Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street Are Destroying Investor Confidence and Your Portfolio by Sal Arnuk, Joseph Saluzzi

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algorithmic trading, automated trading system, Bernie Madoff, buttonwood tree, corporate governance, cuban missile crisis, financial innovation, Flash crash, Gordon Gekko, High speed trading, latency arbitrage, locking in a profit, Mark Zuckerberg, market fragmentation, Ponzi scheme, price discovery process, price mechanism, price stability, Sergey Aleynikov, Sharpe ratio, short selling, Small Order Execution System, statistical arbitrage, transaction costs, two-sided market

Considering that exchanges are based around the world, a recent MIT study found that the ultimate site may be in the middle of the Atlantic Ocean.14 Some exchanges make sure that each colocated customer receives equal amounts of connecting cable so that a server at the northeast corner of a facility has the same latency as one at the southwest.15 It appears that “fairness” and the equalization of market data speed among colocated firms is a critical “must” for the exchanges, but not so when it comes to institutional and retail investors. Private Data Feeds In the 1987 movie Wall Street, insider trader Gordon Gekko tells aspiring broker Bud Fox that “the most valuable commodity I know of is information.”16 This is still true today, particularly for the stock exchanges. Private data feeds consolidate an enormous amount of information and transmit it at speeds faster than the consolidated quote system. Exchanges say they make these feeds available to everyone. Realistically, only those with the most sophisticated technology and programmers can use them.

 

pages: 523 words: 111,615

The Economics of Enough: How to Run the Economy as if the Future Matters by Diane Coyle

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accounting loophole / creative accounting, affirmative action, bank run, banking crisis, Berlin Wall, bonus culture, Branko Milanovic, BRICs, call centre, Cass Sunstein, central bank independence, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation does not imply causation, Credit Default Swap, deindustrialization, demographic transition, Diane Coyle, disintermediation, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Financial Instability Hypothesis, Francis Fukuyama: the end of history, George Akerlof, Gini coefficient, global supply chain, Gordon Gekko, greed is good, happiness index / gross national happiness, Hyman Minsky, If something cannot go on forever, it will stop, illegal immigration, income inequality, income per capita, invisible hand, Jane Jacobs, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour market flexibility, low skilled workers, market bubble, market design, market fundamentalism, megacity, Network effects, new economy, night-watchman state, Northern Rock, oil shock, principal–agent problem, profit motive, purchasing power parity, railway mania, rising living standards, Ronald Reagan, Silicon Valley, South Sea Bubble, Steven Pinker, The Design of Experiments, The Fortune at the Bottom of the Pyramid, The Market for Lemons, The Myth of the Rational Market, The Spirit Level, transaction costs, transfer pricing, tulip mania, ultimatum game, University of East Anglia, web application, web of trust, winner-take-all economy, World Values Survey

Few people, even among the most ardent fans of market solutions, will disagree with the proposition that the financial markets have, from time to time, brought scandalous demonstrations of greed. While most traders earning multimillion bonuses no doubt think of themselves as upstanding citizens, the rest of us find it hard to find many shining examples of virtuous behavior on Wall Street or in the City of London. In the notorious words of cinema villain Gordon Gekko (Michael Douglas in Wall Street), “Greed is good” is the motto of the markets, but not of Main Street. Likewise, the cartoon “rational economic man” is a selfish being, whereas real people make choices motivated by the moral sentiments of Adam Smith and illuminated by modern evolutionary biology. But does the immorality of the financial markets and the all-out free market ideology they embody in fact corrupt the rest of the economy?

 

pages: 355 words: 92,571

Capitalism: Money, Morals and Markets by John Plender

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Andrei Shleifer, asset-backed security, bank run, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, bonus culture, Bretton Woods, business climate, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collapse of Lehman Brothers, collective bargaining, computer age, Corn Laws, corporate governance, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, discovery of the americas, diversification, Eugene Fama: efficient market hypothesis, eurozone crisis, failed state, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, Fractional reserve banking, full employment, Gordon Gekko, greed is good, Hyman Minsky, income inequality, inflation targeting, invention of the wheel, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, labour market flexibility, London Interbank Offered Rate, London Whale, Long Term Capital Management, manufacturing employment, Mark Zuckerberg, market bubble, market fundamentalism, means of production, Menlo Park, moral hazard, moveable type in China, Nick Leeson, Northern Rock, Occupy movement, offshore financial centre, paradox of thrift, Plutocrats, plutocrats, price stability, principal–agent problem, profit motive, quantitative easing, railway mania, regulatory arbitrage, Richard Thaler, rising living standards, risk-adjusted returns, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, shareholder value, short selling, Silicon Valley, South Sea Bubble, spice trade, Steve Jobs, technology bubble, The Chicago School, The Great Moderation, the map is not the territory, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, too big to fail, tulip mania, Upton Sinclair, We are the 99%, Wolfgang Streeck

It suffered from the flaw that in a society marked by an uneven distribution of income favouring a numerically small elite, the rich had plenty of spending power to satisfy their desires, but not enough buying power to dynamise the economy to its full potential to raise real incomes.8 The German sociologist and economist Werner Sombart nonetheless argued two centuries later that luxury played an important part in the development of capitalism. 9 And Mandeville’s point has trickled down through history. To name just one example, Gordon Gekko’s ‘greed is good’ speech in the film Wall Street clearly descends in a direct line from the author of the fable. The Fable of the Bees was not universally admired by other Enlightenment thinkers. Adam Smith could not bring himself to accept the extremity of Mandeville’s paradox, in which vice was a necessary condition of prosperity. In his justly celebrated redefinition of the boundaries of the argument about business and morality, he emphasised self-interest rather than vice, with his statement in The Wealth of Nations that ‘it is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard for their own interest’. 10 In much the same vein, he added: ‘I have never known much good done by those who affected to trade for the public good.’11 Yet, as the author of The Theory of Moral Sentiments, he also emphasised the need for markets to operate within a moral context and believed that the act of engaging in market exchange entailed a discipline that encouraged good individual behaviour as well as the good of wider society.

 

Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America by Matt Taibbi

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affirmative action, Affordable Care Act / Obamacare, Bernie Sanders, Bretton Woods, carried interest, clean water, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, desegregation, diversification, diversified portfolio, Donald Trump, financial innovation, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, illegal immigration, interest rate swap, laissez-faire capitalism, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, medical malpractice, moral hazard, mortgage debt, obamacare, passive investing, Ponzi scheme, prediction markets, quantitative easing, reserve currency, Ronald Reagan, Sergey Aleynikov, short selling, sovereign wealth fund, too big to fail, trickle-down economics, Y2K, Yom Kippur War

A being who does not hold his own life as the motive and goal of his actions, is acting on the motive and standard of death. Such a being is a metaphysical monstrosity, struggling to oppose, negate and contradict the fact of his own existence, running blindly amuck on a trail of destruction, capable of nothing but pain. This is pure social Darwinism: self-interest is moral, interference (particularly governmental interference) with self-interest is evil, a fancy version of the Gordon Gekko pabulum that “greed is good.” When you dig deeper into Rand’s philosophy, you keep coming up with more of the same. Rand’s belief system is typically broken down into four parts: metaphysics (objective reality), epistemology (reason), ethics (self-interest), and politics (capitalism). The first two parts are basically pure bullshit and fluff. According to objectivists, the belief in “objective reality” means that “facts are facts” and “wishing” won’t make facts change.

 

pages: 280 words: 82,623

What Got You Here Won't Get You There: How Successful People Become Even More Successful by Marshall Goldsmith, Mark Reiter

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business process, cognitive dissonance, financial independence, Gordon Gekko, high net worth, knowledge worker, loss aversion, shareholder value

But it’s also possible that it’s true, that you’re saying something piercingly honest about yourself which you’re not yet admitting: You don’t thank well. As I say, I don’t want to twist every comment we hear and make into knots. But self-deprecation, pseudo or otherwise, can be one of those honest feedback moments that makes a signal sound in our brain. “Pay attention,” it tells us. “This might be something worth observing.” 5. Look homeward. Remember the movie Wall Street and the character Gordon Gekko? Michael Douglas won an Academy Award for Best Actor for his portrayal of this rude, larcenous wheeler-dealer. Well, I worked with a real-life investment banker who could have inspired the Gekko character. The man I coached—let’s call him Mike—wasn’t amoral and unethical like Gekko, but he had some competitive fires burning within his soul that made him treat people like gravel in a driveway.

 

pages: 383 words: 108,266

Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions by Dan Ariely

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air freight, Al Roth, Bernie Madoff, Burning Man, butterfly effect, Cass Sunstein, collateralized debt obligation, computer vision, corporate governance, credit crunch, Daniel Kahneman / Amos Tversky, David Brooks, delayed gratification, endowment effect, financial innovation, fudge factor, Gordon Gekko, greed is good, housing crisis, invisible hand, lake wobegon effect, late fees, loss aversion, market bubble, Murray Gell-Mann, payday loans, placebo effect, price anchoring, Richard Thaler, second-price auction, Silicon Valley, Skype, The Wealth of Nations by Adam Smith, Upton Sinclair

The scary thought is that if we did the experiments with nonmonetary currencies that were not as immediately convertible into money as tokens, or with individuals who cared less about their honesty, or with behavior that was not so publicly observable, we would most likely have found even higher levels of dishonesty. In other words, the level of deception we observed here is probably an underestimation of the level of deception we would find across a variety of circumstances and individuals. Now suppose that you have a company or a division of a company led by a Gordon Gekko character who declares that “greed is good.” And suppose he used nonmonetary means of encouraging dishonesty. Can you see how such a swashbuckler could change the mind-set of people who in principle want to be honest and want to see themselves as honest, but also want to hold on to their jobs and get ahead in the world? It is under just such circumstances that nonmonetary currencies can lead us astray.

 

pages: 265 words: 93,231

The Big Short: Inside the Doomsday Machine by Michael Lewis

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Asperger Syndrome, asset-backed security, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, diversified portfolio, facts on the ground, financial innovation, fixed income, forensic accounting, Gordon Gekko, high net worth, housing crisis, illegal immigration, income inequality, index fund, interest rate swap, London Interbank Offered Rate, Long Term Capital Management, medical residency, moral hazard, mortgage debt, pets.com, Ponzi scheme, Potemkin village, quantitative trading / quantitative finance, short selling, Silicon Valley, too big to fail, value at risk, Vanguard fund

Still, if a team of experts had set out to create a human being to maximize the likelihood that he would terrify a Wall Street customer, they might have designed something like Lippmann. He traded bonds for Deutsche Bank, but, like most people who traded bonds for Deutsche Bank--or for Credit Suisse or UBS or one of the other big foreign banks that had purchased a toehold in the U.S. financial markets--he was an American. Thin and tightly wound, he spoke too quickly for anyone to follow exactly what he was saying. He wore his hair slicked back, in the manner of Gordon Gekko, and the sideburns long, in the fashion of an 1820s Romantic composer or a 1970s porn star. He wore loud ties, and said outrageous things without the slightest apparent awareness of how they might sound if repeated unsympathetically. He peppered his conversation with cryptic references to how much money he made, for instance. People on Wall Street had long ago learned that their bonuses were the last thing they should talk about with people off Wall Street.

 

pages: 1,073 words: 302,361

Money and Power: How Goldman Sachs Came to Rule the World by William D. Cohan

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asset-backed security, Bernie Madoff, buttonwood tree, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversified portfolio, fear of failure, financial innovation, fixed income, Ford paid five dollars a day, Goldman Sachs: Vampire Squid, Gordon Gekko, high net worth, hiring and firing, hive mind, Hyman Minsky, interest rate swap, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, merger arbitrage, moral hazard, mortgage debt, paper trading, passive investing, Ponzi scheme, price stability, profit maximization, risk tolerance, Ronald Reagan, Saturday Night Live, South Sea Bubble, time value of money, too big to fail, traveling salesman, value at risk, yield curve, Yogi Berra

“No mercy for the yuppies,” explained Anthony Scaramucci, one of the forty Goldman associates in the conference room that afternoon. Hour and after hour passed without the partner who had told them all to be there showing up. By 8:30, three of natives were getting restless. “What’s up?” one of them said. “Where is this jerk? I have plans in the Hamptons and want to get going.” After another half hour, the three rebels left. “They were MBAs from top grad schools,” Scaramucci observed. “They were the future Gordon Gekkos.” The rest of the group waited around. At 10:00 p.m., the partner appeared, passed around a sheet of paper, and asked everyone there to sign his or her name on it. With that minor bit of bookkeeping completed—and taking a page from the nineteenth-century French writer, Stendhal, in Lucien Leuwen—he said, “So, today’s lesson is about waiting patiently for those who are more important than you.

The tale was nothing if not sordid: Dorothy Rabinowitz, “A Cautionary Tale,” New York, January 8, 1990. The author has also reviewed numerous documents related to the cases and interviewed Gary Moskowitz and Lew Eisenberg. 9. “This worked because”: Robert E. Rubin, In an Uncertain World (New York: Random House, 2003), p. 99. 10. “Over the years”: Ibid., p. 100. 11. “There was a lot”: Author interview with Steve Friedman. 12. “No mercy for the yuppies”: Anthony Scaramucci, Goodbye Gordon Gekko: How to Find Your Fortune Without Losing Your Soul (New York: Wiley, 2010), p. 141. The entire incident is described well in Scaramucci’s book. 13. “masses of people”: Janet Hanson, More Than 85 Broads: Women Making Career Choices, Taking Risks, and Defining Success on Their Own Terms (New York: McGraw-Hill, 2006), p. 24. 14. “All eyes were on me”: Ibid. 15. “she was subjected to a hostile”: Utley v.

 

pages: 385 words: 133,839

The Coke Machine: The Dirty Truth Behind the World's Favorite Soft Drink by Michael Blanding

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carbon footprint, clean water, collective bargaining, corporate social responsibility, Exxon Valdez, Gordon Gekko, Internet Archive, laissez-faire capitalism, market design, Naomi Klein, New Journalism, Ponzi scheme, profit motive, Ralph Nader, rolodex, Ronald Reagan, shareholder value, The Wealth of Nations by Adam Smith, Thorstein Veblen, union organizing, Upton Sinclair

Meanwhile, in 1919, in the wake of Candler’s slight, Dobbs became head of the Atlanta Chamber of Commerce, where he got to meet many members of the city’s business elite. Just as Robinson had persuaded Candler to buy up the company decades earlier, Dobbs would persuade one of them, Trust Com­ pany president Ernest Woodruff, to take over the company now. As a business tycoon, Ernest Woodruff was almost a caricature—a cross between Gordon Gekko and the Monopoly Man. His occupation was to make money, mostly through the takeover, restructuring, and sale of real estate and transportation companies. He had a reputation for play­ ing dirty, not above breaking into a rival’s office late at night to steal files. And he was even more of a skinflint than Candler, once supposedly strap­ ping $2 million in bonds to himself and his secretary on a train from Cleveland in order to save $200 in shipping costs.

 

pages: 479 words: 133,092

The Coke Machine by Michael Blanding

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carbon footprint, clean water, collective bargaining, corporate social responsibility, Exxon Valdez, Gordon Gekko, Internet Archive, laissez-faire capitalism, market design, Naomi Klein, New Journalism, Ponzi scheme, profit motive, Ralph Nader, rolodex, Ronald Reagan, shareholder value, The Wealth of Nations by Adam Smith, Thorstein Veblen, union organizing, Upton Sinclair

Meanwhile, in 1919, in the wake of Candler’s slight, Dobbs became head of the Atlanta Chamber of Commerce, where he got to meet many members of the city’s business elite. Just as Robinson had persuaded Candler to buy up the company decades earlier, Dobbs would persuade one of them, Trust Company president Ernest Woodruff, to take over the company now. As a business tycoon, Ernest Woodruff was almost a caricature—a cross between Gordon Gekko and the Monopoly Man. His occupation was to make money, mostly through the takeover, restructuring, and sale of real estate and transportation companies. He had a reputation for playing dirty, not above breaking into a rival’s office late at night to steal files. And he was even more of a skinflint than Candler, once supposedly strapping $2 million in bonds to himself and his secretary on a train from Cleveland in order to save $200 in shipping costs.

 

pages: 476 words: 118,381

Space Chronicles: Facing the Ultimate Frontier by Neil Degrasse Tyson, Avis Lang

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Albert Einstein, Arthur Eddington, asset allocation, Berlin Wall, carbon-based life, centralized clearinghouse, cosmic abundance, cosmic microwave background, dark matter, Gordon Gekko, informal economy, invention of movable type, invention of the telescope, Isaac Newton, Karl Jansky, Kuiper Belt, Louis Blériot, Mars Rover, mutually assured destruction, Pluto: dwarf planet, RAND corporation, Ronald Reagan, Search for Extraterrestrial Intelligence, SETI@home, space pen, stem cell, Stephen Hawking, Steve Jobs, the scientific method, trade route, V2 rocket

I, for one, want to live in a nation that values dreaming as a dimension of that spending. Most, if not all, of those dreams spring from the premise that our discoveries will transform how we live. Recently I had a depressing revelation. It was about firsts. The first cell phone looked like a large brick. You see it and you think, Did people actually hold this up to their ear? Remember the 1987 movie Wall Street, with Gordon Gekko, the rich guy, at his beach house in the Hamptons, talking on one of those phones? I remember thinking, Wow, that’s cool! He can walk on the beach and speak to somebody on a portable phone! But now when I look back, all I can think is, How could anybody have ever used such a thing? This is the evidence that we’ve moved on: you look at the first thing—the brick-size cell phone, the car with the little crank, the airplane that looks like a cloth-wrapped insect—and you say, “Put it in a museum.

 

pages: 462 words: 150,129

The Rational Optimist: How Prosperity Evolves by Matt Ridley

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23andMe, agricultural Revolution, air freight, back-to-the-land, banking crisis, barriers to entry, Bernie Madoff, British Empire, call centre, carbon footprint, charter city, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, colonial exploitation, colonial rule, Corn Laws, credit crunch, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic dividend, demographic transition, double entry bookkeeping, Edward Glaeser, en.wikipedia.org, everywhere but in the productivity statistics, falling living standards, feminist movement, financial innovation, Flynn Effect, food miles, Gordon Gekko, greed is good, Hans Rosling, happiness index / gross national happiness, haute cuisine, Hernando de Soto, income inequality, income per capita, Indoor air pollution, informal economy, invention of agriculture, invisible hand, James Hargreaves, James Watt: steam engine, Jane Jacobs, John Nash: game theory, joint-stock limited liability company, Joseph Schumpeter, Kevin Kelly, knowledge worker, Kula ring, Mark Zuckerberg, meta analysis, meta-analysis, mutually assured destruction, Naomi Klein, Northern Rock, nuclear winter, oil shale / tar sands, out of africa, packet switching, patent troll, Pax Mongolica, Peter Thiel, phenotype, Plutocrats, plutocrats, Ponzi scheme, Productivity paradox, profit motive, purchasing power parity, race to the bottom, Ray Kurzweil, rent-seeking, rising living standards, Silicon Valley, spice trade, spinning jenny, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, supervolcano, technological singularity, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, ultimatum game, upwardly mobile, urban sprawl, Vernor Vinge, wage slave, working poor, working-age population, Y2K, Yogi Berra

Mercantilism said that exports made you rich and imports made you poor, a fallacy mocked by Adam Smith when he pointed out that Britain selling durable hardware to France in exchange for perishable wine was a missed opportunity to achieve the ‘incredible aug mentation of the pots and pans of the country’. Marxism said that capitalists got rich because workers got poor, another fallacy. In the film Wall Street, the fictional Gordon Gekko not only says that greed is good; he also adds that it’s a zero-sum game where somebody wins and somebody loses. He is not necessarily wrong about some speculative markets in capital and in assets, but he is about markets in goods and services. The notion of synergy, of both sides benefiting, just does not seem to come naturally to people. If sympathy is instinctive, synergy is not. For most people, therefore, the market does not feel like a virtuous place.

 

pages: 402 words: 110,972

Nerds on Wall Street: Math, Machines and Wired Markets by David J. Leinweber

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AI winter, algorithmic trading, asset allocation, banking crisis, barriers to entry, Big bang: deregulation of the City of London, butterfly effect, buttonwood tree, buy low sell high, capital asset pricing model, citizen journalism, collateralized debt obligation, corporate governance, Craig Reynolds: boids flock, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Danny Hillis, demand response, disintermediation, distributed generation, diversification, diversified portfolio, Emanuel Derman, en.wikipedia.org, experimental economics, financial innovation, Gordon Gekko, implied volatility, index arbitrage, index fund, information retrieval, Internet Archive, John Nash: game theory, Khan Academy, load shedding, Long Term Capital Management, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, market fragmentation, market microstructure, Mars Rover, moral hazard, mutually assured destruction, natural language processing, Network effects, optical character recognition, paper trading, passive investing, pez dispenser, phenotype, prediction markets, quantitative hedge fund, quantitative trading / quantitative finance, QWERTY keyboard, RAND corporation, random walk, Ray Kurzweil, Renaissance Technologies, Richard Stallman, risk tolerance, risk-adjusted returns, risk/return, Ronald Reagan, semantic web, Sharpe ratio, short selling, Silicon Valley, Small Order Execution System, smart grid, smart meter, social web, South Sea Bubble, statistical arbitrage, statistical model, Steve Jobs, Steven Levy, Tacoma Narrows Bridge, the scientific method, The Wisdom of Crowds, time value of money, too big to fail, transaction costs, Turing machine, Upton Sinclair, value at risk, Vernor Vinge, yield curve, Yogi Berra

Don worked some kind of deal with Quotron,12 then the major market data vendor and conveniently located down the street, that allowed us to use actual market data to try out our wacky ideas. This might have been one of the first times anyone actually tied the consolidated feed to an expert system. Lew Roth joined me in trying to get this collection of buggy stuff to do something useful. Our modest efforts at a prototype were immodestly called the ART Quotron Universal Investment Reasoning Engine—AQUIRE, which had a nice Gordon Gekko feel to it (even though the actual Gordon was a year away, in 1987). As it turned out, the “Universal Investment Reasoning” demonstrated in AQUIRE consisted of variations on xxx Introduction crossover rules—comparisons of moving averages. These seemed to be a favorite of the New York visitors, and were easy to program. Many of the traders had their own secret sauce variations on this theme, combining different averaging intervals and lags.

 

pages: 458 words: 134,028

Microtrends: The Small Forces Behind Tomorrow's Big Changes by Mark Penn, E. Kinney Zalesne

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affirmative action, Albert Einstein, Ayatollah Khomeini, Berlin Wall, big-box store, call centre, corporate governance, David Brooks, Donald Trump, extreme commuting, Exxon Valdez, feminist movement, glass ceiling, Gordon Gekko, haute couture, illegal immigration, immigration reform, index card, Isaac Newton, job satisfaction, labor-force participation, late fees, life extension, low skilled workers, mobile money, new economy, RAND corporation, Renaissance Technologies, Ronald Reagan, Rosa Parks, stem cell, Stephen Hawking, Steve Jobs, Superbowl ad, the payments system, Thomas L Friedman, upwardly mobile, uranium enrichment, urban renewal, War on Poverty, women in the workforce, Y2K

And he isn’t that interested in telling you how much money he has. Most millionaires would not be caught dead in a limo. It is the antithesis of what they believe in. Even the limo companies have had to shift to SUVs. According to a 2003 survey and analysis by Harris Interactive, there are actually six different kinds of millionaires—and the biggest group is the quietest one. Here are the six: 1. “Deal Masters” (think Gordon Gekko of the movie Wall Street) 2. “Altruistic Achievers” (think Bruce Wayne, the public face of Batman) 3. “Secret Succeeders” (like “Citizen” Charles Foster Kane) 4. “Status Chasers” (Scarlett O’Hara) 5. “Satisfied Savers” (Oliver Wendell Douglas of Green Acres), and 6. “Disengaged Inheritors” (Dudley Moore’s Arthur) While the cliché of the Really Rich is that they are either ambitious and domineering (like Gekko) or petty and spoiled (like Arthur)—it turns out that those two kinds of millionaires actually represent the smallest groups, together making up less than a quarter of all American rich people.

 

pages: 460 words: 130,053

Red Notice: A True Story of High Finance, Murder, and One Man's Fight for Justice by Bill Browder

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Berlin Wall, British Empire, corporate governance, El Camino Real, Gordon Gekko, half of the world's population has never made a phone call, index card, rolodex, Ronald Reagan, transfer pricing, union organizing

I was ready to leave when the door finally opened—only it wasn’t Boris. It was Leonid Rozhetskin, a thirty-one-year-old Russian-born, Ivy League–educated lawyer whom I’d met on a few occasions (and who would, a decade later, be murdered in Jurmula, Latvia, after a spectacular falling-out with various people he did business with). Leonid, who’d clearly watched the film Wall Street one too many times, had slicked-back, Gordon Gekko–styled hair and sported red suspenders over a custom, monogrammed, button-down shirt. He took the chair at the head of the table and laced his fingers over one knee. “I’m sorry Boris couldn’t make it,” he said in lightly accented English. “He’s busy.” “I am too.” “I’m sure you are. What brings you here today?” “You know what, Leonid. I’m here to talk about Sidanco.” “Yes. What about it?” “If this dilution goes forward, it’s going to cost me and my investors—including Edmond Safra—eighty-seven million dollars.”

 

pages: 386 words: 122,595

Naked Economics: Undressing the Dismal Science (Fully Revised and Updated) by Charles Wheelan

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affirmative action, Albert Einstein, Andrei Shleifer, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, capital controls, Cass Sunstein, central bank independence, clean water, collapse of Lehman Brothers, congestion charging, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, Daniel Kahneman / Amos Tversky, David Brooks, demographic transition, diversified portfolio, Doha Development Round, Exxon Valdez, financial innovation, floating exchange rates, George Akerlof, Gini coefficient, Gordon Gekko, greed is good, happiness index / gross national happiness, Hernando de Soto, income inequality, index fund, interest rate swap, invisible hand, job automation, Joseph Schumpeter, Kenneth Rogoff, libertarian paternalism, low skilled workers, lump of labour, Malacca Straits, market bubble, microcredit, money: store of value / unit of account / medium of exchange, Network effects, new economy, open economy, presumed consent, price discrimination, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, race to the bottom, RAND corporation, random walk, rent control, Richard Thaler, rising living standards, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, school vouchers, Silicon Valley, Silicon Valley startup, South China Sea, Steve Jobs, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, transcontinental railway, trickle-down economics, urban sprawl, Washington Consensus, Yogi Berra, young professional

Listing high would mean many weeks of showing the house, holding open houses, and baking cookies to make the place smell good. Lots of work, in other words. Assuming a 3 percent commission, your agent can make $8,400 for doing virtually nothing or $9,600 for doing many weeks of work. Which would you choose? On the buy side or the sell side, your agent’s most powerful incentive is to get a deal done, whether it is at a price favorable to you or not. Economics teaches us how to get the incentives right. As Gordon Gekko told us in the movie Wall Street, greed is good, so make sure that you have it working on your side. Yet Mr. Gekko was not entirely correct. Greed can be bad—even for people who are entirely selfish. Indeed, some of the most interesting problems in economics involve situations in which rational individuals acting in their own best interest do things that make themselves worse off. Yet their behavior is entirely logical.

 

pages: 412 words: 113,782

Business Lessons From a Radical Industrialist by Ray C. Anderson

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Albert Einstein, banking crisis, carbon footprint, centralized clearinghouse, clean water, cleantech, corporate social responsibility, Credit Default Swap, dematerialisation, distributed generation, energy security, Exxon Valdez, fear of failure, Gordon Gekko, greed is good, Indoor air pollution, intermodal, invisible hand, late fees, Mahatma Gandhi, market bubble, music of the spheres, Negawatt, new economy, oil shale / tar sands, oil shock, peak oil, renewable energy credits, shareholder value, Silicon Valley, six sigma, supply-chain management, urban renewal, Y2K

I suggest—and I know this is heresy—that Milton Friedman was at the heart, along with a generation of economists and bankers who have blindly followed his mantra: “Business exists to make a profit.” Really? This credo is at the heart of the world view that I’ve already written about—the fundamentally flawed paradigm, the mind-set that underlies the industrial system—and I suggest that that same mind-set also underlies the global financial system. I further suggest that Gordon Gekko’s fictional proclamation in the film Wall Street, “Greed is good,” is as widely accepted as Friedman’s credo, one hand-in-glove with the other, throughout the high-flying financial world. That’s a real double whammy! So, with trillions of dollars seeking instant gratification in short-term profits, with the financial industry coming up with ever-more esoteric and risky ways of satisfying that demand, with a ratings industry turning a blind eye to risk and stamping triple-A on too many pieces of paper (because if one agency didn’t, another would), something had to give, and it did.

 

Little Failure: A Memoir by Gary Shteyngart

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Albert Einstein, anti-communist, Anton Chekhov, East Village, glass ceiling, Gordon Gekko, greed is good, New Journalism, Ronald Reagan, Yom Kippur War, young professional

The brochure for kindly, progressive Grinnell College in Iowa literally makes me cry. All those morally strong boys and girls, all those international flags hanging amid the Gothic architecture. I curl up in my old Soviet comforter as Mama and Papa launch new fusillades downstairs. What kind of a person would I be if I went to a place like Grinnell? What if I jettisoned all of it, foreigner, Gnu, Gordon Gekko wannabe? What if I started from nothing? Am I crying because of the razvod downstairs? Am I crying because I can’t wait to be loved for the little nub inside me, whatever it may contain? Or am I crying because, in a sense, I know I’m about to commit an act of suicide, an act that will take me fully through my twenties and thirties, fully through a decade of psychoanalysis, to complete? I get into Michigan first.

 

Investment: A History by Norton Reamer, Jesse Downing

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Albert Einstein, algorithmic trading, asset allocation, backtesting, banking crisis, Berlin Wall, Bernie Madoff, Brownian motion, buttonwood tree, California gold rush, capital asset pricing model, Carmen Reinhart, carried interest, colonial rule, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, debt deflation, discounted cash flows, diversified portfolio, equity premium, estate planning, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, family office, Fellow of the Royal Society, financial innovation, fixed income, Gordon Gekko, Henri Poincaré, high net worth, index fund, interest rate swap, invention of the telegraph, James Hargreaves, James Watt: steam engine, joint-stock company, Kenneth Rogoff, labor-force participation, land tenure, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, margin call, means of production, Menlo Park, merger arbitrage, moral hazard, mortgage debt, Network effects, new economy, Nick Leeson, Own Your Own Home, pension reform, Ponzi scheme, price mechanism, principal–agent problem, profit maximization, quantitative easing, RAND corporation, random walk, Renaissance Technologies, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, Sand Hill Road, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spinning jenny, statistical arbitrage, technology bubble, The Wealth of Nations by Adam Smith, time value of money, too big to fail, transaction costs, underbanked, Vanguard fund, working poor, yield curve

It is thus critical not only to be vigilant about overseeing this behavior and administering punishment accordingly but also to be creative about redesigning contracts that are prone to manipulation so that the allure is reduced in the first place. 184 Investment: A History INSIDER TRADING Using large buying power or collusion to influence the price of the market is certainly not the only way to get ahead in the market illicitly. This chapter concludes by exploring cases of insider information, where individuals quietly attempt to exploit knowledge of corporate events, earnings, mergers and acquisition activity, or other material and nonpublic knowledge to get ahead. Ivan Boesky We begin with Ivan Boesky, the man whose likeness was caricatured as Gordon Gekko in the acclaimed film Wall Street.126 He was the man who famously proclaimed, “Greed is all right, by the way. I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself.” The comment was met with some chuckling and an ovation when Boesky made it at the University of California, Berkeley, School of Business Administration in 1986.127 Looking back, however, it is difficult to see precisely what “good” Ivan Boesky’s greed has done society.

 

How I Became a Quant: Insights From 25 of Wall Street's Elite by Richard R. Lindsey, Barry Schachter

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Albert Einstein, algorithmic trading, Andrew Wiles, Antoine Gombaud: Chevalier de Méré, asset allocation, asset-backed security, backtesting, bank run, banking crisis, Black-Scholes formula, Bonfire of the Vanities, Bretton Woods, Brownian motion, business process, buy low sell high, capital asset pricing model, centre right, collateralized debt obligation, corporate governance, correlation coefficient, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, discounted cash flows, disintermediation, diversification, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, financial innovation, fixed income, full employment, George Akerlof, Gordon Gekko, hiring and firing, implied volatility, index fund, interest rate derivative, interest rate swap, John von Neumann, linear programming, Loma Prieta earthquake, Long Term Capital Management, margin call, market friction, market microstructure, martingale, merger arbitrage, Nick Leeson, P = NP, pattern recognition, pensions crisis, performance metric, prediction markets, profit maximization, purchasing power parity, quantitative trading / quantitative finance, QWERTY keyboard, RAND corporation, random walk, Ray Kurzweil, Richard Feynman, Richard Feynman, Richard Stallman, risk-adjusted returns, risk/return, shareholder value, Sharpe ratio, short selling, Silicon Valley, six sigma, sorting algorithm, statistical arbitrage, statistical model, stem cell, Steven Levy, stochastic process, systematic trading, technology bubble, The Great Moderation, the scientific method, too big to fail, trade route, transaction costs, transfer pricing, value at risk, volatility smile, Wiener process, yield curve, young professional

Don worked some kind of deal with Quotron,6 then the major market data vendor and conveniently located down the street, that allowed us to use actual market data to try out our wacky ideas. This might have been one of the first times anyone actually tied the consolidated feed to an expert system. Our modest efforts at a prototype were immodestly called the ART Quotron Universal Investment Reasoning Engine—AQUIRE, which had a nice Gordon Gekko feel to it (even though the actual Gordon from Wall Street was a year away, in 1987). As it turned out, the “Universal Investment Reasoning” demonstrated in AQUIRE consisted of variations JWPR007-Lindsey 20 May 7, 2007 16:12 h ow i b e cam e a quant on crossover rules—comparisons of moving averages. These seemed to be a favorite of the New York visitors, and were easy to program. Many of the traders had their own secret-sauce variations on this theme, combining different averaging intervals and lags.

 

pages: 426 words: 115,150

Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Independence: Revised and Updated for the 21st Century by Vicki Robin, Joe Dominguez, Monique Tilford

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asset allocation, Buckminster Fuller, buy low sell high, credit crunch, disintermediation, diversification, diversified portfolio, fiat currency, financial independence, fudge factor, full employment, Gordon Gekko, high net worth, index card, index fund, job satisfaction, Menlo Park, Parkinson's law, passive income, passive investing, profit motive, Ralph Waldo Emerson, Richard Bolles, risk tolerance, Ronald Reagan, Silicon Valley, software patent, strikebreaker, Thorstein Veblen, Vanguard fund, zero-coupon bond

Every time that increasing sense of something missing would overtake her, out she’d go to buy an item to “cheer her up.” Perhaps some moments of pleasure came from purchasing each white sweater, a happiness that probably dissipated soon after the sweater had disappeared into the white-sweater drawers. As one wise person said, you can never get enough of what you don’t really want. Greed is another component of our irrational and addictive relationship with money. “Greed,” said Gordon Gekko, the wheeler-dealer in the movie Wall Street, “is good.” It is, indeed, a socially acceptable and even encouraged motivation. Along with its dark cousin, fear, it runs the casino called Wall Street and gets reported on in the most respectable journals and newspapers in the world. Greed is also what possesses so many of us as we shoot right past the peak of the Fulfillment Curve and accumulate clutter (hoarding).

 

The America That Reagan Built by J. David Woodard

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affirmative action, anti-communist, Ayatollah Khomeini, Berlin Wall, Bonfire of the Vanities, colonial rule, Columbine, cuban missile crisis, Deng Xiaoping, friendly fire, glass ceiling, global village, Gordon Gekko, gun show loophole, income inequality, invisible hand, Jeff Bezos, laissez-faire capitalism, late capitalism, Mikhail Gorbachev, mutually assured destruction, new economy, postindustrial economy, Ralph Nader, Ronald Reagan, Ronald Reagan: Tear down this wall, Silicon Valley, South China Sea, stem cell, Ted Kaczynski, The Predators' Ball, trickle-down economics, women in the workforce, Y2K, young professional

Of course there were critics, and for them the era was never that splendid; it was derided for its inbred conformity, flatulent excesses, and materialistic binges. The ‘‘me’’ decade of the 1970s turned into the ‘‘my’’ decade of the 1980s. The faultfinders saw the surge of abundance as a joyless vulgarity. In 1987, filmmaker Oliver Stone released the movie Wall Street. The story involved a young stockbroker, Bud Fox, who becomes involved with his hero, Gordon Gekko, an extremely successful, but corrupt, stock trader. In the most memorable scene of the movie, Gekko makes a speech to the shareholders of a company he was planning to take over. Stone used the scene to give Gekko, and by extension corporate America at the time, the characteristic trait of economic success.5 Gekko: Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents, each making over 200 thousand dollars a year.

 

pages: 515 words: 132,295

Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar

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3D printing, accounting loophole / creative accounting, additive manufacturing, Airbnb, algorithmic trading, Asian financial crisis, asset allocation, bank run, Basel III, bonus culture, Bretton Woods, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, centralized clearinghouse, clean water, collateralized debt obligation, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, crowdsourcing, David Graeber, deskilling, Detroit bankruptcy, diversification, Double Irish / Dutch Sandwich, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial deregulation, financial intermediation, Frederick Winslow Taylor, George Akerlof, gig economy, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, High speed trading, Home mortgage interest deduction, housing crisis, Howard Rheingold, Hyman Minsky, income inequality, index fund, interest rate derivative, interest rate swap, Internet of things, invisible hand, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, knowledge economy, labor-force participation, labour mobility, London Whale, Long Term Capital Management, manufacturing employment, market design, Martin Wolf, moral hazard, mortgage debt, mortgage tax deduction, new economy, non-tariff barriers, offshore financial centre, oil shock, passive investing, pensions crisis, Ponzi scheme, principal–agent problem, quantitative easing, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, Rana Plaza, RAND corporation, random walk, rent control, Robert Shiller, Robert Shiller, Ronald Reagan, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Snapchat, sovereign wealth fund, Steve Jobs, technology bubble, The Chicago School, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, too big to fail, trickle-down economics, Tyler Cowen: Great Stagnation, Vanguard fund

Bush tried to institutionalize the transition to an “ownership society” by trying to privatize Social Security (thankfully, that plan was unsuccessful) and increase home ownership by lowering lending standards, which was of course one of the factors that precipitated the housing market collapse in 2007. And throughout the entire period, public obsession with the markets grew. The financial media burgeoned. Traders became stars, shareholder value became the guiding force for corporate America, and, as Gordon Gekko put it so famously in the 1987 movie Wall Street, greed was good. Our economic orbit has been realigned. TOO BIG TO FAIL It was a revolution that benefited financiers the most. Even though Wriston’s blunders in the emerging markets haunted Citi balance sheets for years, requiring the sort of government interventions that Wriston deplored for other industries,65 he retired on a high note in 1984.

 

pages: 540 words: 168,921

The Relentless Revolution: A History of Capitalism by Joyce Appleby

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1919 Motor Transport Corps convoy, agricultural Revolution, anti-communist, Asian financial crisis, asset-backed security, Bartolomé de las Casas, Bernie Madoff, Bretton Woods, BRICs, British Empire, call centre, collateralized debt obligation, collective bargaining, Columbian Exchange, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, deskilling, Doha Development Round, double entry bookkeeping, epigenetics, equal pay for equal work, European colonialism, facts on the ground, failed state, Firefox, Ford paid five dollars a day, Francisco Pizarro, Frederick Winslow Taylor, full employment, Gordon Gekko, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Hernando de Soto, hiring and firing, illegal immigration, informal economy, interchangeable parts, interest rate swap, invention of movable type, invention of the printing press, invention of the steam engine, invisible hand, Isaac Newton, James Hargreaves, James Watt: steam engine, Jeff Bezos, joint-stock company, Joseph Schumpeter, knowledge economy, land reform, Livingstone, I presume, Long Term Capital Management, Mahatma Gandhi, Martin Wolf, moral hazard, Ponzi scheme, profit maximization, profit motive, race to the bottom, Ralph Nader, refrigerator car, Ronald Reagan, Scramble for Africa, Silicon Valley, Silicon Valley startup, South China Sea, South Sea Bubble, special economic zone, spice trade, spinning jenny, strikebreaker, the built environment, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thorstein Veblen, total factor productivity, trade route, transatlantic slave trade, transatlantic slave trade, transcontinental railway, union organizing, Unsafe at Any Speed, Upton Sinclair, urban renewal, War on Poverty, working poor, Works Progress Administration, Yogi Berra, Yom Kippur War

While capitalist nations were taking in these troubling facts, capitalism moved into high gear with a cascade of new technologies that brought in the age of the computer, the transistor, and the Internet. Schumpeter’s “perennial gale creative destruction” blew in with a new generation of ingenious devices. Every economic downturn gives critics a chance to draft obituaries for capitalism, but they underestimate the fecundity of capitalism in promoting ingenuity and turning novel prototypes into great cash cows. Contemporary Capitalism and Its Critics Gordon Gekko, the business antihero in the movie Wall Street, said that “greed, for lack of a better word, is good,” but few agree. Alan Greenspan, for one, pointed to the dangers of an “infectious greed” while speaking to Congress in 1997 as chairman of the Federal Reserve Board. Nor is greed the only thing that people hold against capitalism. I’ve made a little list, and it includes such charges as responding to short-term opportunities to the neglect of long-term effects, dispensing power without responsibility, promoting material values over spiritual ones, commoditizing human relations, monetizing social values, corrupting democracy, unsettling old communities, institutions, and arrangements, and rewarding aggressiveness and—yes—greed.20 Two other capitalist responsibilities have cast long shadows forward: intractable poverty and a deteriorating environment.

 

pages: 713 words: 203,688

Barbarians at the Gate: The Fall of RJR Nabisco by Bryan Burrough, John Helyar

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buy low sell high, Donald Trump, Gordon Gekko, margin call, Ronald Reagan, shareholder value, South Sea Bubble

If he wasn’t the consummate takeover tactician, Waters’s easygoing manner, forthright attitude, and sincerity—a rarity among his ilk—made him a favorite of Johnson, whom he had known since Standard Brands. J. Tomilson Hill III, Harvard College, Harvard Business School, was the warrior of the pair, a zealot for the Wall Street trenches. To enemies—and he had a few—Tom Hill came across as an oiled-back Gordon Gekko haircut atop five feet, ten inches of icy Protestant reserve. Hill was well tailored and proud of it; “the best-dressed man on Wall Street” a competitor called him, and Hill wore his dark Paul Stuart suits like armor. His office was all cool modern art and Lucite-encased tombstones commemorating past victories. Hill could be charming but rarely glib; sometimes it seemed as if he chose every word from a dictionary.

 

pages: 598 words: 172,137

Who Stole the American Dream? by Hedrick Smith

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Affordable Care Act / Obamacare, airline deregulation, anti-communist, asset allocation, banking crisis, Bonfire of the Vanities, British Empire, business process, clean water, cloud computing, collateralized debt obligation, collective bargaining, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, David Brooks, Deng Xiaoping, desegregation, Double Irish / Dutch Sandwich, family office, full employment, global supply chain, Gordon Gekko, guest worker program, hiring and firing, housing crisis, Howard Zinn, income inequality, index fund, informal economy, invisible hand, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, knowledge worker, laissez-faire capitalism, late fees, Long Term Capital Management, low cost carrier, manufacturing employment, market fundamentalism, Maui Hawaii, mortgage debt, new economy, Occupy movement, Own Your Own Home, Peter Thiel, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ponzi scheme, Ralph Nader, RAND corporation, Renaissance Technologies, reshoring, rising living standards, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, shareholder value, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Steve Jobs, The Chicago School, The Spirit Level, too big to fail, transaction costs, transcontinental railway, union organizing, Unsafe at Any Speed, Vanguard fund, We are the 99%, women in the workforce, working poor, Y2K

Since top company executives were privy to inside company information, they could obviously cash in big-time by trading in company stock. But the unwritten code frowned on that. “Were everyone to seek to do so …,” Galbraith wrote, “the corporation would be a chaos of competitive avarice.” By the 1980s, competitive avarice was in. Tom Wolfe captured the winner-take-all creed in his book Bonfire of the Vanities, and so did Oliver Stone’s 1987 movie, Wall Street. “Greed, for lack of a better word, is good,” preached Gordon Gekko, the movie’s mogul investor. “Greed is right, greed works…. Greed, in all of its forms … has marked the upward surge of mankind.” It certainly marked the upward surge in CEO pay, which rocketed from forty times the pay of an average company worker in 1980 to nearly four hundred times by 2000. Stakeholder Capitalism Certainly in the 1980s and ’90s, there were CEOs like David Packard of Hewlett-Packard, who practiced stakeholder capitalism, balancing the needs of various corporate stakeholders—employees, customers, and suppliers as well as shareholders and management.

 

pages: 677 words: 206,548

Future Crimes: Everything Is Connected, Everyone Is Vulnerable and What We Can Do About It by Marc Goodman

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23andMe, 3D printing, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, airport security, Albert Einstein, algorithmic trading, artificial general intelligence, augmented reality, autonomous vehicles, Baxter: Rethink Robotics, Bill Joy: nanobots, bitcoin, Black Swan, blockchain, borderless world, Brian Krebs, business process, butterfly effect, call centre, Chelsea Manning, cloud computing, cognitive dissonance, computer vision, connected car, corporate governance, crowdsourcing, cryptocurrency, data acquisition, data is the new oil, Dean Kamen, disintermediation, don't be evil, double helix, Downton Abbey, Edward Snowden, Elon Musk, Erik Brynjolfsson, Filter Bubble, Firefox, Flash crash, future of work, game design, Google Chrome, Google Earth, Google Glasses, Gordon Gekko, high net worth, High speed trading, hive mind, Howard Rheingold, hypertext link, illegal immigration, impulse control, industrial robot, Internet of things, Jaron Lanier, Jeff Bezos, job automation, John Harrison: Longitude, Jony Ive, Julian Assange, Kevin Kelly, Khan Academy, Kickstarter, knowledge worker, Kuwabatake Sanjuro: assassination market, Law of Accelerating Returns, Lean Startup, license plate recognition, litecoin, M-Pesa, Mark Zuckerberg, Marshall McLuhan, Menlo Park, mobile money, more computing power than Apollo, move fast and break things, Nate Silver, national security letter, natural language processing, obamacare, Occupy movement, Oculus Rift, offshore financial centre, optical character recognition, pattern recognition, personalized medicine, Peter H. Diamandis: Planetary Resources, Peter Thiel, pre–internet, RAND corporation, ransomware, Ray Kurzweil, refrigerator car, RFID, ride hailing / ride sharing, Rodney Brooks, Satoshi Nakamoto, Second Machine Age, security theater, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, Skype, smart cities, smart grid, smart meter, Snapchat, social graph, software as a service, speech recognition, stealth mode startup, Stephen Hawking, Steve Jobs, Steve Wozniak, strong AI, Stuxnet, supply-chain management, technological singularity, telepresence, telepresence robot, Tesla Model S, The Wisdom of Crowds, Tim Cook: Apple, trade route, uranium enrichment, Wall-E, Watson beat the top human players on Jeopardy!, Wave and Pay, We are Anonymous. We are Legion, web application, WikiLeaks, Y Combinator, zero day

What the hell just happened? When the news of an explosion at 1600 Pennsylvania Avenue broke, the market suspected a probable terrorist attack and immediately foresaw the profound negative impact it would have; after all, 9/11 was estimated to have cost America $3.3 trillion in economic losses. Traders immediately began dumping their shares, and the exchanges went into free fall. But these traders weren’t the Gordon Gekko, masters-of-the-universe types with slicked-back hair and $10,000 suits of yesteryear. In fact, they weren’t even human. At hedge funds, investment banks, and pension funds across the tristate area and around the world, networks of supercomputers were doing the trading en masse, slaves to their algorithmic programming. Gekko and the majority of his human lot on the trading floors lost out to computers in 1999, replaced by ultrafast electronic high-frequency trading (HFT) platforms.

 

pages: 898 words: 266,274

The Irrational Bundle by Dan Ariely

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accounting loophole / creative accounting, air freight, Albert Einstein, banking crisis, Bernie Madoff, Black Swan, Broken windows theory, Burning Man, business process, cashless society, Cass Sunstein, clean water, cognitive dissonance, computer vision, corporate governance, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, delayed gratification, Donald Trump, endowment effect, Exxon Valdez, first-price auction, Frederick Winslow Taylor, fudge factor, George Akerlof, Gordon Gekko, greed is good, happiness index / gross national happiness, Jean Tirole, job satisfaction, knowledge economy, knowledge worker, lake wobegon effect, late fees, loss aversion, Murray Gell-Mann, new economy, Peter Singer: altruism, placebo effect, price anchoring, Richard Feynman, Richard Feynman, Richard Thaler, Saturday Night Live, Schrödinger's Cat, second-price auction, shareholder value, Silicon Valley, Skype, software as a service, Steve Jobs, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, ultimatum game, Upton Sinclair, Walter Mischel, young professional

The scary thought is that if we did the experiments with nonmonetary currencies that were not as immediately convertible into money as tokens, or with individuals who cared less about their honesty, or with behavior that was not so publicly observable, we would most likely have found even higher levels of dishonesty. In other words, the level of deception we observed here is probably an underestimation of the level of deception we would find across a variety of circumstances and individuals. Now suppose that you have a company or a division of a company led by a Gordon Gekko character who declares that “greed is good.” And suppose he used nonmonetary means of encouraging dishonesty. Can you see how such a swashbuckler could change the mind-set of people who in principle want to be honest and want to see themselves as honest, but also want to hold on to their jobs and get ahead in the world? It is under just such circumstances that nonmonetary currencies can lead us astray.