Quants | The Alchemists of Wall Street | VPRO documentary

yeah nobody I mean these are huge
18:03
numbers to make millions 5 million 10
18:06
million oh that’s a lifetime’s worth of
18:07
money you don’t ever need to work again
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and everybody wanted that you know I
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could quit working this year I made
18:14
enough money in one year I’ll never have
18:15
to work for the rest of my life and that
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was the goal of everyone it appeared to
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me huh this is money okay and Aspen’s
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talking about making money making money
18:29
making money every year you’re making
18:31
money and then one year you blow up now
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the difference between this being your
18:35
money and being a hedge fund is if this
18:38
is your money fantastic you’re making
18:40
money you’re down here you’re bankrupt
18:42
if it is somebody else’s money if it’s a
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hedge fund that does this every year
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they’re taking a percentage they’re
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taking some of that as profit as their
18:52
bonus effectively so they make some of
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that they make some more they make some
18:56
more all of this money they’re putting
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into their own bank account and then
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when they lose money that’s their
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clients money that’s a lot it’s not
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their money so you’ve got you can so you
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can see why it’s very easy for people to
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abuse this kind of thing I think it’s
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fantastic the people who take risk
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should be compensated for taking risk
19:19
but only if they are actually taking
19:22
risk themselves taking risk with other
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people’s money you should not get
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compensated for I’m sorry I did that the
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Donald where that fits into economic
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theory but taking risk with other
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people’s money does not get rewarded
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sadly though it does in this business
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no but now
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there was a moment when I thought when I
19:50
questioned why I was ever involved in
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Wall Street goodbye I need it right now
19:56
on the double
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hi that’s something I thought that
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people would be more judicious and more
20:04
conservative in their lending and I was
20:06
involved in it and I thought well wait a
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second these guys are out of control
20:09
totally the piece of software per se you
20:13
know that’s a sort of inanimate object
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yes people used it but you know if
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people had used it and put good
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mortgages into it who never would have
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caused a problem at all but when you put
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you know mortgages that you have a
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fairly high certainty that people cannot
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repay and then half of all the mortgages
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issued in a given year that type of
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mortgages yes the industry has gotten
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out of control
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trillions of dollars a year basically
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went through that model these bonds
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within two and three years of being
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issued went from triple-a to
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unwrite I mean just catastrophic
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collapse a lot of trading firms that
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kept these the riskier pieces in their
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portfolio saw them drop to next to
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nothing and given the leverages the
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amount of leverage under the amount that
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the banks had borrowed they were
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suddenly in a financial panic
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Saturday after midnight still studying
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I know long hours will not stop when I
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enter a future job as a client
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because I was primarily a technologist I
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did not fully understand what was going
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on I think part of my motivation
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post-crash for becoming a quant is to
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gain that understanding having been
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through the personal experience of
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seeing the destruction of my firm looked
21:45
again at my resume that I put out there
21:48
the same headhunter called again today
21:51
to see if I would like to take a job in
21:53
my former field as a financial
21:55
technologist I declined again of course
22:01
no invitation for a quanzhou Piett
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people that are in the business right
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now probably refuse to talk to the
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public if they were to talk to the press
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they would be fired
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so only limited few people in the
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business have the option of talking to
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the press once you’re in the world right
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I mean your phones are ringing you know
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from the moment I woke up in the morning
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and I remembered you know a lot of these
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guys I do quite well they try to wake me
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up 6 o’clock oh I thought you were
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asleep you know can you be up till 11
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o’clock
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you have to be wired you have to be
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alert every second you have to be
22:49
engaged and and you have to be perfect
22:52
and you have to be right all the time
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the software fails people lose millions
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or billions can’t happen you can’t you
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can’t be wrong you have to be perfect it
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says it’s a lot of stress my wife was in
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the business with me
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we both would wake up in the morning and
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describe similar nightmares phones were
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ringing we couldn’t answer them and then
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we sort of grew out of that and we both
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realized that we didn’t know what day of
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the week was that’s right boy there’s
23:24
always videos person departures Barclays
23:27
dangerously Pleasant read the planet
23:30
record is brought to you by the Deaf
23:31
1.6% it wonder the up 1.2 percent
23:35
so is the CAC in Paris hey Joel boy
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stirs
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banking is completely lost touch with
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its purpose its original purpose and is
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now becoming dangerous
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it used to be that when some of these
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derivatives were first invented they
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were to help your farmer for example
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hedge the value of his crop so he was he
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wasn’t speculating on the price of wheat
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he was busy growing it now there are
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more people trading these these
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commodity derivatives and then are
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actually involved in the production of
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the commodity so which is completely
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bizarre I know a lot and quite a lot of
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people in this business who are feeling
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a bit jaded now people are starting to
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ask questions my nice friends I started
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to ask questions about the role in
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society you may be making lots of money
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but are you is it something to tell your
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grandchildren oh yeah I was a banker I
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was there when I caused the the
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2008-2009 crisis etc what are they
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actually doing with their lives or their
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or just moving this money around this
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isn’t necessary such a business to be
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proud of I think that’s probably
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planning 30 35 pounds responsibility is
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just not a one-way street when it’s
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successful you’re responsible well you
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can’t be unresponsible when the same
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same item is is a failure you have to
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have some type of responsibility and I
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could say I wasn’t but I was involved I
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made a comfortable very comfortable
25:23
living and and I was proud of what I had
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done I never I myself never saw this
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kind of debacle
25:38
pretty big muscle to see a little Wilder
25:43
this is a you know they’re yellow on the
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inside different color a chef and the
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city loves this wild taste I only do it
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for one chef because if I did too many
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there wouldn’t be enough you know the
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model is Hippocratic oath I will
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remember that I didn’t make the world
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and it doesn’t satisfy my equations
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that’s obviously that’s it that’s about
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having a a mature appreciation that
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whatever you do that the models are
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never going to be perfect
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I will never sacrifice reality for
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elegance without explaining why I have
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done so so it’s again it’s a competition
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between the real world and the elegant
26:27
world of mathematics and sometimes the
26:28
real world is just dirty
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nor will I give the people who use my
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model false comfort about its accuracy
26:36
instead I will make explicit its
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assumptions and oversights quanta are
26:41
asked the following by some trader they
26:43
say well look you’ve just measured the
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risk in this portfolio it’s too big okay
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to quant back to the drawing board
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I want you redoing numbers and come up
26:52
with a smaller risk it doesn’t mean
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change the portfolio it means change the
26:57
maths to make it look less risky people
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can use the models to hide risk though I
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will use models boldly to estimate value
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I will not be overly impressed by
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mathematics people make finance too
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mathematical so mathematical that many
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people who have to implement the models
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don’t understand what’s going on and
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once you have too much mathematics it’s
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difficult to see where the mistakes are
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I understand that my work may have
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enormous effects on society and the
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economy many of them beyond my
27:31
comprehension so this is a serious
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business it’s what it’s saying the
27:37
quantitative finance banking has become
27:39
so enormous it’s it’s outstripped all
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other all other businesses and really it
27:44
should just be a service for these other
27:46
businesses rather than we are everybody
27:49
is now working to
27:51
she service the banks move is what it
27:53
feels like it’s it’s completely changed
27:56
the nature of the world always banking
27:59
again so there’s a nice little picture
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of the book of me and Emanuel Derman
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with our with our Karl Marx beards on
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because obviously it’s it’s basically
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that the inspiration was a kind of
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communist manifesto you take the
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combined the communist manifesto with
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the Hippocratic oath and this is what
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you’ve got when I first came to the
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field I was sort of optimistic about
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using quantitative methods on the
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financial markets and I don’t think
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they’re useless but them but I’m trying
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to think how to say it I don’t think you
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can use quantitative methods to explain
28:34
markets either people like borer
28:37
Einstein or Schrodinger or Fineman
28:39
discovered things that um that seem to
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be God’s true for most you know even if
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they’re they’re not 100 percent accurate
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and I’m I don’t think that’s possible in
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finance I sort of think it’s an illusion
28:50
it’s the world the financial world and
28:53
their world of people is changing the
28:54
whole time history doesn’t repeat itself
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whereas in physics history repeats
28:58
itself all the time you can do the same
29:00
experiment over and over again so I
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don’t know somewhere somewhere somewhere
29:03
after five or six years in the field I
29:05
began to realize that it wasn’t the same
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thing as doing physics in physics if you
29:11
wake up in the morning and think of an
29:13
equation or think of some theory you
29:16
actually have a small hope in hell that
29:18
you might actually be right but in
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finance if you write down some set of
29:21
assumptions and you look at yourself
29:22
honestly it may be useful but you know
29:25
it’s not going to be right in some
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absolute sense
29:30
because you’re dealing with people and
29:31
and people don’t work that way
29:43
another weekend trying to remember all
29:46
the parts of the city I haven’t seen
29:48
since I started the course longing to
29:51
visit art galleries eat out every night
29:53
to live the day at the library seem to
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have more hours than the normal 12
30:06
studying alone with other people doing
30:08
the same thing I feel like a monk in a
30:11
monastery it’s peaceful the library is
30:14
quite old sometimes we have to cover the
30:17
air-conditioner with old Soviet
30:19
mathematical journals from the 60s
30:37
once I dreamt of doing pure science
30:40
working on rocket ships working at a
30:42
small start-up company
30:47
there has to be a way to be creative as
30:49
a quant – like designing new financial
30:51
products and the math to price them
30:59
do you think it’s always possible for
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people to express a worry they have
31:05
about the things they’re building or
31:07
writing it’s possible people may not
31:09
listen to them in the end most of these
31:11
people are employees people don’t always
31:14
listen to you but yeah it’s possible to
31:16
do it and I think people should do it
31:17
and I think people who use the model
31:19
should should understand that but I
31:22
don’t honestly believe that the models
31:25
are responsible for what happened in the
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world I think what’s just one for what
31:29
happened in the world is that they’ve
31:30
been an increasing number of they’ve
31:35
been an increasing number of crises
31:36
since 1990 financial crises in the world
31:38
since 1994 and every time people are
31:41
used to people are used to constant
31:44
growth and acceleration and every time
31:46
it slowed down the government stepped in
31:49
and tried to stimulate it again by
31:51
lowering interest rates just like
31:52
they’re doing now and so you get these
31:55
sort of a rise and a collapse and then
31:56
people don’t like the collapse so they
31:58
lend money cheaply enforcer’ rise again
32:00
and each time the oscillations get
32:02
bigger and bigger and they doing exactly
32:04
the same I have no idea what’s the right
32:06
thing to do but they’re doing exactly
32:07
the same thing now which is trying to
32:09
stimulate the economy every time it
32:11
looks like it stops growing fast
32:17
it shocks me that as a person who runs
32:20
many businesses that we can talk about
32:23
an economy shrinking by 1% is also
32:27
growing by 1% is fantastic this
32:31
difference of 2% how can that difference
32:34
in 2% have such a big impact on the
32:36
world around us 1% plus or minus in my
32:40
businesses I won’t notice the economist
32:42
sir they think that they’re scientists
32:45
so they come up with these what they
32:47
call laws they’re not laws laws of
32:51
gravity that’s a law anything that Isaac
32:54
Newton comes up with it is a law but
32:56
when the Economist comes up it’s just a
32:58
framework an idea it may work it may not
33:01
sometimes it’s that’s not a law but they
33:03
think their laws and so they build up
33:05
this whole edifice of theory based upon
33:09
this very shaky foundations and they get
33:11
all sorts of nonsense coming out of it
33:20
let’s ease off
33:25
I think that the natural world is
33:29
something you learn to appreciate
33:32
through a struggle in the financial
33:36
world
33:36
you know money is a man-made phenomenon
33:39
right it’s like a game right where you
33:41
make the rules well money is a game that
33:43
people make the rules for but out there
33:46
the day-to-day activity is not about
33:48
making money the day-to-day activity
33:50
trying to grow an animal a healthy
33:53
animal or a group of healthy atoms
33:55
that’s a big difference
34:04
that is beautiful
34:06
believe it or not that is beautiful the
34:08
beautiful thing about this is it says
34:09
that in the risk-neutral
34:11
I’ve got to keep emphasizing this is the
34:14
risk-neutral version when mu equals R if
34:18
it was the real world if this was the
34:20
real version it would have some dim UD
34:23
T’s in it
34:23
now let’s do some manipulations now some
34:25
of these manipulations are
34:26
straightforward six over zet in which
34:29
case there are no Zed’s in there at all
34:30
if you say to me the d by d big t
34:33
version because we want them we are
34:35
trying to find the stochastic
34:36
differential equation not for log said
34:39
so you’re going to end up with new minus
34:40
1/2 Sigma squared let me backtrack it a
34:43
wee bit here and we have a stochastic
34:47
differential equation for Z then we can
34:51
also write down stochastic differential
34:52
equation for F there was a very very
34:57
short period of time when conser in the
35:00
doghouse so to speak the people were
35:01
saying but all banking is changed
35:03
forever a Kwan serveth I’ve finished
35:06
there’ll be no more these credit
35:08
instruments and I said you know second
35:10
guys you really don’t know your history
35:11
you don’t know human nature this will
35:14
all blow over you know in a matter of
35:16
months because we’re back to the big
35:17
bonus is everything goes back to as it
35:21
was if people don’t complain now then it
35:25
serves them right when the next
35:26
financial crisis happens
35:31
twelve hours to go before the evening
35:33
classes start
35:35
I feel United with my classmates but the
35:38
enormous workload it’s actually the fees
35:42
that we’re trying to maximize right of
35:44
course we have to maximize returns we
35:47
have to do a good job in managing their
35:49
money otherwise where we’re going to do
35:51
pretty poorly at collecting those fees I
35:54
wanted to feel challenged again and
35:56
enrolled in a quant program
35:58
it cost me $60,000 tuition which means
36:03
more debt that I now have to take on the
36:07
incentive fee structure basically means
36:10
that maximizing the twr is like
36:13
maximizing fees think about that that’s
36:16
kind of tricky
36:18
this course is a year and a half
36:20
full-time one and a half years no salary
36:24
expenses living in downtown Manhattan
36:26
plus paying full-time tuition so no
36:30
alcohol for me not a drop at least till
36:33
the end of the first semester I can’t
36:35
afford to lose a day to a hangover
36:37
hardly any social life for the time
36:39
being
36:43
most of the other students are Asian or
36:46
East Europeans math is their first
36:48
language and our common language we
36:51
Americans are the minority maximizing
36:55
the number of times that we’re going to
36:56
penetrate the previous high-water mark
36:59
we’re actually maximizing incentive so
37:02
you can see that this this type of
37:04
optimization is very hedge fund like
37:07
does everybody get it so far
37:12
used to be the physicists were splitting
37:14
the atom whose splitting the atom these
37:15
days building bridges who is people
37:18
building bridges everybody wants to move
37:19
into this field scientific creativity is
37:23
becoming financial creativity which is
37:25
all of the bogus
37:39
Kwan’s are essential to modern banking
37:41
because so much of it is based upon new
37:44
techniques like the latest thing is the
37:46
algorithmic trading that high-frequency
37:47
trading for what you need math skills it
37:52
used to be you know historically you
37:53
just have like floor traders and brokers
37:55
you know screaming and shouting down on
37:58
the floor of exchanges and trading
37:59
stocks you know and the order came down
38:01
and they would run up and they sort of a
38:03
muscle there he added we’re a different
38:05
color jackets you know the classic
38:06
pictures we’ve we’ve all seen Matthew
38:09
Goldstein almost obscene list for PES
38:12
below Reuters do same from the ears to
38:15
the Kefauver format high-frequency
38:16
trading on cotton the reality is so much
38:20
of this doesn’t even take place there I
38:22
mean that’s becoming such a lesser part
38:24
of trading in what goes on it goes on in
38:26
the back rooms and it goes on in these
38:27
these modeling’s where these programs
38:29
are put together by computer geeks
38:31
basically so high-frequency trading is
38:33
just about taking all this data
38:35
analyzing very very rapidly and then
38:37
putting on trays that may last
38:38
milliseconds what worries me the most is
38:42
I was disturbed to hear that some firms
38:45
get faster access to the markets than
38:50
other people I forget what they call it
38:52
now but people get like a tenth of a
38:55
second advantage big firms which i think
38:57
is unfair hedge funds try and get the
39:00
black boxes as close to an exchange as
39:02
possible because it takes time for the
39:06
signal to get from the black box to the
39:09
exchange to buy or to sell now of course
39:11
that is dictated by the speed of
39:13
lightning
39:14
now we’re talking about trading at the
39:16
speed of light
39:19
the classic crash was the 87 the 19th of
39:25
October 1987 crash that happened within
39:27
a day all that the big move the 20% fall
39:30
and S&P 500 was within a day the next
39:33
crash could be within minutes so what is
39:36
the black box a black box is just
39:39
something that has it has inside some
39:41
kind of formula
39:43
maybe secret or maybe not that takes in
39:45
lots of data and the data might be stock
39:50
prices and might be other information
39:51
and it tells you what to trade what to
39:54
buy and sell and my favorite is is
40:00
Google search terms trading based on
40:04
what people are searching for it’s not a
40:13
black box in the sense that um you know
40:16
if you if you saw the algorithms you
40:18
could fit what you want you and me might
40:20
not be able to figure it out but but
40:21
wiser minds maybe could and computers
40:23
can certainly read it so it’s a black
40:25
box in a sense that it’s almost hard for
40:26
the human mind to get their arms or you
40:29
know wrap themselves around to really
40:30
understand what’s going on
40:36
and you know people have said for years
40:38
that Goldman itself is a black box we
40:41
don’t really know how it makes all this
40:42
money in the billions of dollars and you
40:44
know the big bonuses we hear about the
40:46
New York Stock Exchange building is big
40:47
facility out in New Jersey which is you
40:49
know right near in New York and and
40:51
basically it’s being built for
40:52
high-frequency traders so they can have
40:53
their equipment very close in a very can
40:56
you know tightly knit factory
40:58
essentially to do high-frequency trading
41:00
well who gets to have their server
41:02
where’s there going to be a lottery you
41:04
know you know does someone pay more to
41:06
get closer I mean it’s sort of a it’s
41:08
sort of absurd when you think about this
41:10
is what it’s come down to the
41:12
battleground is ultimately going to be
41:14
who has the most resources who can pay
41:17
the best salaries to hire the best
41:19
brains in reality we’re talking maybe
41:21
about a dozen or so really top players
41:22
you know and not everyone can be a
41:24
customer of goldman sachs not everyone
41:26
can be a customer of morgan stanley or
41:28
no berkeley also it does the the high
41:32
frequency trading means people more
41:33
concerned with the price of something
41:36
and not its value value means what it’s
41:39
really it’s really worth price is just
41:43
what people buy and sell for and if you
41:45
buy something now sell is second or two
41:49
later all you care about is the price
41:51
you sold it for is greater than the
41:52
price you bought it for it’s actual
41:54
value who cares it sort of flies in the
41:57
face of what we sort of think about what
41:59
what the what the markets are really
42:01
about the companies themselves almost
42:03
don’t matter what they do doesn’t matter
42:05
it’s just the fact which way their
42:07
stocks move is all that matters and
42:10
what’s sort of great thing about it that
42:13
I’ve I’ve seen from the standpoint is
42:15
the systemic risk that might be involved
42:16
it’s so much of this trading just takes
42:19
automatically and just takes place so
42:21
quickly that the the human element gets
42:24
more and more divorced from it I mean
42:25
the human beings are obviously
42:26
responsible for for writing the programs
42:29
but there’s no human being intercepting
42:31
between these trades and we saw this a
42:33
year ago with United Airlines there was
42:35
a false of bankruptcy rumor some wire
42:37
service inadvertently and transmitted an
42:40
old story about a UI
42:41
bankruptcy filing the problem is all
42:45
these news reading algorithms saw that
42:47
and immediately started sell sell sell
42:49
in a matter of minutes United Airlines
42:51
stock is cut in half that is clearly a
42:53
case where the computers have gone wild
42:59
banking is taking over the entire planet
43:01
and is having such a major impact on the
43:05
man in the street and it really should
43:07
not banking is supposed to be to take
43:09
money from people with too much to give
43:12
to people with too little who maybe want
43:14
to start a business if you’re a business
43:16
idea but that’s not what banking is
43:18
about anymore
43:19
banking is just about gambling on these
43:20
these numbers not realizing that behind
43:24
these numbers there are human beings
43:26
with jobs
43:34
there’s always been a joke about the New
43:37
York Stock Exchange becoming a museum at
43:38
some point and they’ll just have it for
43:40
like a show there and people running
43:42
around this is the way we used to trade
43:43
stocks you know isn’t it so quaint in
43:45
everything at the same time one can
43:58
argue though that if there’s this big
44:01
backlash in high-frequency trading
44:02
we may see revival to some form of human
44:05
element inside that people may say you
44:07
know as flawed as human beings are we
44:10
don’t want to give everything over to
44:11
the machines either
44:15
just walk past a crowded Wall Street
44:18
full of Chinese tourists asking me if
44:20
this was the actual stock exchange Wall
44:25
Street as a location is not any longer
44:28
what it was many banks moved their front
44:31
offices uptown and their back offices to
44:34
newer and cheaper spaces in New Jersey
44:37
now deutsche bank is the only major firm
44:40
left on Wall Street proper nearby is
44:43
Goldman Sachs
44:45
with no name on the door also about to
44:48
move there are almost no large firms
44:51
headquartered in the neighborhood that
44:53
was the cradle of American Finance only
44:56
the New York Stock Exchange remains its
44:59
facade one of the most iconic symbols of
45:01
global capitalism
45:19
I’m always trying to encourage young
45:21
people to do what I’m doing I mean it’s
45:23
a young person’s you know it’s pretty
45:25
some pretty physically intensive they
45:33
really haven’t grown that much I may not
45:39
make it to Christmas no I like a bigger
45:44
we sell a much we typically sell a much
45:46
bigger oyster right what do you find
45:48
more satisfying
45:50
well software is much more mental you
45:53
know the pleasure in the mental exertion
45:56
is pretty intense I get million lines of
45:58
software’s a lot – man you have it all
45:59
memorized right and there’s a pleasure
46:01
of like ask ruble Scrabble doing that
46:04
kind of word puzzle kind of thing uh
46:07
although it’s not that healthy you sit
46:09
in front of a machine you have the
46:10
terminal face effect you know it’s not
46:13
the same as this oh yeah this is pretty
46:15
uh not good I mean day like today pretty
46:19
idyllic right you’re just out in the
46:20
water a nice feeling bringing food and I
46:25
think we we still about 150,000 oysters
46:29
which is uh that’s $100,000 you know of
46:35
course I live off interest you know so I
46:39
don’t this is nice to have I make some
46:42
pocket money etc etc and the overhead
46:45
here is pretty small
46:49
you have to come to grips with nature
46:51
like I these these oysters should be
46:53
bigger every year the ones that I pick
46:55
in September and October are ready by
46:58
November why they aren’t I don’t know
47:00
and there’s nothing you can do about it
47:01
right we’re in software you can do
47:03
something about everything
47:04
you can modify you can get you can creat
47:07
make you know this virtual world you can
47:09
make what you want here you know you
47:12
have to live constrained by the real
47:16
world

Wall Street Can’t Burn Bernie

America’s plutocrats and their media allies are certain that US presidential candidate Bernie Sanders is unelectable, or that, if somehow elected, he would bring about the collapse of the republic. This disdain is both telling and absurd.

NEW YORK – The narcissism and Panglossian cluelessness of the Wall Street elite is a marvel to behold. Sitting on their perches of power, and enjoying tax breaks, easy money, and soaring stock markets, they are certain that all is best in this best of all possible worlds. Critics must be fools or devils.

When I have mentioned my support for US presidential candidate Bernie Sanders in their company, it has been to audible gasps, as if I had invoked Lucifer’s name. They are certain that Sanders is unelectable, or that, if somehow elected, he would bring about the collapse of the republic. To varying degrees, the same sentiments can be found even in “liberal” media outlets like The New York Times and The Washington Post.

This disdain is both telling and absurd. In Europe, Sanders would be a mainstream social democrat. He wants to restore some basic decency to American life:

  • universal publicly financed health care;
  • above-poverty wages for full-time workers, along with
  • basic benefits such as family leave for infants and paid leave for illness;
  • college education that does not drive young adults into lifelong debt;
  • elections that billionaires cannot buy; and
  • public policy determined by public opinion, not corporate lobbying (which reached $3.47 billion in the United States in 2019).

The US public supports all these positions by large majorities. Americans want government to ensure health care for all. They want higher taxes on the rich. They want a transition to renewable energy. And they want limits on big money in politics. These are all core Sanders positions, and all are commonplace in Europe. Nonetheless, with each Sanders primary victory, the befuddled Wall Street elite and their favorite pundits puzzle over how an “extremist” like Sanders wins the vote.

An insight into Wall Street’s cluelessness is found in a recent Financial Times interview with Lloyd Blankfein, the former CEO of Goldman Sachs. Blankfein, a billionaire who earned tens of millions of dollars each year, argued that he’s merely “well-to-do,” not rich. More bizarrely, he meant it. You see, Blankfein is a low-single-digit billionaire in an era when more than 50 Americans have a net worth of $10 billion or more. How rich one feels depends on one’s peer group.

The result, however, is the elite’s (and the elite media’s) shocking disregard for the lives of most Americans. They either don’t know or don’t care that tens of millions of Americans lack basic health-care coverage and that medical expenses bankrupt around 500,000 each year, or that one in five US households has zero or negative net worth and that nearly 40% struggle to meet basic needs.

And the elite hardly take notice of the 44 million Americans burdened by student debt totaling $1.6 trillion, a phenomenon essentially unknown in other developed countries. And while stock markets have soared, enriching the elites, suicide rates and other “deaths of despair” (such as opioid overdoses) have also soared, as the working class has fallen further into financial and psychological insecurity.

One reason the elites don’t notice these basic facts is that they haven’t been held to account for a long time. US politicians of both parties have been doing their bidding at least since President Ronald Reagan took office in 1981 and ushered in four decades of tax cuts, union busting, and other perks for the super-rich. The coziness of Wall Street and Washington is well captured in a 2008 photo making the rounds again: Donald Trump, Michael Bloomberg, and Bill Clinton are golfing together. It’s one big happy family.

Clinton’s chumminess with Wall Street billionaires is telling. This was the norm for Republicans going back to the start of the twentieth century, but Wall Street’s close links with the Democrats are more recent. As a presidential candidate in 1992, Clinton maneuvered to link the Democratic Party to Goldman Sachs through its then-Co-Chair, Robert Rubin, who later became Clinton’s Secretary of the Treasury.

With Wall Street backing, Clinton won the presidency. From then on, both parties have been beholden to Wall Street for campaign financing. Barack Obama followed the Clinton playbook in the 2008 election. Once in office, Obama hired Rubin’s acolytes to staff his economic team.

Wall Street has certainly gotten its money’s worth for its campaign outlays. Clinton deregulated financial markets, enabling the rise of behemoths like Citigroup (where Rubin became a director after leaving the White House). Clinton also ended welfare payments for poor single mothers, with damaging effects on young children, and stepped up mass incarceration of young African-American men. Obama, for his part, largely gave a free pass to the bankers who caused the 2008 crash. They received bailout money and invitations to White House dinners, rather than the jail time that many deserved.

With the mega-hubris of a mega-billionaire, former New York City Mayor Michael Bloomberg thinks he can buy the Democratic nomination by spending $1 billion of his $62 billion fortune on campaign ads, and then defeat fellow billionaire Donald Trump in November. This, too, is most likely a case of cluelessness. Bloomberg’s prospects deflated as soon as he appeared on the debate stage with Sanders and the other Democratic candidates, who reminded viewers of Bloomberg’s Republican past, allegations of a hostile work environment for women in Bloomberg’s business, and of his support for harsh police tactics against young African-American and Latino men.

No one should underestimate the deluge of hysteria that Trump and Wall Street will try to whip up against Sanders. Trump accuses Sanders of trying to turn the US into Venezuela, when Canada or Denmark are the obvious comparisons. In the Nevada debate, Bloomberg ludicrously called Sanders’s support for worker representation on corporate boards, as in Germany’s co-determination policy, “communist.”

But American voters are hearing something different: health care, education, decent wages, paid sick leave, renewable energy, and an end to tax breaks and impunity for the super-rich. It all sounds eminently sensible, indeed mainstream, when one cuts through the rhetoric of Wall Street, which is why Sanders has been winning – and can win again in November.

Steve Bannon, Back on the Outside, Prepares His Enemies List

Stephen K. Bannon has always been more comfortable when he was trying to tear down institutions — not work inside them.

With his return to Breitbart News, Mr. Bannon will be free to lead the kind of ferocious assault on the political establishment that he relishes, even if sometimes that means turning his wrath on the White House itself.

.. “In many ways, I think I can be more effective fighting from the outside for the agenda President Trump ran on,” he said Friday. “And anyone who stands in our way, we will go to war with.”

Among those already in Mr. Bannon’s sights:

  • Speaker Paul D. Ryan;
  • Senator Mitch McConnell, the majority leader;
  • the president’s daughter Ivanka Trump and
  • son-in-law, Jared Kushner; and
  • Gary D. Cohn, the former president of Goldman Sachs who now directs the White House’s National Economic Council.

“The president was buoyed to election by capturing the hearts and minds of a populist, nationalist movement,” Alex Marlow, Breitbart’s editor in chief, said Friday evening. “A lot of it was anti-Wall Street, anti-corporatist, anti-establishment. And now we’re seeing that a lot of these guys remaining inside the White House are exactly the opposite of what we told you you were going to get.”

.. Most immediately, he has told associates that he wants to ensure that any spending resolution approved next month by Congress includes money to begin construction on the wall that Mr. Trump has promised to build on the southern border.

If Congress balks, Mr. Bannon has advised the president to issue a veto, which would trigger a government shutdown.

.. “You can’t play by the Marquess Queensberry’s rules,” he often tells colleagues, using a characteristically colorful historical analogy, in this case to the 19th-century code of conduct for boxing.

.. Mr. Kushner; Ms. Trump; Dina Powell, the deputy national security adviser; and Mr. Cohn have all been the target of unrelenting attacks by Breitbart and others on the right for their efforts to draw Mr. Trump to the political center. The site has routinely dismissed Mr. Cohn as a “globalist” and a “swamp creature”; in headlines, his name would sometimes appear bracketed by globe emojis, to underscore the point — also an allusion to the triple parentheses that anti-Semites on social media use to denote Jewish names.

.. “He will use Breitbart as a battering ram,” said Ben Shapiro

.. Unable to talk face-to-face with the president and sensing that his days were numbered, Mr. Bannon began to speak more openly with associates about how effective he could be if he returned to Breitbart