I.
The Trillion Dollar Bet
(2000) - a documentary about the demise of Long-term capital management
(2000; documentary; 48 minutes; option
pricing)
This documentary
tells the story of the Black-Scholes-Merton options pricing formula, physics
envy in finance, and the collapse of hedge fund Long-Term Capital Management
(LTCM). It includes interviews with Robert Merton and Myron Scholes, who won
the Nobel Prize in Economics in 1997. (The Nobel Prize could not be given to
Fischer Black, who died in 1995.) The effect of the formula on financial
markets was far reaching. In the words of the narrator of the documentary,
“Capitalism was on the march. The combination of mathematics and money, it
seemed, was unstoppable.” The hedge fund LTCM was founded by a bond trader at
Salomon, and Merton and Scholes signed on as partners. When LTCM fell, it had
losses so large that it became a systemic threat and had to be bailed out,
bringing financial losses and lingering embarrassment to its owners. Its fall
raised a difficult question: If even Nobel laureates cannot understand the
risks in financial markets, who can? The closing line of the documentary:
“There is a tempting and fatal fascination with mathematics. Albert Einstein
warned against it. . . . Don’t believe in something because it is a beautiful
formula.”
II.
Floored: Into The Pit -
Epic Trader Movie! (2009; documentary; 78 minutes; floor trading)
Hear it from the
Chicago traders themselves — who tell it like it is, with lots of swearing and
cigars. This documentary is also a chapter in financial history; it’s about a
profession that technology has made largely obsolete — floor trading. It shows
how the brutally competitive and in-person floor trading at the Chicago
Mercantile Exchange worked. There are a number of surprising quirks to the
culture. Floor traders had their cliques, based on which part of the city they
lived in or their ethnicity or even their religion. Many traders earned a
living by trading on their own account. As one of them says, “I am the hedge
fund manager of my own family’s worth.” Others are more frank about what they
do. As one puts it, “Whether people like to admit it or not, this is a form of
gambling.” The film explains the switch from open-outcry floor trading to
electronic trading and its effect on the lives of the floor traders in Chicago.
Today’s impersonal and anonymous electronic trading in most financial markets
is the opposite of the royal-rumble-style pit trading, and some of those who
had great success in the pit struggle with electronic trading. While the film
is about floor trading in Chicago, some of its lessons can be safely
generalized to markets around the world that underwent the same change.
III.
Rogue Trader (1999)
In a sentence:
Faster paced British version of "Wall Street."
Plot: Based on
the real-life story of Barings Bank trader Nick Leeson, Ewan McGregor does a
surprisingly awesome job of emulating the British wunderkind down to his
addiction to fruit candies. While a relatively unsuccessful movie at the box
office, Rogue Trader is entertaining.
IV.
Boiler Room (2000; drama;
120 minutes; securities fraud)
This film depicts
finance at its absolute worst: A group of lying, cheating, and stealing young
stockbrokers sell worthless stocks to people they can fool using high-pressure
sales calls. “You will make your first million in three years” is the promise
made by J.T. Marlin to its batch of young recruits. If Wall Street explains
insider trading, this one explains the pump and dump. Money is everything for
these guys, and they make their money by closing sales. As one of them puts it:
“And there is no such thing as a no-sale call. A sale is made on every call you
make. Either you sell the client some stock, or he sells you on a reason he cannot.
Either way, a sale is made. The only question is, Who’s going to close? You or
him?!” The film is also the story of a son who finds it hard to live up to his
father’s standards. He joins the dodgy brokers and discovers his inner
salesman. Interestingly, these stockbrokers act as if they are not practicing
fraud but, rather, are performing the art of sales at the highest level.
V.
The Corporation (2003;
documentary; 145 minutes; legal person)
The most
destructive sociopath of modern times, according to this hard-hitting documentary,
is the corporation itself. The opening line says it well: “One hundred and
fifty years ago, the business corporation was a relatively insignificant
institution. Today, it is all pervasive.” The Corporation is not strictly a
finance film, but it deals with the concept of limited liability and
externalities. Featuring a number of interviews with prominent thinkers, the
documentary digs deep into the ideas underlying corporations, contrasting the
natural person (human) with the legal person (the corporation) and exploring
why some large, profit-hungry companies seem to have little regard for society
and the environment. When I interviewed Bob Monks, a corporate governance
pioneer, about his top learning resources on corporate governance, he named this
film as “an all-time favorite.” Monks is interviewed in the film. His best
line? “A corporation is an externalizing machine in the same way that a shark
is a killing machine.” If you are interested in environmental, social, and
governance (ESG) issues in finance, this film is one to watch.
VI.
The Ascent of Money (2008;
documentary; 120 minutes; financial history)
In this
documentary, based on a book with the same title, Niall Ferguson, author and
academic, traces the evolution of money, bond markets, insurance, and the
subprime mortgage debacle. A key lesson from this documentary is the same as
that from history in general: This time is not so different; it has happened
before — and more than once. We need only read history to find out. Ferguson’s
thesis is that the history of money can help explain all human history. “There
was one huge possibility created by the emergence of money as a system of
mutual trust — a possibility that would revolutionize world history. It was the
idea that you could rely on people to borrow money from you and pay it back at
some future date.” That’s why, explains Ferguson, the root of credit is credo,
Latin for “I believe.” This fast-paced documentary was filmed in a variety of
locations, including the United States, the United Kingdom, Japan, Italy,
Russia, and Chile. The two-hour version of this documentary comprises six
episodes, starting with the origin of credit and ending with globalization.
This is how Ferguson puts it: “Because we take it for granted we tend to
underestimate the extent to which our entire civilization is based on the
borrowing and lending of money. No, it does not literally make the world go round.
But it does make vast quantities of people, goods, and services go round the
world from Babylon to Bolivia.”
VII.
Capitalism: A Love Story
(2009; documentary; 127 minutes; capitalism)
This may well be
the most provocative film on the list. Made by Michael Moore, who is described
in the trailer as “the most feared film director in America,” it hits Wall
Street hard, gives voice to some of the views held by ordinary Americans, and
goes after the ideology of free market capitalism. It does so in the context of
the social cost of the financial crisis in the United States. An early line by
Moore provides a good indication of the content: “This is capitalism, a system
of taking and giving, mostly taking.” The documentary shows how those being
evicted from their homes or laid off from their jobs feel, something that
statistics cannot adequately convey. Here is a line from an American being
evicted from his home: “There’s gotta be some kind of rebellion between the
people that have nothing and the people that’s got it all.” The film openly
questions the political power of financial institutions. (It has some shocking
scenes, such as one in which the chairman of Merrill Lynch tells US President
Ronald Reagan, who is making a speech, to “speed it up.”)
Moore documents
·
The failures of capitalism in the United States,
·
How the regulatory system seems to privatize profits and socialize
losses, and
·
How large financial institutions write the rules.
VIII.
Why Are We All in Debt?
(2009; documentary; 26 minutes; alternative monetary system)
Four parts:
This documentary
is the shortest film on my list. As the title suggests, it addresses a
fundamental question that puzzles many: How come we are all in debt? The
principal writer and presenter in this documentary is the Islamic finance
author and former bond-derivatives dealer Tarek El Diwany. He points out that
according to conventional wisdom; both the disease and the cure of the
financial crisis are the same: “On the one hand, we are told that our financial
crisis is the result of too much debt. But then we are told that the solution
is that the banks lend more. How can that be?” Made in England, it is probably
the only Islamic finance–themed documentary of its kind. Taking a historical
perspective, the film explains the origin of paper money, modern-day interest,
and fractional reserve banking and its impact on the world around us. The
documentary describes paper money as part of the problem: “Paper money is a
promise to pay that is never kept. You can’t go to a bank and get your ten
pounds’ worth of gold.” The film does not just explain a problem, it also
offers a solution — an alternative financial system in which the money supply
is controlled by neither the banking establishment nor the government.
IX.
Inside Job (2010;
documentary; 105 minutes; financial crisis and regulation)
One of the most
insightful documentaries on the 2008 financial crisis, this film, narrated by
Matt Damon, makes the case that the crisis could have been avoided if
regulation had been adequate. An early line sets the tone: “This crisis was not
an accident. It was caused by an out-of-control industry.” It is similar in
spirit to Capitalism: A Love Story but strikes a more serious tone and goes
about analyzing the crisis, largely through a series of interviews with
well-placed individuals — politicians, journalists, and academics. As described
by director Charles Ferguson, the documentary is about “the systemic corruption
of the United States by the financial services industry and the consequences of
that systemic corruption.” Made in the United States, Iceland, England, France,
Singapore, and China, the film has its share of powerful scenes and
hard-hitting interviews with academics and policymakers alike. In a hearing
where representatives of Wall Street are being grilled by US legislators, one
legislator passionately says, “You come to us today, telling us, ‘We are sorry,
and we won’t do it again. Trust us.’ Well, I have some people in my
constituency, and they actually robbed some of your banks. And they say the
same thing.”
X.
Too Big to Fail (2011;
drama; 99 minutes; systemic risk)
Based on the book
with the same title, this film is about the 2008 financial crisis, the
bankruptcy of Lehman Brothers, and the subsequent bank bailouts. Its title is a
phrase that has entered into the popular lexicon because of the financial
crisis. Like Wall Street: Money Never Sleeps, this docudrama covers the subject
of moral hazard. The US Treasury Secretary is shown saying, “We are not bailing
out Lehman. Wall Street has a gambling problem. If government keeps covering
their losses, they never learn anything.” Like many films on my list, this one
is highly critical of Wall Street. Still, the film is unusual because it
provides a reconstruction of the closed-door meetings of important real-life
figures — such as the US Treasury Secretary, the chairman of the Federal
Reserve, and heads of investment banks — as they negotiate the Troubled Asset
Relief Program (TARP). You have to follow the dialogue closely to know what is
going on, which probably makes it more suitable for hard-core finance fans. At
the end of the film, viewers are told that the remaining Wall Street
institutions are, once again, too big to fail.
XI.
The High Human Cost of
Following the Money in the Madoff Fraud Case
On Dec. 11, 2008,
Bernard L. Madoff confessed to F.B.I. agents that he was running an immense
Ponzi scheme, involving tens of billions of dollars from investors all around
the world. That might have been a day of triumph for Harry Markopolos, the
whistle-blower who for years had tried to get the Securities and Exchange
Commission, as well as several business publications, to investigate Mr.
Madoff’s activities. Instead, the arrest provided only momentary relief. As set
out in the documentary “Chasing Madoff,” Mr. Markopolos panicked, thinking it
would be only a matter of time before embarrassed S.E.C. agents would break
into his home in Whitman, Mass., seeking to erase his records of their
incompetence. Of course, as with everything else in this case, the S.E.C. did
nothing.
XII.
Peer into the Future of
Hedge Fund Evaluation: Send in the Clones
Published on Sep
3, 2013
In the future, we
will not pay much for exotic betas. We will pay for superior human intellect
instead. We will know the difference because we will abandon simpleminded
performance benchmarks, like peer groups and indexes, and replace them with
smart science. Disruptive innovation will elevate our comprehension and
contentment.
XIII.
Debtocracy (2011)
For the first time
in Greece a documentary produced by the audience. Debtocracy seeks the
causes of the debt crisis and proposes solutions, hidden by the government and
the dominant media.
Debtocracy is a 2011 documentary film by Katerina
Kitidi and Aris Hatzistefanou. The documentary mainly focuses on two points:
the causes of the Greek debt crisis in 2010 and possible future solutions that
could be given to the problem that are not currently being considered by the
government of the country.
Aris
Hatzistefanou, 34, is accustomed to uncomfortable reporting. A journalist since
his teens, his long-running show infowar on Sky Radio was canceled just
as his thought-provoking documentary, Debtocracy, was released.
From the
authors: The idea came
about during a Sky Radio show on how the Ecuadorian president was responding to
the country’s massive debt. He started a simple financial audit of sovereign
debt, and concluded that other countries were using Ecuador as a slave,
like Argentina and many other countries before. The administration forced a
haircut of 70% on its creditors.
Katerina Kitidi –
editor in chief of TV XS – and I decided to produce the documentary. We faced a
serious funding problem but, for obvious reasons, we did not want to ask any
political parties, companies or – even worse – banks, so we resorted to crowd
funding.
It worked very
well; we collected 8,000 euros in just 10 days, an unprecedented figure for a
country like Greece, facing a serious economic crisis.
At the beginning,
this project was supposed to be a mere YouTube video. But because so many
professionals offered their help (musicians, video editors), and so many people
donated their money, it became a real documentary. The surplus was invested in
promoting the movie.
XIV.
Le Capital French - (2012)
In French:
English and other
subtitles:
Le Capital
(English: "Capital") is a 2012 French film directed by Costa-Gavras.
The film describes
an executive who becomes the CEO of a large bank, only to upset the bank's
board of directors when he begins to take unilateral control in the bank,
laying off many of the employees and making a corrupt deal with the head of an
American hedge fund.
XV.
The Debt time bomb that is
Britain
An apocalyptic
documentary regarding the sorry state of the British Economy and its colossal
debt mountain. Warning: Unpleasant content.
If Money Week are
to be believed, Britain's love affair with borrowing has put us on a collision
course with complete economic, social and political collapse. Osborne cannot
save us now.
XVI.
Wall Street: Money Never
Sleeps (2011; drama; 133 minutes; moral hazard)
Gordon Gekko is
back, but this time in a feel-good film. After serving jail time for what
happened in the prequel, Wall Street, the former insider is now an outsider.
But he has not come back without some quotable quotes: “Someone reminded me I
once said greed is good. Now it seems it is legal. Because everybody is
drinking the same Kool-Aid.” Unlike Wall Street, this is a relatively
complicated story, and the film devotes a good deal of time to the emotional
drama of Gekko’s strained relationship with his daughter, her up-and-down
relationship with her partner (played by Shia LaBeouf), and his relationship
with his mother, whom he must repeatedly bail out from financial troubles. The
film takes place within the context of the financial crisis, in which a young
financier, Gekko’s daughter’s partner, a specialist in alternative energy, is
trying to live a different kind of life on Wall Street — making money while
doing good and avoiding the moral hazard of bailouts. Rather than blatantly
violate the law as Gekko did in Wall Street, the young financier in this film
prefers to work around it. Luck and design pit him against the same billionaire
who is the enemy of Gekko. What is driving these people? Is it money, is it
love, or is it simply madness? Gekko says, “It’s not about the money. It’s
about the game, the game between people.”
XVII.
Front-line, the Warning
(2009)
Long before the
economic meltdown, one woman tried to warn about the threat to the financial
system.
Brooksley E. Born
(born August 27, 1940) is an American attorney and former public official who, from
August 26, 1996, to June 1, 1999, was chairperson of the Commodity Futures
Trading Commission (CFTC), the federal agency which oversees the futures and
commodity options markets. During her tenure on the CFTC, Born lobbied Congress
and the President to give the CFTC oversight of off-exchange markets for
derivatives in addition to its role with respect to exchange-traded
derivatives, but her warnings were opposed by other regulators. Born resigned
as chairperson on June 1, 1999, shortly after Congress passed legislation
prohibiting her agency from regulating derivatives.
An October 2009
Frontline documentary titled The Warning described Born's thwarted efforts to
regulate and bring transparency to the derivatives market, and the continuing
opposition thereto. The program concluded with an excerpted interview with Born
sounding another warning: "I think we will have continuing danger from
these markets and that we will have repeats of the financial crisis -- may
differ in details but there will be significant financial downturns and
disasters attributed to this regulatory gap, over and over, until we learn from
experience."
In 2009 Born,
along with Sheila Bair of the FDIC, was awarded the John F. Kennedy Profiles in
Courage Award in recognition of the "political courage she demonstrated in
sounding early warnings about conditions that contributed to the current global
financial crisis". According to Caroline Kennedy, "...Brooksley Born
recognized that the financial security of all Americans was being put at risk
by the greed, negligence and opposition of powerful and well-connected
interests... The catastrophic financial events of recent months have proved
them [Born and Sheila Bair] right." One member of the President's working
group had a change of heart about Brooksley Born. SEC Chairman Arthur Levitt
stated "I've come to know her as one of the most capable, dedicated,
intelligent and committed public servants that I have ever come to know",
adding that "I could have done much better. I could have made a difference"
in response to her warnings.
In 2010, a
documentary film Inside Job further alleged that the crafting of derivatives
regulation was flawed from the Clinton administration on. Along with fellow
whistle blower, former IMF Chief Economist Raghuram Rajan, who was also
aggressively rebuked by the economic establishment, Brooksley Born was cited as
one of the marginalized voices arguing that financial derivatives increase
economic risk.
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