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The Actuary The magazine of the Institute & Faculty of Actuaries
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Arts: Life imitating art?

After reading Reinhart and Rogoff’s seminal work Is the 2007 US Sub-Prime Financial Crisis So Different?, Matt and I were struck by the importance of understanding the past in order to appreciate the present. With that in mind we decided that to grasp the mindset of the current crop of financial buccaneers, we would watch Oliver Stone’s 1987 epic tale of capitalist greed — Wall Street.

Wall Street is the first and last word in 1980s capitalism. Testosterone-filled traders and salesmen, carrying brick-sized mobile phones, living in expensive New York Upper Eastside apartments with questionable decoration. The film follows rookie broker Bud Fox, who will do anything to succeed and who sees his ticket to success in the shape of Gordon Gekko, an unscrupulous Wall Street player, who epitomises raw naked capitalist greed.

After only 10 minutes, the DVD crashed and we had to restart the computer — is this symbolic of the finance world as it is now? Wall Street does manage to illustrate how human the markets are, with the hustling, cacaphonic trading pits that were the coalface of markets in previous decades. Flashing Bloomberg screens nowadays make you forget that the financial markets are just that — marketplaces where thousands of buyers and sellers meet and trade. Bud, in his quest for redemption, manages to cause a wild spike in the price of Bluestar stocks, not dissimilar to the wild oscillations of financial stocks throughout 2008, where rumour and speculation can move market prices out of sync of a ‘true’ fundamental value.

Although Gekko seems to have amassed his fortune on insider trading — “Stop telling me information and start getting me some,” he orders Bud early on in their relationship — what was more relevant to today’s crisis was the role that hedge funds could play. Gekko is portrayed as a vulture preying on the weak, while his nemesis, Sir Lawrence Wildman, is the proverbial white knight (as well as an English gentleman). In recent times, hedge funds have taken a lot of blame for some of the difficulties we are in, especially with short selling. The arguments raised by Gekko in a speech to counter his critics, match some of the arguments raised by hedge fund managers today — that they are looking to expose badly run companies through the market mechanism.

There are some great quotes throughout. When talking to his working class union leader father, Bud spits out: “There is no nobility in poverty”. While many in the current banking profession could be facing an ignoble future, Gekko would be equally ill at ease with the present financial climate as: “Nothing ruins my day, boy, like losses.”

The most spectacular quote has to be Gekko’s address to a group of disgruntled shareholders: “Greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA.” In current times, maybe Gekko speaks a small amount of truth. Markets are driven by fear and greed, and maybe a little more greed and a little less fear will be part of the process that pulls the world out of a global recession.
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Recommended band
Glasvegas
Glasgow has given the world many things over the years — Billy Connolly, Franz Ferdinand, Gordon Brown and, according to the Glasgow City Council website, Merlin the wizard. However, one of the latest to herald from the UK’s third largest city are four-piece guitar band, Glasvegas. Their self-titled debut album was one of the best releases of 2008. Full of haunting lyrics and excellent melodies, the album is full of heart and definitely worth listening to.

Client entertaining
Inamo, London
Soho has many Asian-fusion restaurants, but not like this. If you want to entertain your clients in a very different setting, Inamo is the place to be. For gadget lovers everywhere, diners can select and place their orders via the interactive ordering system projected on to the table surface. It also allows you to play games, set the mood, book taxis and watch a video of your food being prepared in the kitchen. Oh — and the food is extremely nice too. www.inamo-restaurant.com