Living In A Derivative World

Here’s all the brain food you need this weekend. In this TV report, made by Dutch television, the worlds leading financial experts, among them Emanuel Derman, Paul Wilmott and Mike Osinsky, explains what our economic system has become, how it got there and how it might end. Welcome to the real world…

“It’s a competition between elegance and the real world, and sometimes the real world is just dirty.”

Paul Wilmott

The complex world of derivative finance may be difficult for many people to understand. In this 45 minute TV reportage, made by Dutch television, some of the worlds leading experts in modern economics explains what’s been happening over the last years, what’s going on and what might happen in the future. The pioneers of quantitative finance are most worried about the impact of high frequency trading.

Quants are the math wizards and computer programmers in the engine room of our global financial system who designed the financial products that almost crashed Wall Street.

The credit crunch has shown how the global financial system has become increasingly dependent on mathematical models trying to quantify human (economic) behavior.

Now the quants are at the heart of yet another technological revolution in finance: trading at the speed of light.

What are the risks of treating the economy and its markets as a complex machine? Will we be able to keep control of this model-based financial system, or have we created a monster?

This is a story about greed, fear and randomness from the insides of Wall Street, featuring Emanuel Derman, Paul Wilmott and Mike Osinsky, among others.

Welcome to the real world!


Mike Osinsky:

“Making money is like taking some kind of drug.”

“Both Clinton and Bush agreed that the government should force the banks to make more subprime mortgages.”

“These guys are out of control – the industry has gotten out of control.”

“People who are in the business don’t want to talk to the press. If they do talk to the press, they probably would get fired.”

Paul Wilmott:

“If people don’t complaint now, it serves them right when the next financial crisis comes.”

“The next crisis could be within minutes.”

“Banking has totally lost touch with its original purpose, and is now becoming dangerous.”

“I know a lot of people in the business who are starting to feel jaded. This isn’t necessary a business to be proud of.”

Emanuel Derman:

“There’s been an increasing number of financial crisis since 1994. People are used to constant growth and every time it slows down the government steps in and try to stimulate the economy by lowering interest rates like they are doing now – every time it looks like it’s stops growing fast.”

“What worries me most is that some people get faster access to the market than others.”

Sit back and enjoy a healthy dose of reality:

Quants: The Alchemists of Wall Street:

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Grape-eating Moth Disclose Dirty Secrets of U.S. Top Vineyards

Earthquake May Have Shortened Days on Earth

Mother Earth On Crack

When Will God Destroy Our Money?

Goldman’s Collateralize, Securisized And Synthesized Fraud

Fitch: The Long-Term Goldman-Effect

Obama: “It Is Time”

Euro Collapse As Greek, Portuguese And Spanish Spreads Widen

Markets To Test Greece

Attacks Against Spanish Financial Markets?

Traders Short Record Amount of Euro

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0 thoughts on “Living In A Derivative World

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