The Minion of Wall Street

(Blog n°5)

Even if the schedule imposes a slightly divergence in the planned subject, this blog will not lose its core subject: trying to understand the relationship between the human society and the financial society. The wolf of Wall Street by Martin Scorsese is really a perfect support to illustrate this relationship.

Money. Firstly, a tool. Then a resource. Finally, a goal per se.

Money has this incredible power to fascinate humanity. Everybody seem to act as Eli Wallach in The Good the bad and the Ugly, during the anthological scene of the Ecstasy of gold, combing everywhere with crazy eyes, seeking for what we searched during, so many time. Of course, this vision is slightly caricatural in the actual world, nevertheless it would appear strange in the story of J. Belfort, the main character of Scorsese’s movie.

Drugs are equally with money a key element of the craziness of the wolf, until the point where a confusion appears. Money is for him a drug. At this exact moment the question of the possibility of such a behavior is raised: who let a wolf hunt among the lambs? By manipulating humble and unexperimented people to speculate on rubbish securities.

The most questionable aspect here is that M. Belfort sold dangerous stocks to people without any knowledge about what they were buying. The goal in those transactions was to earn money from the commissions, normal indeed. However, such commissions imply to force customers to buy shares, neglecting the risk presented by those shares, even lying on their actual potential. This behavior was never put into question, just because it was profitable for the company and for the broker. Making money without asking how it is maid, speculate on shares, sell them to increase the prices of the one owned by the seller himself, these are the basic financial manipulations described by the movie.

Based on a true story of an existing man. A man without ethic, without scruples, without any consideration for anything but money (and drug and prostitutes). Of course, the place of humanity is relegated in the background. Fundamentally, what is the scariest in that story is not the acts of M. Belfort, but rather the fascination he created. Such a madness needed the intervention of the state, of a superior authority to be stopped.

This statement leads to two major thoughts.

Firstly, and in contrary of the liberal ideas, every market needs a regulation. Indeed, in a long-term point of view, the market would have corrected the too huge difference between the market value of the shares and their actual values, but this would have implied a tremendous lost for all the people misled by the Wolf.

Secondly, the goal of finance is not always the optimization of shareholders wealth. Making easy money by speculating seems to be an excellent goal for the financial activities, this opinion is at least present in the most common mind. This opinion is not only casted by movies and stories like this one, but also by the reality of the financial history: crisis caused by speculative operations.