Your Money
September 18, 2010
TOM FOREMAN, GUEST HOST:
Before the financial crisis, there was Wall Street in the 1980s, where greed was considered very good, captured in this famous line from Oliver Stone's film "Wall Street."
(BEGIN VIDEO CLIP)
MICHAEL DOUGLAS, "GORDON GEKKO": Greed, for lack of a better word, is good. Greed is right. Greed works.
(END VIDEO CLIP)
FOREMAN: Stephen, 25 years later, has anything changed on Wall Street? Is greed still good?
STEPHEN MOORE, EDITORIAL WRITER, "WALL STREET JOURNAL:"
I hate to tell you this, Tom, but I'm a defender of greed myself. If I have a financial manager, I want that person to make as much money for me as possible. I think most Americans do.
But it is true that we have kind of runaway expectations. And to some extent, when you look at what happens with this financial collapse, there's no question that Wall Street just got completely carried away. It was making investments that made absolutely no sense for people. You have the scandals like the Bernie Madoff scandal which decimated a lot of people's pension's and so on.
But there's one scene in that movie that I just love. Remember that scene where Gordon Gekko is walking down the beach and he has a cell phone in his hand? It's like a brick. See how times have changed? Back then, a cell phone in 1987 cost $4,000 and now today they cost $40.
FOREMAN:
Tom Ajamie, co-author "Financial Serial Killers: Inside the World of Wall Street, Money Hustlers, Swindlers and Con Men."
Tom, same question to you. What, if anything, has changed since that movie came out.
TOM AJAMIE, CO-AUTHOR, "FINANCIAL SERIAL KILLERS:"
Well greed is still there. I think it has gotten a lot worse. Back in the 1980s, there was greed, of course, that got out of control. We had Ivan Boesky, we had Michael Milken and all this insider trading, and that was bad and we knew it was bad, but things even seemed to get worse and worse as time went on.
We had the 1990s and, of course, the tech bubble and the tech busting. Then greed really spun out of control when it affected all of us and almost brought down the entire financial system in the United States of America. Now it's costing us trillions and trillions of dollars.
So it just seems to escalate and in my opinion it could be worse and harming people.
MOORE:
Tom, let me ask you this, because I was just half kidding when I said I'm a defender of greed, what I really meant is there's nothing wrong with making money. That's what the American system is about. So define what greed. What is greed?
AJAMIE:
The word "greed" I take as avarice. But you are right, look, ambition is great. Entrepreneurialism is wonderful. The desire to improve your standard of living all very good. I take greed though as being a very extreme and a negative word. It's when the avarice gets to such a peak that it causes harm and it hurts people and it hurts others.
FOREMAN:
Sit on those thoughts for a minute, because the sequel to that movie that defined Wall Street back in the '80s is about to hit theaters, it's called "Wall Street: Money Never Sleeps" and Ali Velshi sat down with four-time Academy Award-wining director and writer Oliver Stone. And Ali asked him how his film captures the financial collapse and the fall of Lehman Brothers and Bear Stearns.
(BEGIN VIDEOTAPE) OLIVER STONE, DIRECTOR, "WALL STREET: MONEY NEVER SLEEPS":
We have Federal Reserve board meetings. We have the fall of Bear Stearns. The idea of rumors being floated that can hurt a firm. There's three rumor montages in the movie that sort of show you the power of the Internet and the power of rumor and malicious gossip can hurt a company.
And by the way, you well know that Jimmy Cohen at Bear Stearns went to Washington and he said he thought rumors might have had a very big role in the fall of Bear Stearns. He thinks somebody was betting against him and going short.
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT:
Oliver, back when we were doing this, when we reporting on all of this, the financial crisis in 2008, it sometimes felt like we were in a movie. You captured a lot of that using actual track and actual things that happened on TV and many of the players who were involved at the time.
In fact, I'm hoping my life changes on September 24th, because you made me into a star. I want to show our viewers a little clip that had me in it from the movie.
VELSHI:
(BEGIN VIDEO CLIP, "WALL STREET: MONEY NEVER SLEEPS")
Anyone who doesn't admit that is just kidding themselves.
(END VIDEO CLIP)
VELSHI:
You have to look a little bit hard to find it, but it's there.
Oliver, you really reached out to a lot of people who had some involvement in this, either from the financial world or from the world of financial journalism. Give me your thoughts about this melding of reality and fiction.
STONE:
I like to do that in my movies. I thought you were really a star, Ali. I used mostly CNBC people because they covered this around the clock, they are very good at it. I have many of them in the movie.
But you, when I saw you I knew that bald dome was going to go all the way.
VELSHI:
You often in your movies have a particular view that is outside of the consensus view. But in this particular case, history has seemed to have verified the fiction that you put together. There really were rumors that affected Wall Street. There really were bad actors on Wall Street in many ways.
STONE:
Oh, yes. I think that's what the Internet and the television coverage, I mean when we did the original Wall Street we didn't have back-to-back business coverage that you have now. So everybody talking, and I think sometimes too much and they get overheated. The business news has grown into sports or movie news. It's just nonstop.
I'm not so sure that's good for the system, although it's more transparent. It does lead to circles of viciousness and rumor and hype. A stock, as you know, drops. Look what happened a few months ago, the market just crashed. What's going to happen? It does scare me. It's the nature of the modern world I suppose.
(END VIDEOTAPE)
FOREMAN:
It's the nature of the modern world, Oliver Stone just said, referring to nonstop media coverage of Wall Street. Coming up, we'll ask our panel if financial reform would have prevented Wall Street's natural meltdown.
Stay with us.
(COMMERCIAL BREAK)
We're talking about Wall Street then and now.
Tom, before the break Oliver Stone mentioned how business news coverage impacts Wall Street. Do you think it's as grand as he thinks? Do you think that is having an effect on all of us?
AJAMIE:
Well, you know, I think there's more real-time information. But I think that is, frankly, positive. I think the financial news and the media has actually been a positive as has the Internet. It is a lot harder to now to sort of hide information.
For many years, the investment bankers and others could hide things and there was a lot of secret deals. Those still go on, but there's so much seepage and leakage now through the various media sources, through the Internet, and I think that gives the general public much better access to information that in the past only the pros had.
FOREMAN:
Stephen, the new financial reform legislation, does this really do anything to reign in Wall Street?
MOORE:
First of all, let me just say how jealous I am of Ali for getting a cameo. I would love to have a cameo in one those Oliver Stone movies.
Look, I think there will be some benefits to some of the safeguards that are put in place, but I do think you go back to the whole idea of let the investor be ware. We all, as investors, have to be more diligent about following where our money is. We were talking a little bit about Bernie Madoff and people just blindly invest in him saying he's a great guy.
FOREMAN:
Hold on a second, let me challenge you on this because here's the problem for me for many, many normal people, you want to be diligent but you are dealing with so many things and this stuff is -
MOORE:
If you don't understand it, don't invest in it. I really believe that.
FOREMAN:
Oh -- Tom do you think?
FOREMAN:
That is Warren Buffet's job. He is not cutting hair all day and then trying to understand the market at night.
Tom, is that fair to say to people you really have to treat the market that way? Because frankly, I think everybody would pull out of the market if they had to understand all of it.
AJAMIE:
Yes, I think -- we can't expect that at all, no, because people don't have the time as you said.
Warren Buffet does well because this is what he does 24 hours a day, seven days a week and he has done it for decades, of course, but what about the rest of us who are just trying to invest our money? Is it realistic to think that we are really going to understand the intricacies of a company that was the seventh largest in America, Enron? No.
So there has to be a degree of honesty and there has to be a degree of transparency. There has to be laws and rules.
MOORE:
Tom, that is all true, but let's not mislead investors. Over the last 30 years, we have seen the biggest bull market expansion in the history of the world. I mean you go back to 1982, the Dow Jones with 800, today its well over 10,000 and near 11,000. There have been ups and downs. There have been periods in late '80s and obviously what we just went through. But stocks for the long run is always -- just park the money in the stock market and keep it there, don't be a day trader.
FOREMAN:
Thanks to you both for being here. We can gather in the old folks home 30 years from now and see how it turns out.
