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Financial Regulation and Legal Aspects of the Economy
Introduction
The issues of the crisis continue to be relevant: the abundance of goods on the market and the stock exchange does not justify their poor quality. Companies and corporations with influence over public opinion are responsible for this abundance. The crisis of 2008 was a companion to discussions of the present situation in a pandemic where people were deprived of comfort and not adequately supported (Gennaioli and Shleifer). Mathematics and economic theory can describe many aspects of life. Still, it is impossible to find someone responsible because the usual rules do not work in a pandemic. The financial regulation of life is an integral part of the development of society, and it is worth paying attention to the legal issues in economics.
Wall Street: Quants in the Marketplace
Quants main goal is to form a model that increases the profits of financial products with initial levels of trading risk. Quantitative analysts in various fields try to create a stable system where all the economic elements work. Quants probably played a significant role in the 2008 crisis because they made a financial monster, legally unlawful, that led to a massive collapse in finance (VPRO documentary). The trading programs created by the quants contributed to the volume, but in this abundance, they depreciated and led to a market crash. The mathematical models shown in the movie seem mediocre and exciting, but as soon as they stop working, all financial products collapse. The value of the underlying product ceases to matter in a quantum economy, and legal liability may not occur. Accusing an organization of shirking legal responsibility for trade violations is quite tricky because there is no place for this aspect to be fully regulated.
Panic: The Financial Crisis
The 2008 crisis first hit the private sector, affecting three branches: foreign trade, capital outflows, and external borrowing conditions. It became a global financial panic because people were locked into an economic framework. Opportunities for companies to raise capital in securities offerings have significantly been reduced. Panic opens eyes to the fact that, in reality, there were no measures and controls in place to prevent a crisis state (Council on Foreign Relations). The banking system suffered losses, but not enough to make up for the damage done to the public. The film showed leaders who were persuaded and made to believe that their actions were necessary. The high ranks are not punished or enjoined for their efforts, making the viewer question whose fault the crisis was. The one-sidedness of the situation leaves the viewer bewildered, leaving him with questions about why consumers were treated this way. Putting aside the political aspects of the film, one could argue that one received not an analysis of the panic situation but an artistic retelling of the actions and consequences.
Movies Influence on Understanding Financial Regulation
Both cinematic films are of interest even to the unsophisticated viewer because they provide insight into two essential elements of the 2008 economic crisis. The films reflect the opinions of various experts to bring attention to the need for responsible financial regulation. The movies are eye-opening on the market for new legal mechanisms to influence banking systems. For me, both films showed why securities are among the first to be involved in crises. During the 2008 crisis, securities prices dropped significantly, and now in the pandemic, one can see that the opposite has happened. The base price went up, and national banks helped repurchase them to support the economy. In addition, the movie affected the formation of another perspective on the 2008 crisis, and I became interested in the mathematical models of the quants.
Conclusion
Financial regulation involves different systems and practices to maintain economic stability. It is difficult to find fault with the 2008 crisis, but several vital components are worth paying attention to. First, the quants quantitative analysts whose mathematical models failed in the banking system. Second is the careless actions of economic leaders who were too convinced they were right. I think the films I have seen indicate how carelessness and lack of legal responsibility can affect the emergence of a critical situation.
Works Cited
Panic: The Untold Story of the 2008 Financial Crisis | Full VICE Special Report | HBO . YouTube, uploaded by Council on Foreign Relations, Web.
Quants | The Alchemists of Wall Street | VPRO documentary . YouTube, uploaded by VPRO documentary, Web.
Gennaioli, Nicola, and Andrei Shleifer. The Financial Crisis of 2008. A Crisis of Beliefs: Investor Psychology and Financial Fragility, Princeton University Press, 2018, pp. 2148.
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