Wall Street: How Things Haven't Changed

After I wrote in a previous post on credit cards and consumer faith in the financial industry, I chose to turn the television on to relax my mind for a bit.  While scanning through the channels, I stumbled across Wall Street, the 1987 critically acclaimed film that portrayed the malicious world that is the free market.

Cutthroat, power hungry brokers and their investors push around shares of company's to make a simple dollar. As Charlie Sheen's character is sucked into the world of insider trading and other unethical trade practices, the film truly holds up what remains a problem in today's society, or at least how the public perceives it.

While the SEC has tightened greatly since 1987, we can still see why Americans have lost faith in capitalism.  The financial industry has seen tremendous growth in the number of members in the 1% category, and their wealth comes at the hands of many people's downfalls.  The concept of the art of unethical trading is questioned in the film when Bud Fox asks Wall Street legend Gordon Gekko, "When does the game end?"  The question lingers today, and begs the question of when the social costs have finally hit such a large hole?

If I learned anything from the film, the importance of expectations is a fact that I confirmed.  What the market perceives to be valuable (even if it is simply overstated by high volume traders) can cause an eruption.  A shot heard 'round the world.  On the other hand, a single whisper might send a thriving corporation into bankrupt.

Last year, the S&P bond ratings lowered the US bonds from AAA to AA, a downgrade that sent investors running to the hills.  Many economist felt the downgrade was unnecessary and put false perception in the eyes of investors.  The truth remains that control remains in the power of who controls the access points in society.

The S&P downgrades, which have been occurring often in the last year, should send warnings to investors, that perhaps putting all of one's eggs in the same basket isn't wise.  I am not saying S&P is a hoax; but, we should always gain access to as many sources as possible.  Make sure to check the credibility and react in ways that benefit not only ourselves but the social wealth of the American and global economy.

References:

1. Brandimarte, Walter. "United States Loses Prized AAA Credit Rating from S&P". Reuters.  http://www.reuters.com/article/2011/08/06/us-usa-debt-downgrade-idUSTRE7746VF20110806 
2. Wall Street (Film). 1987.