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Notes -
Appreciate the post thanks man. So let me see if I've understood this correctly:
Day traders as depicted in Margin Call do/did perform some modest (probably very modest) service to society in that all the jiggery-pokery and complicated financial instruments have the effect of making investments more appealing, which in turn would reduce the downstream cost of credit to borrowers which is good because all other things being equal cheap credit is better than expensive credit.
It's also not completely fair to lay blame for the financial crisis at the feet of traders/investment banks, at least no more than any other bankers, because they weren't fundamentally responsible for the rotten mortgages that were the root cause of the crisis. At worst they simply didnt look too hard at the numbers because they were making money quite handily from the status quo.
But it certainly isn't true that credit traders etc. give 'Joe Everyman' a big advantage over his global competitors.
Day trader typically means private individuals who trade with their own money from home, like on WallStreetBets. The traders depicted in Margin Call are professional sell-side traders working for an investment bank, whose job is to trade on behalf of the bank's large institutional clients (major corporations, pension funds, hedge funds, university endowments, other banks). To limit the bank's risk, they hedge these trades as they make them. If they're good at their jobs, they make a small amount of money for the bank in the process, but on huge volume, this can amount to a large profit for the desk / their team, which is why many top traders are paid very well. Sometimes, as with the MBS the bank itself issued (a consequence of the GLB Act passed in 1999), their job would also be to trade/sell the bank's securities. I actually don't remember whether the MBS the credit traders in Margin Call were selling had been issued by the bank itself; it might not even be mentioned in any detail.
Traders in general had relatively little to do with the 2007 crash. Lehman Brothers, the largest casualty, collapsed because of decisions made by its leadership to directly enter the mortgage market by acquiring mortgage lenders, to keep acquired mortgages (including commercial ones) on its books for longer before packaging and selling them, and even to some extent to directly enter the commercial real estate market in 2006. None of these decisions were made by even senior credit traders, whose only job was to (try to) sell the securities.
Sure. There were huge mistakes made by senior bankers (although even more by regulators) in the run up to 2008, the biggest of which was a total failure to consider the possible catastrophic implications of a liquidity issue / credit crunch caused by a seizing up of the US housing market. There are ethical issues on the trading floor and in investment banking/advisory (ie. M&A, equity and debt issuance and so on), mostly to do with bankers taking advantage of management that doesn't know what it's doing. But the financial crisis is hard to lay at their feet.
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