Summary: This section is difficult to read lightly
Wall Street is the heart of US financial and global finance.
Here the astronomical unit of money moves and the salaries of those who move it are also astronomical.
But criticism of Wall Street is also significant.
Perhaps making money is considered a top priority, and moral healing is widespread.
There is a woman who majored in mathematics at the University of California, Berkeley.
She hired a hedge fund company.
There is a woman at Columbia University who majored in computer science (math + mathematics).
She got a job in Merrill Lynch.
?
Wait a minute, something is strange .....
Why do all those who majored in mathematics and computer science work for a financial institution?
No, but .. Why do financial firms need mathematics and computer science?
This is because the modern financial market moves to statistics (mathematics) and systems (computers).
Why do people who majored in science and engineering at prestigious universities go to Wall Street instead of Apple or Google?
No matter how you think, entering Wall Street seems to be distant from the need of self-realization at the top of human's five needs.
Be honest.
It's just one thing.
On Wall Street, most companies pay incredible amounts of incentives.
People who work there are reluctant to reveal their exact income
Everyone acknowledges that the annual salary received from Wall Street is large.
And some of them receive $ 5 million to $ 10 million (about $ 5.5 billion to $ 11 billion) in salaries.
It is Korea's salary rank at the same time point of 2014 when broadcast was made.
Only six Koreans receive annual salaries ranging from 5.5 billion won to 11 billion won.
Most of the financial companies we know will be like these.
And no matter how I think, Wall Street's banks
It does not make any sense to pay hundreds of millions to billions of won in salary for many employees.
It 's right, it' s ridiculous.
American banks are subject to tremendous legal restrictions in the 1930s after the Great Depression (1929).
As a result, most banks in the United States at the time were only able to do the banking, deposits and loans we know. (Commercial bank)
However, when Bill Clinton resigned, the situation would change as he abolished the Glassted law.
The Glasstigal Act contained a division of labor between commercial banks and investment banks, the most important of the banking regulations, which was abolished.
[Difference between Commercial Bank (CB) and Investment Bank (IB)
Now banks can make money for themselves rather than their customers.
With regulations disappearing and the market expanding, volumes and profits have grown beyond compare
Financial companies are asking their employees to
Motivate you to compensate for performance.
And companies and employees who have been struggling to get more revenue continue to find answers.
It is a 'derivative'.
Derivatives mentioned for a moment in human vs trade This is derivative.
Derivatives refer to new financial instruments made from financial instruments such as stocks, bonds, and currencies as underlying assets.
In addition to financial products, it can also be used to produce agricultural products such as beans, wheat, livestock products such as beef and pork, metals such as gold, silver, platinum,
Oil, natural gas, and so on.
And even the unrealized interest, credit can be made as an underlying asset
It is also possible to create new derivatives with these derivatives as underlying assets.
Perhaps most of you will have come across the term Derivatives unwittingly.
It is because of the subprime mortgage. (See Human vs Capitalism.) For example,
1. A company loans mortgage to customers.
→ A company's loans (financial products)
2. Company A creates a mortgage backed security (MBS) as an underlying asset and sells it to B company.
→ Sales of derivative products made from A's loans as underlying assets to B
3. CDO (Collateralized Debt Obligation) is created and sold to Company C using MBS purchased by B as an underlying asset.
→ Sales of derivative products that made derivative products made from A company's loans as underlying assets to C
Through this process, thousands of derivatives are created and traded in the market.
The process of selling derivatives was very easy and profitable.
However, as we have seen in the above process, derivatives must be designed and traded with many variables in mind.
As a result, Wall Street finance companies need people majoring in science and engineering specializing in technology and science
It was a high pay for them.
There are three major generators in this type of derivative
Gifts, options, and swaps.
The word "gift" and "option" would have been heard once in stock
The swap may have been heard through the news.
In Italy there is a small town called Cassino.
One day in peaceful Kasino, one of Bear Stearns' employees will visit and tell them that they will lower the 5% loan interest to 2%.
However, there is no free trade in the world.
Without ability, the taxpayers had no knowledge of interest rate swaps and options trading, and were blinded to the condition of low interest rates.
But this was the banks' arms ...
- Part One End -
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