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Lorenzo Enrico H.

Rodriguez
3-AIT

Wall Street 1987

In the movie there was an economic collapse where the stock market around the whole
world plummeted and shredded a huge value in a span of a short time. The movie was adapted
from a real economic collapse that indeed happened during October 1987, thus bring us to the
term Black Monday.
During the first haft of the year the stock market was racing upward. After a few months
later various markets started incurring large daily losses. Black Monday was the largest one day
percentage decline, causing panic and distraught to many. Before the end of October, stock
exchanges in Hong Kong had fallen 45.5%, Australia 41.8%, Spain 31%, the United Kingdom
26.45%, the United States 22.68%, and Canada 22.5%. New Zealand was hit particularly the
hardest, falling around 60% from its 1987 top rank, and taking a few years to recoup.
Many speculations blame the 1987 economic collapse on program trading. It is a sort of
exchanging securities, typically comprising of bushel of fifteen stocks or more that are executed
by a machine program at the same time focused around foreordained conditions. This was used
by big time companies that had hundreds of investments and stocks to monitor. Obviously they
cant monitor theses shear amount of numbers, thats why they have to automated system that
sells and buys automatically. These computers perform rapid stock executions based on external
inputs, such as the price of related securities or many others. Many blamed the program to
blindly selling stocks as markets fell, exacerbating or serving as a catalyst of the decline. There
were other factors to the meltdown such as Overvaluation, Illiquidity and Market psychology but
for the people the main culprit was the program trading.

Lorenzo Enrico H. Rodriguez


3-AIT

Wall Street: money never sleeps

In the second movie the setting of the plot was 2008 to 2009 economic meltdown.
Though the movie did not stroll along those lines to much because of the plot focusing too much
on the payback of the main character Lou; it was considered by numerous economists to have
been the most noticeably worst monetary emergency since the Great Depression of the 1930s.
2008s financial crisis collapsed a large number of financial institutions. This was
remedied by the bail out of many banks and national institutions; but event with the said sacrifice
the stock market continued to plummet worldwide spreading unemployment like an infection.
Many in the real estate market suffered in evictions and foreclosures because of the prolonged
unemployment. Many compared this to the 1987 economic crisis due to its similarities.
The main cause was the bursting of the U.S. housing bubble (this was mentioned in the
movie several time but not explained), which reached its peak around 2006. Every business
worldwide with securities tied to the U.S was damaged by it. This was triggered by the loans
borrowers and mortgages tied to housing. Too many people are not being able to actually pay the
loans this triggered the declines in credit availability and damaged investor confidence had an
impact on global stock markets, where securities suffered large losses during 2008 and early
2009. Total losses are estimated in the trillions of U.S. dollars globally.
The question is; where did all the loans come from. It came from a complex interplay of
policies that encouraged home ownership, providing easier access to loans to a lot of people.
Since a lot of people can apply for loans a large percent of them also can pay what they loaned.
Then this brought about the bubble the just kept on increasing. Companies keep losing more
money on loans because of the policy.

Lorenzo Enrico H. Rodriguez


3-AIT