The party in the long term. Whats your response . Discrimination stephen tonight, how is technology revolutionizing wall street . Now you can lose your life savings in hi def. laughter and my guest, writer tony kushner penned the screenplay to the movie lincoln. No one tell me how it ends. laughter an oil painting on bob barker is on ebay for 3. 5 million. I bid one dollar. laughter this is the colbert report cheers and applause captioning sponsored by Comedy Central theme song playing cheers and applause stephen good to have you with us audience chanting stephen cheers and applause thank you so much, ladies and gentlemen. Thank you for your support. You know i mean that. Welcome to the report. Ive got to thank you people for standing with me and standing by me and standing behind me because for seven years running the report has been the number one cable news show on this network at 11 30. cheers and applause its official. I just found that out. Folks, you dont get to the top without making a few enemies. So once again its time for whos attacking me now . laughter tonight i am once again in the cross hairs of the canadian press. boos it seems that the maple stream media have their mittens in a bunch over something i said in my new book america again rebecoming the greatness we never werent. cheers and applause this thing makes a great Christmas Gift for wherever canadian pris mass is. Here its december 25, the i know everything is metric up there so im going to say the 57. 2 eighth of kilovember. According to the canadian broadcasting corporation, fox in canada are ootranged about my chapter of energy where i say before we can harness Geothermal Power we have to take the planets temperature with a geothermometer and i have no idea where the earths rectum is. cheers and applause and the footnote reads windsor, canada. laughter and applause okay, now dont get them a twist canucks. Thats a misquote. The footnote actually reads windsor, canada . Question mark its a question. As a journalist, its my job to ask these probing questions. Could the earths rectum be windsor . I dont know. It could just as easily be winnipeg. laughter besides, okay, this could be a net positive for windsor. Just look at this actual poll at the bottom of the canadian broadcasting corporations article. Is Stephen Colberts description of windsor as the earths rectum good or bad for the city . laughter and applause this is true. As of this taping the results are 76. 64 good and 23 bad. cheers and applause apparently the earths rectum is an improvement over windsors previous reputation so youre welcome, windsor. You just got the colbert bump. cheers and applause do you agree to make this your new city flag and change yourtoryist signs. Welcome to wind or, you taint seen nothing yet. laughter and applause folks, wall street is taking a lot of heat lately. You destroy the Global Economy once and everyone forgets all the times you didnt destroy it. laughter plus our finance sector is much safer now because wall street has removed the weakest link man. For 150 years, the floor of 2 t change was the center of the financial world. But less than 30 of the trading is conducted here now and the specialists in the noise of the floor is being replaced by the speed and quiet efficiency of computers. Stephen though humans still play an Important Role as seen here as goldman sachs. laughter now, folks, Superfast Computers are necessary for something called High Frequency trading or h. F. T. Or hft the sound of your pension evaporating. Computers can move millions of shares around in minutes earning a tenth of a penny off each share. That adds up to serious money when they finally take it down to the wall street coinstar. laughter and once the computer has a trading strategy or algorithm it makes money just by churning the same formula over and over again. Like maroon 5. laughter cheers and applause and even simple algorithm cans dramatically influence the market. Earlier this fall a single mysterious Computer Program that placed orders and subsequently canceled them made up 4 of all quote traffic in the u. S. Stock market. Thats right. One algorithm is 4 of all trades. The other 96 were people dumping facebook stock. laughter and the source of that mysterious algorithm is unknown but experts suspect it was designed to gum up the system so it slows down others and allows the computer traders to gain a moneymaking opportunity. In other words, not only was he fast, he made everyone else slower. Like if instead of just doping Lance Armstrong also made everyone else eat a turkey dinner. laughter now some say applause some say all this cheers and applause they still love you, lance. Now, some say all this Computer Trading is dangerous but i say its actually safer because if the stock market ever crashes again, instead of brokers jumping out of windows in a panic theyll simply turn on their computer and see the soothing message error 404, economy not found. cheers and applause because, really, whats the worst that can happen . Here to tell us the worst that could happen is the author of automate this how algorithms came to rule the world. Please welcome christopher steiner. Thank you so much cheers and applause nice to meet you. Okay. Now we have the book here automate this how computers came to rule the world. How did they come to rule the world . How much trading are we talking about . Just a little bit, right . Sure, sure. At least half everyday. Some days as much as 70 . When this started, though, it was kind of a good thing. It was a democratizing movement in the stock market. It used to be in the early 90s if you wanted to make a trade you had to call up a broker and maybe your trade would get executed in a couple hours. Now you can sit at your Kitchen Table and bam, 7, you make a trade. Well, we have that ability and that message. Stephen that message goes to a talking baby. laughter yes. We had that ten years ago but things have gotten so out of control that the thing limiting these algorithms now is the speed of light. Its too slow. So theyre now using microwaves which is also the speed of light to trade between chicago and new york. A lot of these trades bounce back between chicago and new york. Before they used microwaves a bunch of guys. Stephen microwaves, like heat up your coffee microwave . Its a radio signal that theyre talking about moving mountains for so they can get a Straight Line between chicago and new york. Stephen in other words they want to make these trades so fast that the ultimate speed of the universe, the speed of light, is not fast enough . Its not fast enough. So there are now shifts that execute trades in nano seconds. And during a nano second the speed of light travels 13 inches. So that you cant go anywhere in three nano seconds so now they put the computers for these traders at the exchanges. Stephen so theyre trying to put the computers literally 13 inches from the exchange . Its got to be at the exchange. So the exchanges now charge these high speed tradeers money to put their computers there. So this is a big source of revenue for the exchanges so they are tethered to this this source of revenue. Since they dont want to stop what has become a very dangerous thing in that we can lose a trillion dollars in ten minutes which is what happened on the flash crash. Stephen the flash crash is something that happened in 2010. Stephen okay. 2010. The market an enormous dive and then it recovered and no one really knows what caused it, right . You know, the s. E. C. Blamed some guy out in kansas but you know, i what does kansas have to do with any of this, right . laughter stephen i dont know its your fault. I dont know. They blamed a mutual that used an algorithm that dumped futures on the exchange in chicago too quickly. But the fact is that what you were just talking about earlier, the 4 of those trades, most of those trades were fake, right . They were fake. So what happened with the flash crash is the pipes to these exchanges were so full of fake trades that the whole thing slowed down. No one knew what was going on until ten minutes passed. Stephen lets take one step back here. I already explained to the rubes in the audience what an algorithm is, okay . But what is an algorithm . laughter what are these things that are doing this thing . An algorithm is very simple, really. Just a set of instructions that tells the computer what to do with a piece of information. So information goes in, output comes out. A simple algorithm would be one that plays tictactoe. The input are the the moves that the human, the outputs are the move of the computer. I know a chicken in china thooun can do that, too. laughter so the algorithms on wall street are similar. Theyre like really big chickens . Really big chickens that make complicated trades. But they do it so quickly that you can lose control of the stock market in literally 30 seconds. Stephen it sounds like its a great thing for big investors or huge investors or gargantuan investors. What about the average investor . Should we even be in there anymore . Can we compete . Can we get our own algorithm . Is there an app far . laughter well, the problem is the apps are so expensive because you have to put your computer at the exchange and you have to buy these giant data feeds that normal people cannot run these. So if ive got money in the stock market and im just an average guy like i am, an average joe should by pulling it out and doing something safer with it, like putting it on black at a roulette wheel or stuffing it into a sock and throwing it into the ocean . laughter the problem is that this problem it exists for both the biggest investors and the smallest investors because theyre one in the same a lot of times. Theyre all in mutual funds and when a mutual fund wants to make a move, its a very big move. Its usually lets buy a million shares of i. B. M. Or whatever it is and all these algorithms are out there sniffing around for these big orders. Stephen are they selfaware . Is this the matrix . laughter are you keanu reeves . Do you know kung fu . I wish i did. Stephen well, thank you for joining me. Christopher steiner. The book is automate this. Well be right back. cheers and applause cheers and applause stephen welcome black, everybody my guest tonight is a Pulitzer Prize play wright. Tony kushner. cheers and applause nice to see you again, thanks for coming on. All right Everybody Knows you. Turn author of the playwright of angels in america. You also wrote the screenplay to munich with Stephen Spielberg now you are the screen writeer for the knew movie lincoln. cheers and applause were you daunted at all approaching a figure this iconic . Someone so huge in our minds . Someone we all think of as old. Old uncle penny face . laughter never occurred to me to think of him as olds uncle penny face. It was scary. I didnt want to do it original because i didnt know that it was going to be possible. Stephen did spielberg have something on you . Did he blackmail you . Well, Doris Kearns Goodwin whos been on the show. Stephen friend of the show. She was a very persuasive and lovely person and great writer and she talked me into it and i loved working with steven on munich so i figured it was a good thing to try. Stephen when doris was on she said something i hadnt heard before. She said she looked at lincoln and she said isnt he sexy . She said shes been saying for years lincoln is sexy and people think shes crazy. You must have you must have got to know something about the man as you were researching him. Sure. Stephen is he sexy . Yeah, absolutely. He had huge feet. cheers and applause well, he was a kentucky rail splitter. laughter yeah, i felt that he was i felt that he was very physically attractive man and laughter and clearly an enormously charming person. Stephen and daniel daylewis portrayal. I saw the show this weekend because im superspecial and laughter its an incredible movie. First of all, its essentially about passing a piece of legislation. Its about passing the 13th amendment which outlaws slavery, makes it unconstitutional. How do you approach making passing a piece of legislation, parliamentary procedure, exciting. laughter did you succeed . Thanks. Im glad you like it. Its a little bit like a state basketball tournament movie. You know the little team is going to win the state championship. So you know the ending already but its still exciting because its youre rooting for them and if its a close call you your engine gets going. So this was a squeaker. The house passed it by only two votes. Stephen right at the buzzer. Right at the buzzer, absolutely. Stephen because the civil war is about to end. The civil war was a few months away from ending. Lincoln knew it was going to come to an end as soon as spring arrived and the army started fighting again. Stephen right. Or if the war ended, you know, people lets end slavery while were fighting to end slavery. But if the war ends and we still have slaves screw em. laughter that was considered the attitude. Stephen were got to take a commercial break but stay right there, well be back with more tony kushner. cheers and applause cheers and applause stephen welcome back, everybody. Were here with tony kushner, the author of the new screenplay for the movie lincoln. Now, tony, shouldnt they just make an oscar in the shape of daniel daylewis and give it to him at this point . laughter and applause stephen because these people havent even seen it and they want to give it to him. Lets watch a clip. This is i believe lincoln and the telegraph office with some young men describing his decisionmaking process. Right, hes just made a decision to ask grant to put some confederate commissioners on ice as were bringing it into washington because he needs to stay out of the way while he gets the vote for the amendment organized euclids first common notion is this. Things which are equal to the same thing are equal to each other. Thats a rule of mathematical reasoning. Its true because it works. Has done and always will do. In his book euclid said this is selfevident. You see, there it is. Even in that 2000yearold book of mechanical law it is a selfevident truth that things which are equal to the same thing are equal to each other. cheers and applause stephen thats lincoln. applause thats going to be our lincoln from now on. I think so. Henry fonda was really, really great. 72 years ago, 79 years ago. And i think daniel is now the definitive. Stephen nailed it, he nailed it. One thing that bothers me about this movie is that thats a great portrait of lincoln and its a heroic portrait of lincoln and, you know, spoiler alert, it ends sadly. laughter but this heroic portrait worries me because people often compare obama to lincoln. Do you think theres a comparison between the two . Oh, yeah, absolutely. Stephen what . What . Theyre both from illinois . What . Both from illinois. Stephen so was capone, go on. laughter i feel that the connection is obama a progressive centrist, as lincoln was. They both believe in government. Stephen lincoln was a republican, though. Lincoln was a republican. A different kind of republican. Stephen still, r next to his name. Thats the case. Stephen and i dont think obama could pull off the look. In a stove pipe mat maybe, but if he had that beard hed look so much like the rent is too damn high guy. cheers and applause tony, thank you so for joining me. Tony kushner. The movie is lincoln. Go see it well be right back. cheers and applause