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Inside Job

The global financial crises that unfolded in 2007-08 drove millions of people into bankruptcy and the economy into recession. Directed by Charles Ferguson and narrated by Matt Damon, this film dissects the causes and implications of the downturn and analyses the role played by several key financial and political figures.

The beauty of Inside Job is that it makes the potentially daunting topic of the meltdown completely accessible to the masses. You don’t need to be a banker or an economist, nor have heard of credit default swaps and collateralised debt obligations, to follow it. The film clearly explains the developments with the aid of graphical illustrations and Damon’s narration, in an easy to digest manner. It is enjoyable to watch for both a finance layperson and a well-versed professional.

Inside Job demonstrates how the American financial sector brought the country to the brink through reckless risk taking, complex financial structures, and sheer greed. Banks provided mortgages to people who were unable to afford them in order to earn greater fees. Through financial engineering, these ‘toxic’ mortgages were then sliced, diced and bundled up into fancy packages and sold off to outside investors, who later lost out when house prices declined and borrowers defaulted. The repercussions were severe and spread throughout the economy. People lost their homes and investors and pension funds suffered heavy losses. The information you learn in this film will inspire both anger and outrage.

Amongst the people interviewed for Inside Job are billionaire investor and philanthropist George Soros, NYU professor Nouriel Roubini who predicted the crisis back in 2006, US Representative Barney Frank, and Eliot Spitzer who sued the major investment banks while serving as the New York State Attorney General. We also meet Glenn Hubbard, Bush’s former economic advisor, who turns defensive and prickly in response to the interviewer’s pointed questions. Furthermore, the colourful insights of former Wall Street madam Kristin Davis are particularly intriguing. She claims that the Street’s corporate culture involves abundant sex and drugs for bankers and their top clients, with large sums of money spent on prostitutes and cocaine.

All in all, Inside Job is a well-argued and comprehensive critique of the factors leading to the financial crisis. The director has done a masterful job of explaining things in a simplified manner. It is an eye-opener and will leave you enthralled, fascinated and infuriated.

Year: 2010

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  • Intriguing!

  • Enrique Woll Battistini

    This type of financially-engineered Global Development system, detail-designed in 1999, would have probably angered the 1%, but probably prevented or curtailed the 2008 financial crisis and its punishing worldwide socioeconomic consequences, which were particularly harsh for the poor, if it had been implemented in the North America-South America axis, and then in the Asia-Oceania and Europe-Africa axes:

    https://www.academia.edu/12823841/Mathematical_Model_and_Simulation_for_A_Partnership_for_Development_with_the_United_States_of_America_-_December_1999

  • Ubuk

    Maatt Daemoon

  • Lostguybrazil

    For everyone that watched the documentary: the 2008 crisis is more complex that that. For example, Fannie Mae and Freddie Mac. These private companies, considered “government sponsored enterprises” were quoted twice very quickly during the documentary.

    I recommend to watch, after “Inside Job” the documentary “Fraud. Why the great recession”. Link: http://www.filmskillet.com/films/1338-fraud-why-the-great-recession

    As said by user bw1339 on IMDb (http://www.imdb.com/title/tt1645089/reviews?filter=hate)

    “Once again we hear the line that the economic debacle was solely caused by deregulation and unbridled capitalism. Not one time were the activities of Fannie Mae or Freddie Mac mentioned (mentioned in passing as innocent victims), pushing and backing subprime mortgages, or the Community Reinvestment Act that forced banks to lend to poor or minorities. Or the criminally low interest rates.”

    • JF Clout

      Fannie & Freddie did not securitize subprime loans, they are prime lenders only. They made some mistakes by Allowing looser underwriting procedures, but did not do anything like what you assert.

      The Community Reinvetsment Act has been around for years, it does not compel any lending. It prohibits discrimination and redlining.

      Don’t imagine you can blame the government for the illegal, greed driven, irresponsible, unethical business practices of the dozens of financial institutions who cheated their customers, their shareholders and the American taxpayer providing FDIC insurance. Their shareholders got trounced (except at Goldman) but they never went where they belonged – prison. There were just too many of them.

      • Lostguybrazil

        I’m not blaming only the government for the crisis. What I meant is that the government was responsible for the crisis too. Fannie Mae and Freddie Mac played an important rule by taking away mortgages from the balance sheet and thus banks could escape from Basel I regulation. Of course they weren’t the only ones buying the mortgages, but for the Inside Job documentary they were irrelevant… “They own or guarantee the payments on more than $5 trillion in American mortgages, or about 60 percent of the total.” (1)

        I’m only warning to not rely only in the Inside Job documentary – look for other sources too.

        From a paper that defends more regulation:

        “The 1988 Basel Accord (Basel I), by setting a global goal of 8 percent for the risk-weighted capital/asset ratio, further encouraged banks to increasingly use securitization and OBS transactions in order to escape regulatory guidelines and to obtain new sources of income.” (2)

        “Two financial innovations have underlined this phase of capitalism: the securitization of credit, which allows banks to reduce the risk of illiquidity intrinsic to banking, and the emergence of off-balance-sheet (OBS) operations.” (2)

        “There are also differences in portfolios and in markets. US banks have tended to keep the riskiest part of their commitments — often also the most profitable — on their balance sheets. Securitisation and deeper financial markets help them to take the remainder off their balance sheets. And they can rely on two government agencies, Freddie Mac and Fannie Mae, to reduce their exposure to residential mortgages. On the other hand, favourable weights for well-rated and well-secured credits have encouraged EU banks to keep these loans on their balance sheets.” (3)

        “As of year-end 2002, Fannie Mae had total assets totaling almost $890 billion and net off-balance sheet mortgage guarantees of over $1.0 trillion, while Freddie Mac had about $720 billion in total assets and net off-balance-sheet mortgage guarantees of over $740 billion.” (4)

        (1) https://www.washingtonpost.com/opinions/government-backed-mortgage-lenders-are-the-definition-of-too-big-to-fail-too-bad-we-need-them-more-than-ever/2015/10/15/781d3926-72bb-11e5-8248-98e0f5a2e830_story.html

        (2) http://www3.eco.unicamp.br/cecon/images/arquivos/publicacoes/farhi/The_shadow_banking_system_and_the_new_phase_of_the_money_manager_capitalism.pdf

        (3) https://www.ft.com/content/6b2642b4-b54d-11e6-961e-a1acd97f622d

        (4) http://archive.nyu.edu/bitstream/2451/26116/2/4-2.pdf

  • Ben Alberton

    It’s really frustrating when documentary film makers cut off the answer of interviewees as an attempt to discredit them. It really takes away from the reliability of the film. The interviewer asks what seems like a very poignant, challenging question only to cut the answer out so that nobody really knows whether their points were countered or not.