Inside Job (2010) ☆☆☆1/2(3.5/4) : Here’s what happened

  Regardless of how much you know about the global financial crisis in September 2008, you will be outraged while watching “Inside Job”, Charles Ferguson’s incisive documentary which explains in detail why and how this complex incident happened. It was not a bad luck at all. US finance industry had already been destined to that enormous disaster for a long, long time, and the people who could prevent it had neglected it while getting the profits for themselves. Even after the global economy as well as US economy was severely damaged as a result, nothing is changed much in the system, and, this is quite frightening, it still keeps going on as before.

Like his previous work “No End in Sight”(2007), an equally sharp-edged documentary about how the George W. Bush administration disastrously ruined Iraq from the beginning, Ferguson gives us the calm, penetrating presentation on how US finance industry has systemically ruined the economy it has fed on. The film only presents us the interviews with the various financial experts and others along with the helpful explanations and data showing how the system “works”, but the message behind them is quite clear to us. The crisis happened due to the lack of proper regulations of the companies, and US really needs the regulations for preventing the next possible crisis, which might be more catastrophic than the recent one.

The documentary tells us about the long history of mutual relationships between Washington and American finance industry. The deregulation of finance industry has been favored since the Reagan administration in the 1980s, and this policy has never been changed during last three decades. Wall Street people got the big chance to earn lots of money thanks to that. One interviewee recalled that one of his friends, a stock trader working at Merrill Lynch during the 1970s, had to do an extra part-time job for supporting his family. In the 1980s, that guy’s annual income became more than six figures.

With such a boom like that, the crash was bound to happen, and it did happen in the late 1980s with many American people losing their precious savings. However, the stock traders and the executives of Wall Street did not learn any lesson from that. While similar financial disasters kept occurring, they have continued to push the US government to more deregulation for more money. The billions of dollars from Wall Street have been put into Washington to block any attempt to reform the financial system. Both Republicans and Democrats get the money in their respective pockets. The former executives or board members of the leading financial companies get the new jobs at the Department of Treasury or several federal committees that are supposed to supervise and regulate their industry. They even have corrupted the academic integrity. Several leading economists are paid well for supporting deregulation through their writings and consults – and their universities are also paid well, too. Some of these scholars agreed to be interviewed by Ferguson, but they cannot give him nice answers when facing the hard questions thrown by him.

The business became more cancerous as the time went by. With merger and acquirement, the banks got bigger and more influential than before – and they got greedier. With the rise of computer technology, they introduced a new financial instrument called “derivative”, which, unlike what they said, caused more harm to the market. In addition, as another part of deregulation policy, they made the government lift the limit on the leverage of the banks, which meant they could lend money far more than they actually had.

The film gives us a very lucid picture of how this malignantly unregulated system, so called “Securitization Food Chain”, was operated at full force for maximizing the profits while the things were accelerated toward the catastrophe. The banks wanted to lend more money to the debtors most of whom were not so eligible for the mortgage, so they borrowed more money from the investment banks like Goldman Sachs. The investment banks then packaged the debts into Collaborated Debt Obligation(CDO), which was then sold to their investors as the products, which were, by the way, rated ‘AAA’ by the rating agencies such as Moody’s(they said later that they were not responsible for their “opinions”, by the way). And then there was credit default swap; the investment banks bought the insurances for their lousy CDOs from the insurance companies including that infamous AIG. The insurance companies knew they insured the bad products, but they did not care because the money was coming anyway. Plus, it was possible to insure one CDO in multiple directions – another very good chance for them to earn more profit. When AIG was turned out to be unreliable, my god, the banks even insured against AIG’s collapse.

The system was literally out of control, and so were people in it, who, intoxicated with the ecstasy from profits, carelessly spent their money for living in obscene luxury. Richard Fuld, the CEO of that notorious Lehman Brothers, flaunted his vast wealth quite arrogantly before the crisis. Private jets were more like the toys to him; he had six along with one helicopter. There was a private elevator only for himself in his company building; when his driver called, the elevator was ready for bringing him straight up to his office on the 31st floor. And he did not give damn much about how his people worked below.

Gambling, drugs, strip clubs, and prostitutes were abounding among the people of Wall Street, and they were taken for granted. Kristin Davis, who ran a high class prostitution ring for them near Wall Street (at least $1000 for an hour), reveals us a lot about how irresponsible they were, and her words are supported by other interviewees. It is sort of amazing that they managed to work in their companies in the next morning after such hedonistic excess during night.

In the end, as many experts had foreseen, all hell broke loose not only to them but also to us. AIG and Lehman Brothers were collapsed along with many finance companies. The stock price plummeted. The money from thousands of investors was vaporized. The debt of US government was doubled, and the American society became far bleaker than before with increased unemployment rate. The global economy had lost trillions of dollars as a consequence, and lots of people around the world also lost their jobs.

In spite of all these damages, the history will probably repeat itself sooner than we think if we are not careful. Many people called for the financial reform after the crisis, but even the Obama administration did little for that. The same kinds of people from Wall Street were hired in the government again, and, as many of you know, the US government gave these rotten finance companies the huge amount of tax money for bailout. As Ferguson said in his Oscar acceptance speech several months ago, none of executives responsible for the crisis were indicted for what they did; they instead got the huge bonus as usual.

“Inside Job” is a detached but angry documentary demanding the changes with the good arguments based on facts and data. As it bitterly admits through Matt Damon’s narration, the changes will not happen easily due to the obstacles alarmingly grown out of proportion – but there must be changes no matter what. As French Finance Minister Christine Lagarde says in the film, the financial industry is a service industry; it should serve others before it serves itself. Otherwise, it will be no more than money-sucking cancer.

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