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Archive for December, 2010

Revelations Inside “Inside Job”

Posted by chakrabarti on December 13, 2010

Walked into a movie theater after quite some time last night to catch a screening of “Inside Job“, a documentary about the 2008 financial crisis and its aftermath. The narration was by Matt Damon, presumably to put more people in seats (also might be a logical move given Damon’s identification with Democrats and liberals in general).

A lot of the stuff in the documentary has been out in the public domain for a long time now: deregulation of financial markets starting with Reagan, the dot-com and housing bubbles, the power exerted by a handful of investment banks on the political scene, securitization of mortgages, derivatives trading, repeal of Glass-Steagall under the Larry Summers-Robert Rubin-Alan Greenspan regime (“The Committee to Save World”, as I recall from a Time Magazine cover of that period), the collapse of Lehmann Brothers that triggered the epic financial crisis of 2008, et cetera, et cetera. Relatively little of this was new information, though presented nicely┬áin a coherent format. The contrast with Michael Moore’s “Capitalism: A Love Story” was fascinating. Although Moore’s work is a lot more humorous and on a different level in terms of cinematic excellence, “Inside Job” avoids the question of profit-versus-welfare motive altogether, focusing instead on the role of the financial industry, legislators, the Federal Reserve and the role of the Clinton and Bush administrations in bringing about the debacle of September 2008 and the resulting worldwide recession, from which we are recovering painfully to this day.

Something new that I learned from the screening: the role of Economics professors in lending respectability and a certain legitimacy to the financial industry, be it while writing papers about the (in)stability of Iceland’s banking sector in conjunction with Goldman Sachs [Frederic Mishkin], or advocating for deregulatory legislation as Treasury Secretary and subsequently cashing in while giving speeches to Wall Street executives following a stint as President of Harvard [Larry Summer], or advocating supply-side tax policies that increase the personal wealth of the top 0.1% of the population, many of whom happen to be employed in the financial services sector [Glenn Hubbard].

Another take-away was the commentary on the kid-gloves treatment provided to the big banks by the Obama administration, that has been a major sore point for liberals who expected things to change at least slightly in the past couple of years. Notably, the movie points out that many of the players who were central to bringing about the crisis (Bernanke, Geithner, Summers, the list goes on) are still running the show. Of course, those who were paying close attention to the Obama primary campaign would have recognized that economic populism was not one of the strongpoints of the campaign [their differences were mainly in the foreign policy domain].

To sum up, “Inside Job” is a good primer on the events leading up to the financial “Armageddon”, and its lingering aftereffects. However, the documentary does make you leave the theater feeling a little pessimistic..

Posted in Film, Finance, Politics, Uncategorized | 1 Comment »