Inside Job: hard-hitting documentary about 2007/08 Global Financial Crisis

Charles Ferguson, “Inside Job” (2010)

¬†For many people, this incisive documentary on the immediate origins of the 2007 – 08 Global Financial Crisis will prove a real eye-opener into the workings of the various large American investment banks, insurance and other finance corporations all collectively known as “Wall Street” and of the failure of the US government and its agencies to monitor and regulate the industry’s activities. The consequences of the failure of successive US governments from the 1980’s onwards to control Wall Street’s rapacity and excesses are becoming all too apparent as “Inside Job” makes clear: collapsed banks and insurance companies; economic instability resulting in over-caution on lenders’ part, forcing businesses to downsize operations and lay off workers; huge public debts which force government cut-backs in spending on education, medical and social welfare services; increased debt burdens on households; people’s savings and superannuation and pension funds wiped out, among other results. Director Charles Ferguson who also wrote the script and produced the documentary tracks down and interviews a number of bank executives, public officials and economists about aspects of the GFC, and many of the interviewees who appear in “Inside Job” reveal themselves as corrupt or corrupted participants in and beneficiaries of Wall Street’s greed, arrogance and lack of ethics.

The film traces the roots of the GFC to the early 1980’s when the Reagan government began deregulating the banking and finance industry and watered down a number of government acts and regulations that came into force after the Great Depression of the early 1930’s. Even after the collapse of savings and loan associations in late 1980’s which should have been a warning that something was not right in the finance industry, deregulation continued well into the next decade and after the Cold War ended in 1991, a number of physicists and mathematicians entered the finance industry with ideas on playing the stock market like a giant casino, and many creative and convoluted ways of converting mortgage and other types of loans into more lucratvie financial instruments, backed by other weird, wonderful and wacky financial products whose origins were so diverse and complex even for finance industry workers to trace, came into being. Eventually a crisis of trust and confidence developed and spread like a wildfire, undermining large corporations like Bear Stearns, AIG and Lehman Brothers which ended up being taken over by large banking corporations, and the US government under President George W Bush was forced to bail out Wall Street for US$700 billion.

The film’s major strength is its examination of the incestuous links among US government officials and agencies charged with supervising and regulating Wall Street activities, the financial corporations themselves and university academics who basically performed a cheerleading function for the often unethical if not illegal activities of the banks. The interviews with two university academics at Columbia and Harvard Universities are very entertaining in this respect, with the questions hitting a very exposed raw nerve for one economist who challenges the film-maker to make the most of a suddenly shortened interviewing time of three minutes. Other entertaining interviewees include an expensive callgirl and a psychiatrist / therapist both of whose Wall Street clienteles must have overlapped considerably.

Unfortunately the film falls flat with a watery conclusion that Wall Street must be subject again to regulation to avoid repeat crises and leaves it at that. Having exposed the collusion that went on between Wall Street and the White House, Ferguson’s retreat into a call for re-regulation is a huge letdown and disappointment for this particular viewer. A future of re-regulation followed by deregulation followed again by re-regulation can never be a viable solution as long as an “old boys’ network” continues to operate between governments and the financial sector. As long as people forget or refuse to learn the lessons of previous financial crises and continue to believe in political and economic ideologies that prize self-interest, the quick accumulation of wealth at any cost and extreme dog-eat-dog competition (which feeds on fear and encourages a herd mentality and irrational behaviour), the global financial system will remain essentially unstable and prone to crises. The effect of regulation will only soften the more extreme effects of such a system but can’t prevent crises from happening. We need to re-examine our assumptions about our current financial systems, what place they should have in a real economy based on producing goods and services to suit all people, and in particular we need to question the role that money, debt and banks play. Already there are commentators like Ellen Brown (www.ellenbrown.com) and websites like Social Credit (www.bleedingindebt.com) who question the worth of a financial system in which money can be created and start to circulate only if someone asks for a loan and incurs a debt. There need to be better ways to stimulate production of goods and services other than creating debt that attracts interest that accumulates and produces more interest. Islamic financing which prohibits usury and systems based on social credit and ingenious forms of bartering are some alternatives that could be considered.

Apart from a weak ending, “Inside Job” is a thorough hatchet-job on the architects and builders of an elaborate edifice that took years to build but fell apart very quickly with effects on the economy, society and culture in the United States that may still be working (and wrecking) their way through. We may not have seen the full outcomes of the GFC and it may be that its worst effects will be felt by the very poor and most disadvantaged people in American society.