"Inside Job" is a sleek, briskly paced film telling the story of a crime of unparalleled proportions a crime that is, so far, without punishment. It's the story of an outrage that has so far escaped broad understanding, as well as much in the way of societal stigma and legal sanction. The betrayal of public trust and collective values that Mr. Ferguson chronicles was far more brazen and damaging than anything in American history. And this film goes a long way toward explaining exactly what happened and how.
The story begins by retracing the paths that led the world economy to the precipice two years ago:
- the deregulation of the financial services industry in the 1980s and '90s;
- the growing popularity of complex and risky derivatives;
- the real estate bubble;
- the explosion of subprime lending
None of them were exactly secret, yet they have never been so well presented, together, in a way that allows them to be so well understood, each in the context of the others. Until very recently, each of these developments was celebrated by our economic "experts," top officials, and academics, as vindications of "the power and wisdom of markets." With great irony, Mr. Ferguson recycles choice moments of such triumphalist expressions by Lawrence Summers , George W. Bush , Alan Greenspan and various cable television ranters and squawkers.
However, even as stock indexes soared and profits swelled, there were always at least a few investors, economists and government officials who warned that the frenzied speculation was leading to the abyss. Some of these prophets, who were largely neglected at the time, show up in front of Mr. Ferguson's camera, less to gloat than to present, once again, the analyses that were dismissed and ignored by their peers for so long at such a phenomenally great cost to the rest of us.
Dozens of interviews -- along with appropriate and explanatory news clips -- are folded into a clear and absorbing history, narrated by Matt Damon . This is not a piece of ragged muckraking or breathless advocacy. It rests its outrage on reason, research and careful argument. "Inside Job" offers a sweeping synthesis, going as far back as the Reagan administration, and as far afield as Iceland , in its analysis of the broader financial crisis and its origins.
Not surprisingly, many of the highest-profile players declined to be interviewed. Larry Summers appears only in news footage, and neither he nor any of his predecessors or successors as Treasury secretary -- not Robert Rubin or Henry Paulson Jr. or Timothy Geithner -- would submit to Mr. Ferguson's questions. Nor would any of the top executives at Goldman Sachs or the other big banks -- for understandable reasons. Most of the interviewees are, at least from the perspective of the filmmaker, friendly witnesses, adding fuel to the director's comprehensive critique of the largely unregulated way that business has been done in the United States and the other advanced capitalist countries for the past two decades.
Both American political parties are indicted; "Inside Job" is not simply another belated settling of accounts with Mr. Bush and his advisers, though they are hardly ignored. The scaling back of government oversight and the weakening of checks on speculative activity by banks began under Reagan and continued during the Clinton administration. And with each administration the market in derivatives expanded, and alarms about the dangers of this type of investment were ignored. Prime example: Raghuram Rajan, chief economist at the International Monetary Fund , presented a paper way back in 2005 warning of an impending "catastrophic meltdown," and was scorned as a "Luddite" by Mr. Summers (who of course has nothing to say about this now).
Meanwhile, some investment bankers -- at Goldman Sachs in particular -- were betting against the very positions they were pushing onto their customers. Here's the story in a one-sentence nutshell:
An elaborate but very profitable house of cards was constructed in which bad consumer loans of all kinds were bundled into securities, which, were "certified" as sound by corrupt rating agencies paid by the very banks that needed good ratings to be stamped on this junk, which was then insured via credit-default swaps issued by AIG, a giant insurance company that had nowhere near enough capital to ever pay off on these insurance policies if and when these junk securities were discovered by investors to be junk, which of course they eventually did, thereby requiring US taxpayers to come to the rescue, as investment banks went out of business and credit markets seized up, prompting a worldwide recession that could have become much much worse without the government/taxpayer rescue.
One risky bet was stacked on top of another , and in retrospect the collapse of the whole edifice, along with the associated loss of millions of jobs, homes, pensions and political confidence, was inevitable. Yet federal regulators like Timothy Geithner and Alan Greenspan slept through all of the warning signs leading up to this catastrophe, and they of course refused to be interviewed for this powerful expose that is now playing in theaters across America.
Mr. Ferguson is no conspiracy theorist; nor is he inclined toward structural or systemic explanations. Markets are not like tectonic plates, shifting on their own. Visible hands write laws and make deals, and in this case a combination of warped values and groupthink seems to have driven very intelligent men toward some mixture of crime and folly various lawsuits will ultimately have to determine how much of each.
In addition to taking on business and government, Mr. Ferguson aims his critique at academia, showing how the discipline of economics, and more than a few prominent economists, were corrupted by consulting fees, seats on boards of directors and membership in the "masters-of-the-universe" club.
When he challenges some of these professors, in particular those who held positions of responsibility in the White House or in the Federal Reserve , they are reduced to stammering obfuscation: "Who could have predicted?" and/or "I don't see any conflict of interest" -- and occasionally provoked to testiness. Mr. Ferguson, for his part, cannot always contain his incredulity, or rein in his sarcasm. Occasionally his voice pipes up from off camera, during an interview, saying things like, "You can't be serious!"
Ferguson also explores the effects of the crisis on ordinary, non-Wall-Street-connected workers and homeowners. At the end of the film, narrator Matt Damon exhorts viewers to demand checks on the kind of speculation and unregulated deals that led to the crisis and the rising inequality and neglect of productive capacity, so as to prevent continuing cycles of boom and bust.
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