The documentary, Inside Job, was released in 2010. It mainly focuses on the financial crisis that was witnessed between 2007 and 2009. Viewers opine that the financial crisis was an instigation of few individuals in the USA. The US government officials and top players in the financial services industry intentionally made decisions that would later lead the American economy into turmoil. From the documentary, it is evident that the financial service industry was led into a trap by its own leaders, who had full knowledge of what would happen. More so, the people responsible for these actions went unpunished because they executed the plan conscious of the legal system.
The documentary illustrates how the financial crisis was instigated by rich individuals, who believe that if their businesses are gaining and growing then there is no crisis. This attitude by the rich was further tolerated by their political supporters who wanted to see the economy gain much in the short run for their personal gains. The 2008 bubble could have been controlled and even the crisis could have been averted. Instead, the rich let the bubble grow big until it popped, leaving the economy in a mess.
The documentary gives a glimpse of how the Federal Reserve boss in 1987 pushed for the deregulation of markets and financial services. This move allowed financial institutions to gamble with money they received from depositors. The institutions could also borrow more money and offer potential investors risky and complex financial instruments. The institutions would benefit from increased income inlets such as financial instruments, bundled up debts and high interest obtained from mortgage loans to risky borrowers. Form that time, banks enjoyed high returns by encouraging investors to take high risk loans. These investment banks were driven by the urge to make more profit, not recognizing the potential impacts if their plan failed.
As reflected in the documentary, Federal Reserve officials watched as financial institutions plunged the economy into a crisis because of their greed. Before the 2008 crisis, the bubble for mortgages witnessed one of the worst moves by financial service players. The banks and insurance companies readily agreed to insure investors against bad debts. All banks had developed the tendency to sell risky products. This was done under the full watch, and even participation, of America’s top economists. These scholarly individuals carelessly supported deregulation of financial institutions. The economists offered consultancy services to financial institutions to undertake the suicidal actions during the bubble. Most of the top economists who offered wrong advice during the period prior to the crisis do not feel sorry for their actions. This is proof that the steps taken by financial institutions during the bubble were a planned execution to cause the crisis.
The crisis can be attributed to both financial institutions and top government officials. This is because there is a direct link between, top economists, banks and top government officials. Bank officials took up the roles of government officials in drafting rules that would favor the banks. These individuals also made decisions that would favor their own welfare, putting the welfare of ordinary Americans at risk. For instance, Ferguson interviewed Charles Morris. Morris believed that he benefited from the meltdown because he was prudent. It is clear that he had only cared for his individual interests, and those of bank owners. That was an illustration that the financial crisis was instigated by people who cared about their financial gain and not bans that were after serving the public.
The crisis resulted from the collapse of the market for collateral debt obligations. Many of the banks could not offload the billions of dollars they held in form of collateral debt obligation, loans and real estate. These banks’ cash streams came to an abrupt end and they were about to collapse. The government had to act quickly to rescue the whole economy from disintegration. The federal government took over two major banks, Freddie Mac and Fannie Mae. Another major bank, the Lehman Brothers, collapsed a few days later. Federal government officials Timothy Geithner and Henry Paulson advised that Lehman files for bankruptcy. However, this move resulted in the commercial paper market collapsing. There were other take overs such as AIG. Federal Reserve chiefs, Ben Bernanke and Henry Paulson convinced the US congress to pass a $700 billion bailout for these banks. This was another indicator that the crisis had been planned by top individuals who knew well that they would ask the government to bail them out if at all they failed in their quest. Henry Paulson had been instrumental in allowing freedom of financial institutions. He is the same person who turned a blind eye on the financial market during the mortgage bubble. Yet he was on the forefront advising for bailouts.
The documentary shows how top investors and executives in the companies that collapsed managed to keep their individual fortunes intact. They received the billions offered by government as bailout. These banks got more power and maintained their antireform stance for their personal gain.
The documentary is divided into five sections where events during the bubble, the crisis, the post crisis and the present are captured chronologically. From it, we learn that the financial crisis was instigated by prominent people in the financial industry. These people used their influence to make the financial system weak leading to the crisis. They then benefited from government bailouts while ordinary Americans lost their jobs.
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