Inside Job starts off with a cautionary tale about Iceland. Iceland’s economy was, for a time, almost entirely based on finance. Economists from America (who were paid by the Icelandic Chamber of Commerce) penned scholarly articles on the health and stability of Iceland’s economy. Turns out it was a house of cards.
The movie is a documentary film by director Charles Ferguson, narrated by Matt Damon. It explains and tracks the events of the global recession that ushered in the Obama administration. It explains the roots of the problem, tracking all the way back to the Great Depression and the Glass-Steagall Act and its appeal during the Reagan administration and the savings and loan scandals of the ‘80s. It explains it in pretty plain language in a way that ordinary Americans like you and me can understand.
The Glass-Steagall Act was a piece of legislation passed in 1933 in response to the Great Depression. It established the FDIC and made it illegal for conventional banks to offer speculative investments. It also basically banned insurance agencies and investment services firms from merging with traditional banks.
That all changed, beginning in the 1980s, and the Republicans, and later, Bill Clinton, helped to pass laws that removed the regulation and controls that the Glass-Steagall Act had put into place for the protection of ordinary Americans. Not only were the laws changed to accommodated a laissez faire attitude, the laws that remained in place were blatantly disregarded and unenforced. Under the influence of Alan Greenspan, Ayn Rand‘s former lover and protege, free market was good, regulation bad.
The movie explains how the housing bubble, CDOs and derivatives worked together to cause a global catastrophre. Everyone gets in on the blame: Wall Street traders, mortgage lenders, insurance companies, politicians, lobbyists, ratings agencies and insurance companies. The individual greed of these people works in a kind of synergy to provide a perfect storm of collective immorality.
Everyone is out for his own piece of the pie. Everyone thinks he’s entitled to receive something for nothing. One thing in the movie that’s especially shocking is when the increase in the average Wall Street employee’s salary over the last forty years or so is tracked on a line graph. If you weren’t angry about the bailout before you saw this movie you certainly will be afterward.
Why and how did these people escape prosecution? An entire nation has been defrauded of billions of dollars, and not one single person has been jailed for it. Instead, they got bonuses or millions of dollars in severance pay and a McMansion in the Hamptons. It’s a travesty. And if you are an American, and you don’t stand up and let your outrage be heard, well, you should just be ashamed of yourself.
You owe it to yourself to see this movie. If I can read Too Big to Fail and watch Inside Job and understand complex finance geek speak, then you can, too. Do it. And remember next time you vote for a President what was done or not in order to right this situation. You can bet that I will.