"Jesus...."
"Are you kidding me?"
"I had no idea..."
"God..."
"We are doomed..."
These were just a few of the words I heard coming out of the mouths of the patrons at the theater last night as I watched the shovel to the head stunning film Inside Job.
The film details the exact events which caused our economy to collapse in September of 2008. In several uncomfortable interviews, it puts the key people responsible (at least those that allowed themselves to be interviewed) on the spot. And turns them into gibbering messes. Here is the trailer.
To be quite blunt, it makes Michael Moore films look tame. The main reason for this is the film's director, Charles Ferguson, has a much mellower style than Moore. He asks simple questions and when his subjects try to stonewall he gently (totally unlike Moore) reminds what the facts are. And the film is loaded with such facts.
In a very simple and no nonsense way, Ferguson explains how lack of deregulation over the last 30 years brought us to where we are today. In many ways, it takes the theme of CNBC's House of Cards (shown to me by our esteemed Commenter in Residence, Last in Line) and takes it up a notch. Actually, about a hundred notches.
We being in Iceland where all was well until the country decided to deregulate everything. And then everything went to shit. And then the same thing happened here. Why? Well, the simplest answer is that people are greedy. Ferguson details the certain area of the brain that is stimulated by winning money. It's the same one that is stimulated from cocaine use and sex. Not surprising are the vast number of financial sector folks (including CEOs) that snort coke and hire prostitutes.
Every president from Reagan to Obama is blamed with the latter being held to the mat for hiring Larry Summers and Tim Geithner, two of the chief architects of the crisis. Men like Glenn Hubbard, Hank Pauslon, Frederic Mishkin, Martin Feldstein, Scott Talbot, David McCormick, Robert Rubin, Alan Greenspan, Ben Bernanke, Richard Fuld, and Joe Cassano are some of the many responsible for crisis. None of the are in jail. All of them retain their respected positions of power.
People lost their savings...their homes...everything. And all of these men kept their millions. My family lost around 40 thousand dollars. But that's not even the worst part. The thing that makes me sicker than anything right now is that I now have to hear that we need to "cut the private sector loose and watch the economy grow." This film details exactly how we tried that and how much of an absolute catastrophe it was.
In one very revealing scene, Dominick Strauss-Kahn, current managing director of the IMF, told a story of a party he attended in which some of the people mentioned above told Hank Paulson, "You have to stop us...regulate us...because we can't stop ourselves." I've been hearing a lot of complaints lately of Social Security being a Ponzi scheme. Yet these some people who offer these complaints...people who are so trapped in their own bias of pathological distrust of the government....want to give these men who actually got away with a Ponzi scheme more power! Completely. Fucking. Insane.
Basically, it comes down to this. Saying we need to cut the financial sector loose is like saying, "Hey, let's release the mass murderers we have locked up and deputize them."
When President Roosevelt set up financial regulations during his first term, he set the bar for how business was to be conducted. This lasted for about 45 years. During that time, there were no major financial crisis. From the time Reagan took office to today, how many have their been? Black Monday, the S and L crisis, the dot com bubble, and the Crash of 2008. How many more are we going to have to endure until we follow Jim Manzi's advice?
As we work to adapt our regulatory structure to fit the 21st century, we should therefore adopt a modernized version of a New Deal-era innovation: focus on creating walls that contain busts, rather than on applying brakes that hold back the entire system.
We had those walls, as Ferguson details in great disgust, and every leader from Reagan to Obama has failed to do anything to put those walls back in place. For those of you who think that the Dodd-Frank bill is going to help with any of this, let's get together. I need a good laugh after seeing this film.
And for those of you who call for less regulation, I challenge you to see this film and share your thoughts with me. Will you change your mind? My hope is that you will because the definition of where we are at, as the film so perfectly and eloquently summarizes, is absolutely unacceptable. In all honesty, it renders most of the topics we debate on here moot considering the gravity of what our country has become in the year 2010. Both parties are to blame.
And so are all of us.
15 comments:
I saw this film last week as well and can't, for the life of me, understand why anyone would strive to keep this system in place. Conservatives, what do we gain by having LESS regulation in the financial sector when we have clearly seen the results? When derivatives went unregulated, what happened?
Once again you go with your basic premise: We need more regulation, to be administered by people who don't answer to the law, nor enforce the law upon their supporters.
...want to give these men who actually got away with a Ponzi scheme more power!
No I don't, you do. Demand the leaders you voted for start sending some of this trash to jail, instead of defending them as you did with Geithner for months. Then we'll talk. Until then, giving them more regulatory authority consists of nothing but giving them more authority to demand compliance with the regulations by some, and grant waivers to others, just as we have been seeing.
That's what the Democrats are demanding more of. If you weren't, Frank and Dodd would be doing hard time instead of writing bills.
Is it always the government to blame, DT, or is there ever a time when it's the private sector?
The govt is not always to blame. But consider, Geithner IS up to his neck in this - and yet he gets put in charge (more or less). I've got to ask, when you put the fox in charge of henhouse security - what are you exactly expecting?
If you wish to trace the problem back to the appropriate source, it was called Long Term Capital Management, and it was bailed out by the govt when there was absolutely no need to. The smart guys in the markets subsequently figured out that the govt would cover their sorry asses even if they took extraordinary risks. It is not a failure of the market to punish foolishness - the market does that quite well when it is allowed to. But well-connected fools don't like the harshness of that. Every time the govt steps in to "save" someone, they are keeping the market from cleaning up its own messes (and yes, there are always messes). It drives me nuts that you then turn around and scream that the market doesn't work - of COURSE it doesn't work when you won't let it!
Don't DARE bring up the S&Ls - because at the same time they were allowed to pursue more risky lending by the govt, that same govt UPPED the protection on their investors (savings accounts). The govt set that up perfectly, and then you all act surprised.
As for the housing bubble - that was driven by govt policy (very bipartisan too) that grossly over-favors home ownership (and that no one should ever lose money in real estate). There would've been no market for mortgage backed securities if Fanny and Freddy had not created the secondary market for mortgages in the first place.
There is no free lunch, least of all from govt digging deeper and deeper into the economy.
As I have said elsewhere, sasquatch, there was plenty of greed and poor judgment to go around, on the buyers' side, on the sellers' side, on the government side. But the only people who provably failed to do the job they were getting paid to do worked for the Fed and the SEC. And yet, those are the only people in this process who haven't been propagandized as either innocent lambs led to slaughter or greedy, rapacious fat cats.
The "reality based community" has ditched actually enforcing the law in favor of choosing heroes and villains based on caricature. Since the exact same thing has happened with unions, car companies and consumers, oil companies and the MMS, illegal immigrants and the DoJ, etc., where those whose job it is to prevent the villains from being villains are carefully left out of the "good guys/bad guys" equation, it's not much of a stretch to call it a pattern of behavior. Especially since the Democrat party has been demonstrably following that pattern since the Clinton Administration.
So... you want more regulation? Show me where Dems (or Repubs, for that matter) are willing to enforce ANY law or regulation across the board, even on their friends, supporters and donors. Until that starts happening, "more regulation" does not equal more authority to the government, it equals more power to the Good Ole Boy Network.
Many prominent Dems have, by their actions, shown that they are fine with that so long as it's their Good Ole Boy Network and not the Republicans'. The waiver for Geithner is a prime example of this.
Talk is cheap. You can either support equality and the rule of law (even though you know you'll have no better than mixed success), or you can support despotism that favors your allies. You can't have both. Obama has consistently chosen despotism that favors his allies ever since he said, "I won." Pelosi and Reid have done so since before anyone ever heard the name Barack Obama.
Ante up or fold, sasquatch.
But if the Democrats are as "ol boy" as you say they are, why did they push to pass finreg? If they were being paid off by their buddies, why did they act in contrast to their interests? The GOP seems to be very open about where their allegiances lie. They don't want regulation at all. Period. How can you support that?
But if the Democrats are as "ol boy" as you say they are, why did they push to pass finreg?
To give themselves more power without any more accountability, just as they've been doing with everything else. What kind of power? The power to grant waivers of the new regulations, just as we have seen them doing. What do you think a waiver is, if not permission to "act outside the law"?
They don't want regulation at all. Period.
Link to someone actually saying so, or admit that's a deliberate lie.
As for less regulation, until you can get even enforcement so that nobody can play the waiver game, all taking away regulations does is take power out of the hands of the GOB club. Democrats demanded and passed the Pay Go rule too. How did that work out? Already, it's just another way to punish anyone stupid enough to obey the rules, and reward anyone corrupt enough to find ways around them.
How can you support that?
I'm lost, DT. Where is this power? What do they intend to do with it? It seems to me that even when the Democrats held large majorities and the executive branch, they failed to do anything with it. In fact, they could barely govern. Do you support regulating derivatives and if so, how?
From the other thread...juris, how would you regulate derivatives? Sorry if I stepped on your toes, sasquatch, but I figured we are having a group discussion.
M, you could just let the "players" in the derivatives markets assume all the risk, i.e. you lose - you lose. Bitter medicine perhaps, but investors sufficiently burned won't be as apt to play with matches (and gasoline). That is a lot easier than coming up with a set of regulations that can't be gamed (particularly if the Sec of Treasury can waive them).
The real lesson learned, if they had had to bear the cost, was not to pretend that underlying value was meaningless. No doubt SOME people will not learn that lesson and still will lose more money in the future - not much you can do about that.
Anyway, YOU are supposed to be the ones proposing the regulations to prevent this, not me - so why ask me?
When a stone[r] can figure out taxes, maybe you folks should think about your constant "tax the rich" refrain.
And speaking of otherwise indefensible, but irresistable stupidity - trains!
Or you can all just wallow in self-absorbed misery about the stupid electorate.
Interesting that you bring that point up, juris, as it is mentioned specifically in the film. That's the way firms used to work under FDR style regulations. But deregulation changed all of that. So, I agree, the law needs to be changed back which means more regulation.
I am not suggesting a 98 percent tax rate. Nor is any Democrat. A great leap and a great lie.
Trains--I don't get this one at all. Having high speed rail would be a giant boost to our economy and make many people a lot of money. The government has to be involved because it is in the Constitution (interstate commerce). So why is the right/whatever against it?
But deregulation changed all of that.
Damn you are obtuse. Bailouts are not a product of deregulation. There is no relation between deregulation and bailouts - none.
The one part I will agree with you on is that bailouts are part and parcel of the conjunction of govt power and corporate influence. The difference is you think there is only one cause/part - not two. In the land of the sighted, the one-eyed man has less perspective!
I am not suggesting a 98 percent tax rate. Nor is any Democrat. A great leap and a great lie.
I said "tax the rich" as though it has no consequences (and that ain't no lie) - doesn't matter the exact percent. Hell, the fair share advocates always underestimate how much the rich already pay. The point is, when you raise taxes, you get less of what you are taxing. Tax wealth harder, you are going to get less wealth - either because people will just say fuck off, or they will do what the Stones did and go offshore.
Trains--I don't get this one at all.
Of course you don't. Samuelson lays out the simple, plain economic case against - and then points YOU out precisely: people that just don't want to accept inconvenient facts.
The government has to be involved because it is in the Constitution (interstate commerce).
No, you are not that stupid. You're just baiting me. Nice try, but no sale.
Trains? Oh boy trains! I work for the nation's largest railroad - I can talk trains...
Having high speed rail would be a giant boost to our economy and make many people a lot of money.
The only world where that statement is close to accurate would be one where the Wright brothers and Henry Ford never existed.
You can't come up with any reasonable scenario where high speed rail benefits our economy beyond it's cost.
Your entire statement is pure fabrication.
"You have to stop us...regulate us...because we can't stop ourselves."
LMAO. You know where else I've heard this - pro sports franchise owners demanding a salary cap. Because they just can't stop from overpaying star (or even non-star) athletes without one.
Yeah, right.
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