Inside Job Documentary by Charles Ferguson

Inside Job is a documentary by Charles Ferguson, about the causes of the global financial crisis and revealed what was going on inside the U. S. financial industry during the first decade of the 21st century. The movie highlights the effects of a series of causes beginning in the Regan Administration. These causes most prominently include deregulation that allowed excessive and reckless actions in finance, fraud, and conflicts of interest. Deregulation allowed the financial sector more freedom and less discipline, which provided more opportunity for profit and risk.

Reflecting the profit growth resulting from deregulation, investment banks went from small, private firms to public companies. The movie illustrates the growth of the financial sector beginning in the 1970s and continuing into the early 2000s, considering that from 1978-2008 the average salary in the United States in every profession other than investment banking rose by 25% and the average salary in investment banking rose by 150%. In early 2000 another method mortgage lending was developed that allowed for excessive risk and allowed for incentives to bet against the system for personal gain.

The system was called the Securitization food chain and loans were mixed with other types of debt, such as car loans and credit card debt, given a rating, and investors would include these mixes in their funds depending to their rating. Since each party was removed from risk by selling the debt, lenders could extend absurd loans that were highly unlikely to be repaid, rating agencies could grade the absurd debts highly without consequence and the result was the opportunity for virtually anyone in the US to receive a home loan and purchase a home.

Which sent home prices incredibly high and since the financial sector was profiting from this procedure through the Securitization Food Chain no one cared about who was holding the bag. The rest is history. The financial industry knew that the meltdown was going to occur. Records show that internally they were betting AGAINST their own offerings. The bubble bursts resulting in people losing their illusory homes and their previously tangible jobs. The financial sector lost their businesses.

An incredible, sweeping wildfire of foreclosures and bankruptcies. The US government claimed that if these major financial institutions that caused the crisis were allowed to fail, the effect on the global financial system would be catastrophic. The US government said these firms were ‘too big to fail’ and paid out several hundred billions of taxpayer money to save these firms. The unemployment and inflation from these rescues is still accumulating today.