The recent financial crisis presents a particularly intractable problem for the layman. The crisis has greatly affected the vast majority of the world’s population but is well-understood by only a tiny minority. Thankfully, there are filmmakers such as Christopher Ferguson who are able to take a large swath of complex information and turn it into an enticing explanation and passionately argued visual polemic.
Ferguson’s Inside Job cleverly utilises a wide and well-chosen breadth of stock footage, graphics and interviews to develop a narrative of the causes and consequences of the global meltdown. The graphics form the backbone of the film by showing how the proliferation of credit default swaps, sub-prime mortgages, collateralised debt obligations, mortgage-backed securities and other complex financial products set in motion the calamitous chain of events that led to the collapse of Lehman Brothers and the other well-known fallen angels of the finance world.
The stock footage and interviews serve to expose the chief executives, rating agencies, politicians and academics whose actions are largely to blame for the crisis. Several of the interviewees quickly regret coming on camera. Professors Frederic Mishkin and Glenn Hubbard of Columbia University and Martin Feldstein of Harvard all become visibly agitated when their connections with big business (and the potential conflict of interest that arises from this) are brought up. Bizarrely, Scott Talbott, the chief lobbyist of the Financial Services Roundtable, possibly the nastiest piece of work in the whole film, is able to keep a completely straight face while defending the levels of compensation in the finance industry.
The stock footage in the film is equally as damning. Heads of companies such as Goldman Sachs are seen squirming when pressed in congressional hearings about why they sold clients’ stocks they themselves considered bad investments. Credit rating agencies come in for a considerable amount of condemnation. In one interview, Ferguson is unable to conceal his disbelief that companies such as Lehman Brothers and Fannie Mae held high credit ratings directly before going into free fall. Similarly, he consistently expresses indignation at the fact that the culprits walked away with their fortunes intact.
Aside from Ferguson’s incredulity at the latent corruption within the finance industry and its network of lackeys, the core of the film’s analysis is the argument that that the crisis was foreseeable and preventable. Ample evidence is supplied that the crisis was predicted by several experts. Raghuram Rajan, for instance, talks of how he delivered a paper during his tenure as the chief economist of the International Monetary Fund which warned of the reckless risk-taking facilitated by deregulation. All of the financial bigwigs in attendance at his presentation dismissed his findings. Similarly, Satyajit Das, a former trader, published a book in 2006 which warned of the dangers of derivatives and the potentially disastrous risk they posed to the world’s economic system.
Of those in this cohort however, Nouriel Roubini, author and economics professor at New York University, was the most prescient in his foresight. He was warning about “toxic loans”, for example, well before the crisis began. He also comes the closest in identifying the structural and systematic problems that are to blame. In his book Crisis Economics: A Crash Course in the Future of Finance, he argues against the idea that economic and financial events are sudden, unexpected and unpredictable. Rather, “crisis economics”, he says, is becoming more of a rule than an exception.
What Inside Job lacks is a more sustained attack on these structural problems of capitalism, at least in its radical neo-liberal form. The film appears to make a strong case that the crisis was avoidable, when this is far from certain.
It would have profited greatly from including an interview with John Bellamy Foster, professor at University of Oregon and prominent socialist theorist. In The Great Financial Crisis: Causes and Consequences, he and co-author Fred Magdoff point to the fact that the boom-and-bust cycles have become more pronounced and more frequent. He points out that the 2007 collapse “was preceded by a whole series of lesser economic shocks, of growing magnitude, over the last two decades”. His conclusion is that humanity desperately needs “a system of social use rather than private gain to replace the current rotten system with a more humane order geared towards collective needs.” Ferguson would have made a better film if he had taken heed.
