The Heart of the Matter: The 2008 U.S. Financial Meltdown

Inside Job is quite possibly the best documentary I have ever seen. It chronicles the financial collapse of 2008 and what led the United States into the current recession. Narrated by Matt Damon and featuring interviews with many prominent politicians, journalists, etc, this film is highly informational while also evoking strong emotions from the viewer. I highly recommend seeing it.

"If you're not enraged by the end of the movie, 

you weren't paying attention" 

- Mary and Richard Corliss, TIME

At the turn of the century president Teddy Roosevelt worked hard as a Progressive Republican to create change in the American workplace by instituting new laws and regulations such as child labor reforms, and shortening the American work day to eight hours. Reform continued in the 1930's, With Franklin Roosevelt working hard to ensure another Great Depression would never again happen. More regulations were put into place to keep America safe from Wall Street wheeling and dealing, which contributed mightily to the Great Depression.

Things continued along well in America with the economy growing and our power in the world increasing. Then, in the 1980's Reagan took office and began to deregulate many institutions in the market, such as the Savings and Loan companies. This had a profound effect; corporations and Wall Street realized that they had the power to lobby in Washington, and by using money they could get their way. With their help the Republican Party moved to continue deregulation and encouraging the free market.

The Clinton presidency did nothing to stave off this flow of money and power to Wall Street. In the 1990's Alan Greenspan argued for deregulation of the mortgage industry, saying that it did not need regulating. This is an absurd proclamation, essentially stating that companies in the free market are trustworthy and honorable and will ensure that American citizens are safe and prosperous. Am I wrong to think that most companies are out to turn a profit, and would never take money out of their own pockets to help some unfortunate soul?

Then in 2000 it was announced that the derivatives market was not going to be regulated in any way, and that companies engaging in derivatives trading were exempt from anti-gambling laws. Essentially this allowed the companies to engage in extremely high risk investing and trading, putting the country at risk of a financial collapse. Politicians saw nothing wrong with this scenario, and continued to advocate for deregulation of the market. Consumers lost an estimated $700 million, while the companies in question made $100 million.

Next comes the George Bush era. Under his watch the housing market grew into a giant bubble just waiting to blow up. Mortgages were being offered to people who could not possibly pay them back, along with other large loans. When these were defaulted upon - in the thousands - the bubble burst. Investement banks bet against these mortgage packages they were selling to other companies, knowing full well that they were likely to default. This insurance is what allowed the investment banks - such as Goldman Sachs - to get even more money out of this scheme.

House ownership was at an all time high in 2007, while savings was at an all time low. Now, one could certainly argue that people are responsible for themselves and their actions. If one does not choose to be responsible with their assets then it is their own fault for winding up in a bad financial situation. However, due to predatory lending and poor education in our country, many people were perfect targets for these companies. They were told by so-called experts that they were making a smart investment, and that they would not have trouble paying back these loans - in fact, they were told that debt is good and American because it builds up the market as well as your personal credit. Too bad these were lies, and most people defaulted quickly on these loans, winding up destitute and homeless.

This seems like a clear case of fraud, however these companies were simply taking advantage of a situation the government created. First, politicians (mostly right wing) helped to deregulate the market, allowing companies full control over the derivatives market. Then they turned a blind eye to what these companies were doing to American citizens. The saddest part is that Obama re-elected many of these politicians to his cabinet, allowing everyone to get away with the terrible economic situation that they created. No one has been or will be punished, and again the American tax payer is left shovelling the shit.

In the end we are left with a choice: do we blame the politicians who allowed this type of behaviour from capitalists, or do we blame the capitalists and companies themselves for taking advantage of our country and people - though technically not doing anything illegal, just highly immoral?

Sources: http://www.sonyclassics.com/insidejob/site/#/events