MovieChat Forums > Inside Job (2010) Discussion > A lot of emotional drivel in this movie

A lot of emotional drivel in this movie

posted 14 years ago by Citizenright1
22 replies | jump to latest

A lot of facts, but not near enough explanation about how and why the lending standards were reduced.

The only mention of Fannie Mae, which was a key player in the debacle, was when they were taken over.

Barney Frank and Chris Dodd get a total pass, when they were part of the problem and both getting benefits from Fannie Mae.

How about showing the congressional hearings where people were pointing out the problems with Fannie and Freddie, and Barney Frank was attacking anyone who brought up the problem.

How about showing the morons Maxine Waters and Gregory Meeks claiming that the complaints against Fannie Mae were racially based because the crook running it, Franklin Raines--who did exactly what Ken Lay did at Enron, was black. A "lynching" is what Meeks called it.

There is a lot left out.

It was especially entertaining to have the Europeans lecturing the U.S. on policy decisions made when trying to prevent the meltdown. But, of course, European countries are in great shape, er...I mean, well...

The Brooksley Born at CFTC part was just skimmed over. How about showing how the Clinton Admin appointees attacked and vilified her as she was trying to regulate the Over the Counter Derivative market? Of which are now $600 Trillion worth of derivatives of all kinds out there. Yes, with a T.

This constant focus on executive compensation shows a liberal-leftist bias that misses the big picture of how we got here. While compensation is an issue, it is a very minor issue in the greater scheme of things.

I give this a C+ only because I think it will spark an interest in the thinkers who watch it to read a book about it all.

[–] jokeco68 14 years ago

It's a commendable film because a lot of people did not know what what the cause of the financial meltdown was. By the time you get down to Freddie and Fanny your getting into a whole new ballgame really. The major issue was and still is collaterizing all of the phony mortgages and bundling them into CDO's and given a AAA rating should be the main focus and that it is something that every citizen should know about.

I know it must be extremely insulting to an American viewer to take criticism from a foreign nation but the unique situation that exists in the U.S. in terms of the political lobbying by the financial industry is something that is extremely dangerous and is the root cause of the problem. Europeans are very upset because they got dragged down with this sinking ship as severely if not more so due to the fact that no nation other than the U.S. can maintain such a staggering debt load and still borrow money.

Finally, the compensation issue can not be ignored any further because there is absolutely no doubt that these buffoons could care less about their respective companies or their shareholders all they are concerned with is making a quick half billion and cashing out. Let the taxpayers of the next 100 years worry about the resulting debt, right? The biggest problem in America right now is that every one is in it for themselves with no regard to the future of the country and the mentality of get rich fast by whatever means necessary and cash out fast. I know this appeals to every American however it only works out for 1% of the population. Human nature is to believe your smarter than everyone around you but your only a fool if you believe that you will be one of the lucky ones.

Everyone gets everything he wants.

[–] Citizenright1 14 years ago

By watching this they still don't know what the cause was.

My comment about the Europeans was, let me spell it out; sarcasm, since the Europeans are in far worse shape than the U.S.

The compensation issue is miniscule compared to the other factors, including negligence on the part of the government and fraud on the part of the investment banks. Frankly ExecComp doesn't mean sht.

[–] The_Dying_Flutchman 14 years ago

Sounds like yer one of those execs.

Let it be unsaid: insignificance is the locus of true increpation.

[–] jokeco68 14 years ago

Is it against your religion to watch movies or to read something other than the bible?

Everyone gets everything he wants.

[–] deeveed 14 years ago

A lot of facts, but not near enough explanation about how and why the lending standards were reduced.

hmmmm..maybe we need a "study", eh??????????????????? But we'd be wasting time.
IJ gives a good overview. We don't need to beat the dead horses I think. And ps some of those living horses are still runnin' "free" in the home of the brave...;-)...

[–] Citizenright1 14 years ago

The interviews themselves were very poor.

The reduction in lending standards led to the debacle. There were other factors that would not have come into play had the standards NOT been reduced. Who reduced the lending standards?

I think that is essential to understanding the most important economic calamity of our time, don't you?

The executive compensation issue is after the fact. And, it is unimportant to why the debacle happened, unless you want to make the case that compensation was tied to revenues which were boosted by the commerce generated by the reduction in lending standards. Well, duh. It's called incentive. However, if there weren't reduced lending standards, there wouldn't have been the ability to flood the economic system with risky loans leading to risky CDOs, leading to risky CDSs, leading to the debacle.

Let's not lose sight of the root causes of the problem by some emotional class warfare issue, hmmmmm?

[–] jokeco68 14 years ago

Citizen, it's ignorant fools like you that ensure that America is fooked.

Everyone gets everything he wants.

[–] Citizenright1 14 years ago

joke, I think you are the ignorant one. Why don't you try to learn something rather than being run by emotion and "feelings" eh? Try a little maturity.

[–] jokeco68 14 years ago

Right back at ya, slick.

Everyone gets everything he wants.

[–] Citizenright1 14 years ago

Try an intelligent response. That would be a switch.

[–] deeveed 14 years ago

The reduction in lending standards led to the debacle. There were other factors that would not have come into play had the standards NOT been reduced. Who reduced the lending standards?

I think that is essential to understanding the most important economic calamity of our time, don't you?

Sure and of course as noted there were a host of issues. I guess my point was that IJ was really a short discourse into the financial calamity and under the circumstances did its job. It was short but did get to some of the real causes.
And the class warfare mentality. Isn't is an issue and a big one at that here in America today? How can it be ignored? Money drives everything around here. It's sickening.

[–] Citizenright1 14 years ago

"And the class warfare mentality. Isn't is an issue and a big one at that here in America today? How can it be ignored?"

Unclear. It is an issue because it is being pushed by politicians who seek to divide the people rather than make the tough decisions to get us out of this mess.

"How can it be ignored?" Why keep bringing it up? Why keep harping on executive compensation when it wasn't the cause of the debacle and is irrelevant to the solutions?

This movie missed big, important causes of the debacle while focusing on relatively unimportant issues. And, it left out key players like Fannie Mae, Barney Frank, Christopher Dodd, Anthony Mozilo. It didn't explain why lenders made risky loans, who encourage the practice and how that led to the taxpayer being on the hook.

[–] deeveed 14 years ago

And the class warfare mentality. Isn't is an issue and a big one at that here in America today? How can it be ignored?"

Unclear. It is an issue because it is being pushed by politicians who seek to divide the people rather than make the tough decisions to get us out of this mess.

Personally, I'd think it's getting harder to jump classes in the US economy. I did but now it's probably a great drifting dream for most in the lower and middle classes. Most who benefited from the debacle have added to their already filled coffers. The rest get the dregs and suffer the eco imbalance. I just don't think it's necessary for the drawing on politicos as "causing" the class divide. They simply report on it from their constituents. Really the problem stares everyone in the face and its plain to see.

[–] sd45-1 14 years ago

"The reduction in lending standards led to the debacle. There were other factors that would not have come into play had the standards NOT been reduced. Who reduced the lending standards? "

Are you really that thick. Do you not understand the profit motive?

The profit motive led to the dismantling of lending standards. Why? Because Wall Street invented this handy "risk laundering" device, an insurance mechanism, that unfortunately, turned out to be a ponzi scheme bigger than Madoffs.

Are you really that far behind the curve to not know the role of derivatives in this? Are you just one of those simple minds still looking feverishly for the smoking gun back under Fannie and Freddie's pillow?

[–] Citizenright1 14 years ago

"Do you not understand the profit motive?" (Are you for real?)

That is what led them to continue to generate subprime loans after the risk was removed from the originator by Fannie and Freddie buying up the paper.

It wasn't the profit motive that led to the dismantling of standards, unless you are talking about the change in the corporate culture at Fannie Mae.

The "risk laundering device" you refer to (and I have never heard it called that) were the credit default swaps on the CDOs, aka derivatives.

The OTC derivative market was totally unregulated and still is.

Fannie and Freddie had a major role in the subprime meltdown, but it wasn't only them.

[–] sd45-1 14 years ago

If you think EVERY sub-prime loan passed through Fannie & Freddie's hands, then you have a serious comprehension problem.

I have news for you, every bank on every street corner BECAME a defacto Fannie & Freddie, and their operational motive had nothing to do with government mandates, and had everything to do with the profit motive.

There are over $700 trillion in derivatives obligations worldwide (10 times the GDP of the world). The housing sector comprised roughly 10% of that (50-60 trillion), and interest rate derivatives are responsible for about $420 trillion of that total.

Only 10% of the 'bomb' (what Warren Buffet calls "Financial WMD's") blew up with the housing crisis, leaving 90% to go off sometime in the future, based upon some other economic trigger. I cannot blame that remaining 90% on Fannie and Freddie, as that 90% has nothing to do with housing. If you think Fannie and Freddie are suspect #1 in the entire derivatives debacle, then you are an idiot. That belongs to Wall Street and its coked-out operatives. But I'm sure you will try to pin it the entire 700 trillion problem on Fannie & Freddie, much to everyone's amusement.

This movie did a good job at explaining Credit default Swaps as they relate to housing and mortgages, but stopped there, and did not explore their use in the remaining 90% of the economy.

If anything, the sub-prime loans did the world a favor, by constituting the weak link that predictably failed, and in doing so, exposed the systemic looting via 'financial innovation' and its 'algortihms' sooner - while we still have time and money to build prisons.

In the meantime, thanks. You really nailed the forensics of a whopping 10% of the problem (rolls eyes).

[–] Citizenright1 14 years ago

"If you think EVERY sub-prime loan passed through Fannie & Freddie's hands, then you have a serious comprehension problem. "

Didnt say that dipsht. Fannie Mae was simply the biggest. You don't have any news for me.

There are approximately $600 trillion in derivatives generated from here, about $1 quadrillion world wide.

Get your facts straight before you come in here, and don't assume.

[–] sd45-1 14 years ago

You are off by a factor of 10. Closer to $60 trillion.

In 2008, when the crisis hit, the total derivatives around the globe, per the Bank of International Settlements, was $680 trillion. At that time, over $420 trillion were comprised of interest rate derivatives totally unrelated to the housing sector.

That difference is only $260 trillion, and some of that comprised other things (GM bailout and its $50 billion in CDS toxic assets, the two oil bubbles leading to $4 gas, all derivatives related, comprising some of that $260 trillion). While I know all of that $260 trillion is NOT in housing, even if I give you that, and say that it was, that would mean that between the housing bubble bursting in 2008 and today, there would have been a secret secondary housing bubble necessary to expand that $260 trillion to the $600 trillion you state. That is my "smoking gun" proof you are simply pulling these numbers out of your a$$.

And BTW, every time you move that figure higher in your attempt to constantly disagree with me, you are condemning your own original premise. You are making people other than Fannie & Freddie the villain, and you don't know it.

Fannie and Freddie (and the private banks who behaved like them) were the loan originators. They had nothing to do with the derivatives created out of their loans. Think of them as the breeder of a race horse. While breeding race horses was indeed their "crime", they did not own the race track or the betting parlor where the *real* damage occurred. When you blame Fannie & Freddie for the derivatives problem, that is the equivalent of blaming the breeder of a race horse for the fact that some guy bet and lost his life savings at the pony track. I don't buy that premise at all. And neither does anybody else.

[–] Citizenright1 14 years ago

No, not 60.

There are $45 trillion in the derivatives called Credit Default Swaps on the CDOs.

There are lots of other kinds of derivatives, about $585 trillion generated from our country. About $1quadrillion worldwide, including that 585

[–] sd45-1 14 years ago

http://www.bis.org/statistics/otcder/dt1920a.pdf

From the Bank of International Settlements.

Global value of OTC derivatives (the part that is rank speculative gambling that serves no purpose in the economy). This does not include exchange traded derivatives (the part healthy to the economy and healthy towards the production of goods and services).

[–] elimc184 14 years ago

Originally posted by sd45-1:

Fannie and Freddie (and the private banks who behaved like them) were the loan originators. They had nothing to do with the derivatives created out of their loans.

You seem to think that the derivatives market is the issue. Perhaps it is an issue. However, how could the collapse have occurred without the government insuring the loans on housing in the secondary market?

When the government started insuring housing through the FHA, VA, and GSEs, the private sector had its risk shifted to the public sector. This threw off the risk-reward ratio for loan origination.

If the primary market actually had to worry about losses, this whole mess would not have happened. Why? Because banks would have to do due diligence when handing out loans. What they do now is cut out the due-diligence (and therefore, expense) of loan origination through complex formulas that spread risk. Moving back to the model of loan origination for housing that we had in the past (pre 1930's) would simplify and reduce the risk of bad loans being made. Sure, APR's would be much higher, but I think that is the price you should have to pay. I think the mortgagor should have to pay for the risk instead of spreading it around to others. It's called the free-market.

My argument is that the government needs to stay out of housing. I blame the fact that housing is not a free-market as the root cause of the financial collapse.

[–] sd45-1 13 years ago

"You seem to think that the derivatives market is the issue. Perhaps it is an issue. However, how could the collapse have occurred without the government insuring the loans on housing in the secondary market? "

The GSE's were a social engineering experiment, that's for sure. But they have existed since the 1970s, and *by themselves* they never created a financial crisis despite the fact that unqualified people have been taking on loans for 30 years.

It was not until 2000, when that 30-year old piece of social engineering got married to Wall Street's "financial innovation", did things really go sideways in a hurry, and get costly very fast.

You are damn right in your Rip Van Winkle-like awakening that the derivatives really were THE ISSUE. They are what took a social engineering problem that was manageable, and turned it into a crisis threatening the global financial system, requiring taxpayer bailouts. Your TARP dollars did nothing for the real estate in question, but rather was spent 100% on the consequences of the derivatives element.

You remember the guy in the movie who was talking about owning a house and buying a fire insurance policy on that house? When that house proverbially burned down due to the weaknesses of the GSE social experiment, there was ONE loss in the system regarding that one piece of property. When you added Wall Street's derivatives element, which enabled 50 people to buy unregulated fire insurance speculatively on that same house, the "insured losses" within the system were suddenly 50 times the value of that one house.

That GSE social experiment, by itself, only created 1x losses for each piece of property. When these GSE's got married to Wall Street's "innovation", the innovation is what turned a simple 1x loss for the system into a 50x loss.

The conservative media is apoplectic over the GSE social engineering element that is behind an insurance loss of 1x, but totally ignores the Wall Street element that magnified each loss 50x. That is bull$hit, and I'm calling all of these political hacks on it.

The 1x loss over a failed govt-backed mortgage was a storm that was completely weatherable. When every broken mortgage suddenly cost the system 50x, that magnification element is what downright imploded the financial firms overnight and took the global system to the brink.

And do you really think that derivatives invented by Wall Street only apply to mortgages? Mortgages were only one piece of betting fodder used by the financial elites to gamble over. The no-doc mortgages simply ended up being the weakest link in a pretty broad derivatives pyramid. Stop blaming the mortgage weak link for exposing the ponzi insurance pyramid for what it was, and start blaming the guys who built the friggin ponzi insurance pyramid to begin with. It's a much more effective use of your time.

And when the next part of the ponzi insurance pyramid falls, it will have nothing to do with mortgages. How will you then blame the GSE social experiments for that part, too?