Inside Job

The documentary starts with Iceland’s financial crisis, the film invited a lot of celebrities in the financial sector, among them are Wall Street bank executives, Federal Reserve members and other US financial regulators and so on. With an approachable attitude expounds the cause and effect of financial crisis to audience.

From the financial engineering point of view, how the crisis form? The United States before the financial crisis to take a "multiple long" regulatory system, multiple refers to the federal and the states are entitled to financial supervision, financial institution regulatory functions. This kind of specialized division of labor and multiple regulatory mechanisms in the United States has been the object of many countries to follow. The system in liberal dominated American do support the great prosperity in the United States, but there is no denying that the system does make US economic order extremely out of control.

‘inside job’ is put forward under the condition of lack of regulation, greedy Wall Street designed a money encirclement game one by one, and eventually led to the crisis. But greed is not illegal, the nature of capitalism cause Wall Street always be greedy.

The real culprit, it is the separation of powers and responsibilities. Another means the insurance of decision and debt capital providers were divided by Wall Street. Banks determinate whether loans to individuals. And then Wall Street put these debts sold to investment banks. Investment banks resolve the debt, enhance and sold to individual investors.

Second culprit is the issue of pricing mechanism, also refers to the model has assume error. The pricing in the first step would be wrong, in fact, the biggest beneficiaries are those who have no money to buy a house, can loan money to buy a house of the poor, and low interest rates and the society as a whole, the biggest loss are investors in the last. But buyers are all Americans, and investors have a lot other foreign people, so, for the United States, Wall Street did a good thing.

Another thing, the problem of bank executive compensation. Compensation includes salary and bonus and link up with enterprise operating performance. The legislature has no evidence to limit an industry practitioner to pay, because it is based on their high profits. What they should do is limit illegal business behavior, as well as conflicts of interest which could lead to crisis.

Churchill proposed that there no eternal friends, only permanent interests. The words are appropriate in this documentary, everything is in order to maximize the pursuit of personal interest. Finally, there seem be not much significance to say economic problems which stand on the moral side. No matter what human nature is good or evil, when desire swelling should tighten our own heart.