TheDaak review

Movie Review

Raheel Bashir

Like any other adherents of fundamentalism, Market Fundamentalist¹s were left flummoxed when the entire edifice built upon the assumption that ‘markets know best’ came crashing down in 2008. The financial recession is estimated to have caused $20 trillion loss to the global economy, making it the worst crisis since the Great Depression of 1929. The fall of Lehman Brothers sparked a domino effect that engulfed the markets of capitalist economies. The global financial infrastructure collapsed like a house of cards. What caused the financial meltdown? How did the crisis play out? Who were its architects and key players? What role did the political class play? Who bore its consequences? How did the actors behind the financial malfeasance escape unscathed? These are some of the questions that Charles Ferguson explores in his tour-de-force documentary Inside Job. With Matt Damon’s narration in the background, the five part documentary features interviews of varied figures such as government officials, central bankers, wall street executives, hedge fund managers, lobbyists, economists and financial regulators. Inside Job lacks the flamboyance and artistic flair of its mainstream cinema equivalent, The Big Short, however there is no dearth of jaw-dropping revelations. The sheer racketeering that Ferguson reveals, leaves one infuriated and seething with righteous indignation. It painstakingly narrates the morass of ethical misconduct, conflict of interest and degeneration of an entire academic field.

The frenzied speculation by the wall street bankers was geared towards the sole goal; maximisation of individual wealth. The immense concentration of wealth and the grotesque inequality it bequeathed were not simply an uncontrollable consequence of iron laws of free-market. Wealth and power transferred to a super-rich “grifter class”² was a result of laws written by very visible hands. Inside Job is an indictment of the political system of the USA. Both the political parties of the USA — Democratic and Republican –  are indicted by Ferguson for aiding and abetting the rise of these powerful financial institutions, often deemed as ‘too big to fail’. Investigative journalist Matt Taibi likens an investment bank to ‘a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.’ Depicting the scenic Nordic landscape, the opening scene immediately begins to narrate the experiment in financial deregulation undertaken in Iceland in early 2000s. As the banking was let loose, a handful of billionaires amassed roaring wealth. When the bubble burst, unemployment rate shot up, housing prices became unaffordable and the exemplar of European social democracy was mired in an unforeseen economic crisis. This was a minor whiff of something more sinister brewing in the splendid high-rise buildings of New York.   

After the great depression of 1929, the architects³ of the global financial system devised a system of fixed exchange rates. This was intended to rein in the depredations of financial speculation that characterised the gilded age. Banking was reduced to a boring and a minor part of the capitalist economy. Come 1980s, the genie was released from the bottle. Myriad policy measures were instituted by the Reagan administration that deregulated banking. The financial firms grew bigger and bigger. As the documentary explains, capital holdings of Morgan Stanley soared from a few millions to several billions in a span of a few decades. The decades post 1980 also witnessed numerous mergers, giving rise to massive conglomerates such as Citi Group and J.P. Morgan Chase. The bankers could now undertake risky investments without having to worry about the pitfalls, creating what economist Susan Strange calls a “Casino Capitalism.”⁴ The financial industry put human ingenuity to its great benefit by devising sophisticated products such as collateralised debt obligation (CDO) and credit default swap (CDS). These finance products, basically gambling devices, could be traded in markets and involved investments worth billions of dollars. The prevailing economic doctrines such as efficient market hypothesis and rational expectations theory forbade regulating these derivatives. By the end of 1980s the chickens came home to roost, the USA witnessed its first post-war economic crisis. It was the first among a series of economic crises that plagued the American economy till the great recession of 2008.

The stock market soared, corporate honchos pursued huge profits and CEOs bagged huge bonuses, not least thanks to Bush Jr.’s tax cuts. Wall Street executives revelled in their dazzling mansions. Like the Frankfurt School, that endeavoured to synthesise Marx and Freud, Ferguson seeks an explanation of Wall Street opulence through political economy as well as human psychology. The documentary explains how certain parts of the human brain are stimulated by the sight of money. From penthouses to yachts, race courses to lawn tennis courts, prized artworks to jet fleets, wall street bankers hoarded it all. The masters of the universe never had it any better. Ferguson’s lens captures the unease with which one finance industry lobbyist justifies this outrageous opulence. Unbeknownst to the apparatchiks running the US economy, the housing bubble based upon sub-prime loans and certified by credit rating agencies, was about to pop. Inside Job captures the cocksure attitude of the masters of the economy. The voices that sounded the alarm were ignored or drowned by a deluge of intense flak. As the bubble bursted, its reverberations were felt across the globe. The USA witnessed a massive surge in homelessness, unemployment soared in the Eurozone and millions of migrant workers in China were laid off. Individual vices did not lead to public benefits. The  general population footed the bill for shenanigans of Wall Street speculators, whereas the latter pulled an houdiniesque escape. It was a stark manifestation of socialism for the rich and free-market discipline for the poor.

Ferguson comes into his own in detailing the conflict of interest of various actors who join the financial sector. The camera pans to a revolving door, demonstrating the malice that afflicts higher reaches of the government. There exists a revolving door between banks and the government. The bank executives enter the government offices and legislate laws favourable to their past and potential employers on wall street. What is good for wall street is often bad for American people and the world at large. Apart from government and finance industry, Ferguson subjects the discipline of economics to scathing criticism. Prominent economists such as Dean of Columbia’s Business School, Glenn Hubbard were rife with conflicts of interest. Economists not only offered an intellectual defence of Ponzi schemes of wall street but also shielded it from any prospective audit. One must guard against perceiving the ignominious economists interviewed in the documentary as a case of few bad apples, rather the entire economics discipline was deeply intertwined with the neoliberal project.⁵

Neither the wall street executives nor the economics discipline had its moment of reckoning. The masters of mankind got away with a minor slap on the wrist in the form of hostile senate hearings and the economics discipline has seen resurgence of neoliberal doctrine. Barack Obama, who campaigned on the promise of hope and change not only failed to bring to book the corrupt bankers, instead he rewarded them with lucrative positions in his cabinet.⁶ As the financial crash left people decrepit and fending for themselves, harsh austerity measures were imposed to ‘balance the books’. Fiscal profligacy for banks in the form of bailouts was accompanied by fiscal belt-tightening for the poor. The financial crisis is not behind us and we are still living with its consequences.⁷ Apart from the economic misery, financial crash and the ensuing austerity has rejuvenated the authoritarian far-right across the globe. The crisis has churned political demagogues that have not only scuttled democracy, but threatened organised human survival by accelerating the race to climate disaster. The fight for democracy and justice is a tough one, with powers that-be determined to perpetuate the status quo, nevertheless Inside Job exhorts audiences to persist on the battlefield as ideals such as democracy are really worth fighting for. 

References

1. Mirowski, Philip. Never Let a Serious Crisis go to Waste: How Neoliberalism Survived the Financial Meltdown. London: Verso, 2014.
2. Strange, Susan. Casino Capitalism. New Jersey: Wiley-Blackwell, 1986.
3. Taibi, Matt. Griftopia. New York: Spiegel & Grau, 2010.
4. Tooze, Adam. Crashed: How a Decade of Financial Crises Changed the World. London: Penguin Books, 2019.

NOTES

1. The term “market fundamentalism” was used by Nobel Prize winning economist Joseph Stiglitz to describe the policies premised upon devotional belief in the ability of unfettered markets to deliver economic prosperity. ↩︎
2. Taibi, Griftopia. ↩︎
3. The post-war global financial system was devised at Bretton Woods, New Hampshire in 1944. Notable among its architects was the British economist John M. Keynes. ↩︎
4. Strange, Casino Capitalism. ↩︎
5. Mirowski. Never Let a Serious Crisis go to Waste. ↩︎
6. Obama’s cabinet was almost entirely composed of people from the financial industry, earning it the moniker “wall street cabinet”. Also, the people he appointed in his economic recovery panel were the same whose policies had caused the crisis in the first place. ↩︎
7. Tooze, Adam. Crashed. ↩︎

Raheel Bashir is a research scholar at Centre for Political Studies, JNU. His interests include intellectual history, neoliberalism and Kashmir studies.