Inside Job

I just took the time to watch Charles Ferguson's searing documentary about the 2008 financial meltdown, Inside Job.

The film is not a rant.  It does well at explaining the repackaging of risk into derivative securities, the unregulated "insurance" market of credit-default swaps, and how in the edn even small changes in the underlying assets could bring down the whole over-leveraged facade.

But as one lobbyist after another professes incomprehension that anyone could question the wisdom of Wall Street's obscene bonus culture (millions of dollars if you win! and if you lose, someone else goes bankrupt), one cannot but think of Upton Sinclair: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it."

Academe is not exempt. See the chair of Harvard's economics department reduced to  bumbling incoherence as he tries to explain how there is no conflict of interest when faculty members are paid six-figure sums to write objective-looking reports that just happen to promote the interests of their paymasters.  No, they don't have to disclose the payments, or even the fact that they had been paid.

I suppose the follow-up is to read Confidence Men and learn how the foxes are still in charge of the henhouse.  Sigh.

Seriously, watch this movie.  Key line at the end: "Real engineers build bridges. Financial engineers build dreams. And if those dreams turn out to be nightmares, someone else pays."