...What caused the global economic crisis, and what could have been done (by governments or the private sector) to prevent this? Also, give your personal thoughts on this issue. My personal thoughts on this issue: After watching all five parts of the movie, I think the global economic crisis key factor was caused by deregulation which began since Reagan administration, because it contributed to the real estate bubble and allowed greedy and overpaid banks to go on unreasonable leverage. Regulatory bodies allowed privatization of the banks, dropped the regulations that limiting the investments of the banks and amounts they could borrow. The banks, Wall Street traders and investors and mortgage lenders failed to look at what they bought and ignored risk management. When the going is good, they pocket more than their fair share. The banks borrowed more than several times of their value. Derivatives allowed the lender to repackage the loan and sell to investment banks, which in turn repackage and sell them to investors without considering if the customer ever pays the loan back, since they have their money. Banks and greedy lending groups were showered with incentives to give loans to anyone for exorbitant interest rates, and since nobody cared if the loans were repaid, the commission alone was all that mattered. The massive amount of liquidity in the system and the hunger for mortgages resulted them to repackaged the loans into collateralized debt obligations (CDOs), with numerous...
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...After watching the Inside Job video, the term Global Economic Crisis of 2008 or Global financial Crisis that I understood is where a period of time, there was a great depression on workers, consumers, producers and the peoples due to major losses that happened globally between investment banks, insurance company, Audit firms, financial services firms and other multinational corporations. What are the causes that these entire gigantic firms led to major losses? This economic crisis had cost ten millions of people lost their savings, their jobs and their homes. The first part of the video was about Iceland country. Iceland is such a beautiful country with fresh air, foods, efficient operations of geothermal and hydroelectric and where the economic was stable in marketing before the crisis happen. Iceland is one of the high standard living countries. In 2008, the population is very high about 320,000 and the GDP of the country was $13billion, the bank had major losses about 100billions. During the year of 2008, Iceland banks collapses due to borrowers unable to settle their debts from lenders. Unemployment triples in 6 months. The three banks in Iceland which are Iceland’s banking, Kaupping and GLINTR had borrowed money which is three times the economics of Iceland. Government had financial deregulation. The government could not able to protect the citizen during this crisis. Collapses of major bank in US and Iceland are main causes to this crisis The major Investment banks which...
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...Project Report Subject: Islamic Banking & Finance Submitted to: Sir Hamad Rasool Bhullar Submitted by: Maria Saleem (l1s10bsaa2009) Imran Arif (l1s10bsaa2031) Zeeshan Ahmed (l1s10bsaa0033) Gohar Nouroze (l1s10bsaa2018) Hassan Sarib (l1s10bsaa0011) Umair Khan (l1s10bsaa2006) Inside Job Inside Job is a 2010 documentary film about the late 2000s economic catastrophe Charles H. Ferguson. In five parts, the film delves into how changes in the policy environment and banking practices helped generate the financial crisis. Background of Iceland: Iceland had a stable environment and it was a complete structure of a modern economic society. Its population was 320,000 with a GDP of $13 billion. Gylfi Zoega Professor of Economics at the University of Iceland said that, “A fine location for families to live happily.” In 2000, Iceland’s government began a policy of deregulation. This set up the basis for the banks to upload debts when the foreign companies were accumulated. As the crisis unfolded itself the banks became unable to refinance their debts. The financial crisis of Iceland was the largest suffered by any country in the economic history. It was a political crisis collapse of all the three major privately owned commercial banks, with their difficulties in the refinancing their short term debt and run on deposits. In September 2008, Glitnir bank would be nationalized followed by the Landsbanki. Two days later another bank, Kaupthing was also nationalized...
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...banks in what "Inside Job" calls "one of the purest experiments in financial deregulation ever conducted". The result was disastrous. The banks revelled in excess and unchecked greed. They developed an enormous appetite for risk and went on a borrowing spree the likes of which had never been seen in Iceland before. In a few short years Iceland's banking sector collapsed. "Finance took over, and more or less wrecked the place," Icelandic economist Gylfi Zoega says on film. "In a five-year period, these three tiny banks, which had never operated outside of Iceland, borrowed $120 billion, 10 times the size of Iceland's economy. The bankers showered money on themselves, each other and their friends. There was a massive bubble. Stock prices went up by a factor of nine; house prices more than doubled. The banks set up money market funds. And the banks advised deposit holders to withdraw money, and put it in the money market funds. The Ponzi scheme needed everything it could, huh?" This collapse could have proved an early warning signal for the US, but policy makers like Greenspan were as blind to Iceland as they were to America's institutional memory. The Great Depression that lasted four cruel years, ended in 1933, and only really beaten by the advent on World War II, appeared to leave no lasting lessons. The tragedy brought home by watching "Inside Job" is the realisation that the global financial meltdown that saw millions of ordinary consumers lose their homes, jobs and savings...
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...t interests me when questionable but long-unquestioned business practices attract fresh scrutiny and then, surprisingly quickly, transition from being ignored or tolerated to being generally denounced. I suspect this type of attitude shift is happening now in the context of conflicts of interest confronting academic economists. Such conflicts can arise when, for instance, a distinguished economist testifies before Congress, is interviewed in the press, or otherwise weighs in on policy debates without disclosing that, in addition to his academic affiliation, he also has financial/professional ties that may color (or appear to color) his objectivity. Several recent developments have drawn attention to the issue. First, there’s Inside Job, a documentary film that explores the causes of the financial crisis and deals harshly with high-profile academic economists who had undisclosed financial ties. For example, the film includes a painful-to-watch interview (available online) in which Frederic Mishkin, a professor at Columbia University’s Graduate School of Business and a former Federal Reserve Governor, reluctantly admits that Iceland’s Chamber of Commerce paid him $124,000 to write a paper endorsing the country’s stable business environment, a fact not disclosed in the paper. Next, there’s Financial Economists, Financial Interests and Dark Corners of the Meltdown: It’s Time to Set Ethical Standards for the Economics Profession (available online), a research paper...
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...Inside Job The American financial industry was regulated from 1940 to 1980, followed by a long period of deregulation. At the end of the 1980s, a savings and loan crisis cost taxpayers about $124 billion. In the late 1990s, the financial sector had consolidated into a few giant firms. In March 2000, the Internet Stock Bubble burst because investment banks promoted Internet companies that they knew would fail, resulting in $5 trillion in investor losses. In the 1990s, derivatives became popular in the industry and added instability. Efforts to regulate derivatives were thwarted by the Commodity Futures Modernization Act of 2000, backed by several key officials. In the 2000s, the industry was dominated by five investment banks (Goldman Sachs, Morgan Stanley, Lehman Brothers, Merrill Lynch, and Bear Stearns), two financial conglomerates (Citigroup, JPMorgan Chase), three securitized insurance companies (AIG, MBIA, AMBAC) and the three rating agencies (Moody’s, Standard & Poor's, Fitch). Investment banks bundled mortgages with other loans and debts into collateralized debt obligations (CDOs), which they sold to investors. Rating agencies gave many CDOs AAA ratings. Subprime loans led to predatory lending. Many home owners were given loans they could never repay. During the housing boom, the ratio of money borrowed by an investment bank versus the bank's own assets reached unprecedented levels. The credit default swap (CDS), was akin to an insurance policy. Speculators could buy...
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...THE INSIDE JOB The documentary is split into five parts. It begins by examining how Iceland was highly deregulated in 2000 and the privatization of its banks. When Lehman Brothers went bankrupt and AIG collapsed, Iceland and the rest of the world went into a global recession. Part I: How We Got Here The American financial industry was regulated from 1940 to 1980, followed by a long period of deregulation. At the end of the 1980s, a savings and loan crisis cost taxpayers about $124 billion. In the late 1990s, the financial sector had consolidated into a few giant firms. In March 2000, the Internet Stock Bubble burst because investment banks promoted Internet companies that they knew would fail, resulting in $5 trillion in investor losses. In the 1990s, derivatives became popular in the industry and added instability. Efforts to regulate derivatives were thwarted by the Commodity Futures Modernization Act of 2000, backed by several key officials. In the 2000s, the industry was dominated by five investment banks (Goldman Sachs, Morgan Stanley, Lehman Brothers, Merrill Lynch, and Bear Stearns), two financial conglomerates (Citigroup, JPMorgan Chase), three securitized insurance companies (AIG,MBIA, AMBAC) and the three rating agencies (Moody’s, Standard & Poors, Fitch). Investment banks bundled mortgages with other loans and debts into collateralized debt obligations (CDOs), which they sold to investors. Rating agencies gave many CDOs AAA ratings. Subprime loans led to predatory...
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...Introduction: Inside job is a movie produced and written by Charles Ferguson mostly recognized as the founder and president Representational pictures, Inc. In this film he has produced he is able to make people understand how the most outstanding leaders of finance and the government itself have contributed to the financial crisis of the world with a clear view of how it began emerging up till today’s financial world. However, with the help of Matt Damon narrating the story through the documental it is possible to see the reaction of some of the major head finance representatives of the United States whom still today continue contributing to the collapse of the global markets. Nevertheless, the documentary in five enriching parts, blackmails the procedures, interferences, and, provisions that crashed the markets in the USA causing a major impact in global potencies such as Iceland. Inside Job opens up with a tremendous case study of Iceland unfolding how the market crash has caused three of its major banks to collapse. Iceland used to be a stable nation with low levels of criminality, a wise and strong educational system, and powerful in both stability and its financial systems. However, the global crisis of 2008 cost 10 million people to loose their jobs, savings and even their homes. Basically what was causing it wasn’t only its financial crisis but also overpopulation of over 320,000, a GDP of 13 billion and bank losses of 10 billion. In this way comes Alcoa into the...
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...NAME : JAWAD KARIMI ID NUMBER :05048569 INSIDE JOB: Inside Job is a 2010 documentary film about the late 2000’s financial crisis . The film is in five parts the film explores how changes in the policy environment and banking practices helped create the financial crisis. The movie starts with showing the Iceland bank where it all started from the land scape is shown green and fresh but then as the corporations moves into the country it becomes muddy and dry land with pollution. In a context of global economic crisis, everyone appears to be blaming the other in order to find who is responsible for such a global decline in growth, important rate of unemployment, rising protectionism... Thus, it seems relevant to wonder about the key stages of what has been called “The Great Recession” which began approximately on 15th September 2008 with a huge “domino effect” that was born right after the US government allowed the investment bank Lehman Brothers to go bankrupt. Indeed, the American firm implanted in London did not follow UK law, which caused its loss and is one of the numerous convincing facts showing that economic issues are directly linked to business law. After that, people started looking for elements that should have alarmed them. The example of the Greenbury Report (published in 1995) was destabilizing since it showed that corporate governances were already concerned about excessive executive remuneration because of previous cases...
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...ide JobInside Job (Sony Pictures Classics). Produced, written and directed by Charles Ferguson. Review by Marsha Feinland Inside Job provides a comprehensible lesson on the current economic crisis and an entertaining expose of the slimy players behind it. The movie starts in Iceland. A formerly prosperous population suddenly lost its wealth, income and job base when the economy collapsed. The government had privatized the banks and deregulated industry, allowing speculators to finance risky operations with questionable loans. The example is jarring, but we never find out how or why a seemingly rational people allowed the government and some nefarious entrepreneurs to destroy their lives. The movie provides more historical background for the crisis in this country. The premise is that it all began in the 1980's with deregulation of the banks under Ronald Reagan's presidency. The disastrous result was the Savings and Loan debacle and subsequent bailout. The banks stepped up their debauchery under the Clinton administration. Clinton put Robert Rubin and Lawrence Summers in charge of the economy, letting the business school-investment banking cabal call the shots. And shoot they did. By now most of us know that under Clinton, congress passed the Graham-Leach-Bliley Act which repealed Glass–Steagall. That legislation had maintained a firewall between banks and insurance companies. What is interesting is that it was repealed after Citigroup, a bank, had already acquired Travelers...
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...The documentary “Inside Job” is based on the financial crisis of 2008. It takes a look at all the relative players and their roles in the crisis. The movies highlights the bankers, big business, the politicians and even the academic arena and how their decisions caused one of the greatest recessions and global economic crisis in history. This recession resulted in: cost the world 10+ trillions of dollars; 30 million unemployed; and doubled national debt of US. What happened? The movie starts out talking about Iceland and how it quickly succumbed to a financial crisis after privatization of the banking industry in just a short period of time. The documentary then goes into depth with how the collapse of Lehman Brothers and AIG caused the economic crisis of 2008. It discusses how deregulation in the banking industry led to greed of the bankers, rating agencies and regulators. This greed led to a lot of wealthy business and CEO’s but led to 100s of thousands of people losing their jobs, homes and livelihoods. They also lost confidence in the government and the ability to protect them from future failures. What caused it? The movie suggest that deregulation in the financial industry was the main culprit of the crisis. “Scaling back of government oversight and the weakening of checks on speculative activity by banks began under Reagan and continued during the Clinton administration. And with each administration the market in derivatives expanded, and alarms about the dangers...
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...The film Inside Job offers in-depth evidence of the complex relationship between government and business by showing how business under the auspice of capitalism and government under the mantle of democracy is collusive and incestuous in their ultimate pursuit of profit and power. The film clearly captures the systemic corruption of the United States by greedy and morally unbalanced industry leaders and their cohorts who engineered a financial catastrophe in 2008 not seen since the great depression. The film’s writer and director Charles Ferguson contends that the collapse of the financial industry could have been prevented had there been more regulation of Wall Street. He clearly establishes his line of reasoning through a series of interviews with many of the major players in government and the financial industry who indirectly and in some cases directly contributed to the financial fiasco of 2008. The financial collapse was caused by three main contributing factors; first, a toxic sub-prime mortgage market engineered by the financial industry; second, government’s failure of regulatory enforcement of the financial industry and Wall Street; and third, a collusive relationship between business leaders and government officials elected to curtail the same crisis they helped create. The financial collapse of 2008 resulted from a toxic sub-prime mortgage market engineered by an out-of-control industry that led to its inevitable implosion. In September 2008, the global financial...
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...Inside Job The old-fashioned way for issuing loans was “originate and hold.” Banks would take short-term deposits and other sources of funds and use them to fund longer term loans to businesses and consumers. Banks would hold these loans to maturity and have an incentive to screen and monitor the borrower’s activities even after a loan was made. This model exposed the banks to potential liquidity, interest rate, and credit risk. In order to avoid these risks, commercial banks shifted to “originate and distribute.” An underwriting model in which loans were originated and quickly sold. This innovative way removed the risk from the balance sheet of financial institutions and shifted the risk to other parts of the financial system. The FI’s were not exposed to the risks of old-fashioned banking, and had little incentive to monitor the activities of borrowers to whom they loaned to. They lowered credit quality cut-off points, offered low rates on adjustable rate mortgages (ARM). Under the old-fashioned issuing of mortgages, FI’s would’ve never pursued low credit quality borrowers for fear of default. Asset securitization and loan syndication allowed banks to retain little or no part of the loans, which meant little or no part of the default risk that they originated. They were ignoring long term credit risk concerns altogether. While the old-fashioned way exposed the banks to risks, the innovative way not only exposed the banks, but...
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...Inside Job This great documentary told of how the United States affected the economy on a global scale, sending the financial world into a downward, spiral of which we are still feeling the after affects. This financial fiasco devastated the entire world because of the actions of a few greedy, able to get legislation passed allowing lenders to careless, selfish, ravenous, uncaring millionaires. The Reason Inside Job is a documentary about the 2008 financial crisis in the United States and abroad. It depicts how there are major conflicts of interests between the areas of politics, universities, and investment banks. In the U. S. the financial crisis started with the bankruptcy of the Lehman Brothers and AIG, one of the largest insurance firms in the U.S. The failure of these two companies in the U. S. affected other countries, in that, because these two companies had offices all over the world their bankruptcies in the U.S. meant they had to close down their offices everywhere. To add injury to insult, lobbyist were able to get legislation passed allowing lenders to sell mortgages to investment banks. These banks combined mortgage loans, with thousands of other loans which created complex derivatives. From this, now, when homeowners pay their mortgages, the money goes to an investor. It was also revealed that investment banks pay rating agencies to give AAA ratings to CDO’s. The financial system was a ticking time bomb, it was just a matter of time before it exploded...
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...Inside job La crisis de los Estados Unidos que estalló en 2008, traspaso limites y tocó a la economía mundial, causando una desaceleración en el crecimiento económico de muchos países, esto fue llamado la Gran recesión. Esta crisis fue causada principalmente por la desregulación del sector financiero de este país, que permitió que las firmas bancarias y sus conspiraciones sobre el mercado bursátil, aprovecharan y manipularan todas las transacciones realizadas en Wall Street. Los participes de estos hechos conocían el sistema, las leyes que lo regían y los caminos a seguir para que nada se interpusiera en su camino; los banqueros, entes reguladores, y gobierno tenían conocimiento de lo que estaba ocurriendo. El planteamiento de nuevas leyes y la asesoría de economistas facilitaron muchos de los movimientos que empeoraban la situación; sin imaginarse la magnitud de las consecuencias a nivel económico y social. Otros economistas escribían artículos en donde luego de estudios predecían la catástrofe que se acercaba, afirmando que ninguna organización buscaba proteger y velar por la seguridad de los clientes y en general de los ciudadanos. Se creería que los profesionales en finanzas y economía debieron parar a tiempo estos movimientos bancarios y de inversión, desde que la inseguridad y falta de transparencia se apodero del mercado bursátil. Por el contrario según el documental, pareciera que por la fuerte influencia económica estas personas sobrepusieron sus beneficios...
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