21 Mar 2011

Inside Job: lessons to be learned?

Last night I went to see the Oscar winning documentary, Inside Job. Wow! Some movie – an absolute shocker. It is a brilliant account of who was to blame for the woeful behaviour of the great global financial houses in the build up to the great “meltdown” to 2008. In short, think of a Wall Street name and they were all at it.

The invention of derivatives, and bundles of debt instruments that in some way left everyone (except the poor benighted American house buyer) an eternal winner was both hatched and encouraged by individuals and companies whose names are watchwords in the world of finance. And I use the present tense, because as the film deftly displays, they are all still there, in the engine room and at the helm of the global financial machine.

Few escape blame, but Alan Greenspan, Larry Summers, Timothy Geithner, and so many others are identified by name. Many refused to be interviewed for the film, but many agreed and then sat in front of the camera crucifying themselves.Above all there were two areas of revealing compromise. Firstly the extent to which the AAA rating agencies are completely in bed with the companies they rate. Secondly that a cascade of the great “Ivy League” University Economics Professors are being paid millions by corporate America both to advise and to sit on their boards. According to the film, Harvard, Columbia, and other business schools have no regulatory system for monitoring these potential conflicts of interest.

The film sets out case after case of what it describes as gross criminality by known names, against whom no action has ever been taken. This is a completely ‘must see’ movie. But more, in this British Budget week, some may see it as a call to arms.

This is not just an American affair, this is global. In effect, the film demonstrates that no meaningful action has been taken to stop it happening all over again. Worse, that many of the agents of what went wrong, still have their hands on the major levers of global financial management.

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