Inside Job: Outside Opinion

Chez Buce finally caught up with Charles H. Ferguson's Inside Job last night.  I see that  Rotten Tomatoes rates it  at 98 percent positive--critics; viewer is a mere 90.  I guess you can count me as (to coin a phrase) one of the two percent.  That is: it's not really awful, and it makes a lot of noncontroversial assertions.  Also a few really funny moment, particularly when a couple of guileless professors go all tongue-tied in trying to explain or justify their cushy consulting gigs.

But at the end of the evening, you find yourself asking: so, what did I learn?  The answer is exactly nothing.  You really aren't a bit wiser as to what, exactly, triggered the great uproar of '08--unless you count it as an answer to utter an expletive like "greed."  Aside from that--which, admit it, you could have done before you saw the movie--you are not a bit wiser than you were before,  perhaps less wise insofar as you think yourself moreso.  Put differently--I can't think of a single worthwhile question about the whole affair that was answered or even asked during the entire near-two hours.

By "worthwhile question," I mean things like: why did this crisis metastasize so much further and faster than any other in the postwar period?  What role (if any) can we assign to the government's "expand-homeownership" policies?   Was repeal of Glass Steagall really a factor (and if so, what factor?).  If the Feds had let Bear Stearns would the whole mess have ended more quickly and cheaply?  If the Feds had not let Lehman fail, would we have avoided the financial near-death experience?  What concatenation of factors led so many CEOs to blow up their own companies?  Why Iceland?  And while we are at it, why did Iceland recover so fast?

I could go on for pages, and I am sure there are a lot of questions  I wouldn't have thought of then.  I'm not so foolish as to expect ready answers--as the wise men say, we can't agree on the cause of the great depression yet, hard to expect we would have a handle on this its kid brother. But these are the sorts of questions that are worth our time and effort.

It may be that the topic is just too vast for a single film. Fine, then why not cut it down to size?  It may be the topic just doesn't lend itself to audio visual presentation.  But on this point, I'm not persuaded: I recall that PBS did a one-hour special back in '09 on the tussle over derivatives deregulation that was organized, crisp, to the point, and instructive.   Meanwhile, perhaps the final question about Inside Job is why anybody would watch it at all.

The One-Minute Meltdown

It comes to this, doesn't it. There's a trillion--two trillion--however-many-trillions--of dollars that have gone missing out there. No;not "gone missing;" in truth, they never were there, but now we know they aren't there and somebody has to take it. Seems to me there are two choices:

• The taxpayers, by doling out money to buy toxic assets at inflated prices; or

• The investors, by bearing the downside risk inherent in their investments.

The way I've framed it, I suppose it sounds like I favor the latter. Well, yes, I am tempted, which I guess puts me squarely in the Krugman/Cantor wing of the commentariat. So, guilty as charged, or at least "not innocent."

I suppose the main reason for my continued hesitancy is the fact is that I still don't know (and I suspect nobody else does, either) just who are the "they" who hold all those sour investments. There seem to be so many of them, so widely distributed. The near total-collapse of accounting integrity has to beaar a lot of blame here. And of course, there is always the risk that some of those investors might turn out to be me: the long road may run direcct to my pension fund. There is also the little matter of system meltdown--a rerun or an aggravation of the kind of lockdown we fell into after Lehman Brothers went under last fall.

Are the right kind of judgment on these issues from our betters in the Seat of Power? At the risk of betraying a centrist, anti-populist vein, I'd say at that on the whole, I think so. Our Betters almost certainly have better information than we (I) do, and there is at least a chance that they dare doing right. I suppose my biggest concern on this point is a mega-populist imuplse: the intution that the bums in Washington are altogether too cozy with the people they are supposed to control--that Larry Summers (he of the $135,000 speaking fee) simply cannot countenance any solution that would impose pain on his buds around the fireplace and under the moosehead of the gentleman's club where the decisions that mess up all of our lives usually get made.

Update: It's the flavor du jour; cf. link, link.

Big Three Wages Again

The trustworthy and honorable Felix Salmon says that the $70-an hour meme is bollox. I bought it (link); if Salmon is right, then I am wrong. But it seems to me the bedrock issue--which Salmon does not address--is how the Big Three package compares to the Asian upstarts. So, how do they compare? Are they on a par, one with another? I doubt it--and if not, the original argument still has traction, even if the particular number is wrong.

Update: Also a good comment thread, although (virtually) no attention to the "comparison" issue, which is the one that interests me.