Inside Job Movie Review

ANALYSIS ON THE DOCUMENTARY “INSIDE JOB”
A film directed by Charles Ferguson

Narrated by Matt Damon
PART 1: SUMMARY
The Banking and Financial industries were allowed to make risky investments using the
savings and the general public deposits prior to the U.S. economic phenomenon called “The
Great Recession” as concluded by the International Monetary Fund (IMF). Because of the
massive economic meltdown, this was considered as second to The Great Depression. This
sharp economic decline did not only affect the U.S. but as well as the world market and it
varied from country to country in the late 2000 and early 2010.
The repercussions began extremely and highly observed in 2008 causing huge economic
crisis in international scene. But how did this happen? The documentary explained this in
depth on how the problem took place. The main cause of this was the deregulation of
financial institutions way back in the 1980s, which included lending firms, banks, insurance
companies, credit rating agencies and the likes. As a result, these institutions started to play
on their own ways to get maximum profits and income. It was also explained that due to the
deregulation of the three major banks including Iselandsbanki, Kaupping and Glitmnir in
Iceland created a bubble in the economy that burst in 2008.
In 1999, huge financial firms have merged such as Citicorp and Travelers to form Citigroup
which violated the Glass-Steagal Act that prohibits risky investments. Gramm-Leach-Bliley
Act was passed on the same year to facilitate mergers but a lot more took place. Due to
deregulation, many financial firms were caught in frauds like money laundering, bribery, etc.
And because of the lack of concrete laws, grounds were limited to identify these as a
malpractice in the financial sector. Also, with the addition of so called derivatives through
the help of technology, these institutions became more powerful and profitable.
These institutions later introduced the Securitization Food Chain (SFC) where lenders
started to make mortgage loans to home buyers and selling these mortgages to investment
banks which created a new product called the Collateralized Debt Obligation (CDO). The
investment banks paid rating agencies to evaluate these CDOs and imposed an AAA rating.
The bubble was in between 2001 to 2007 when mortgage loans were made more accessible
even to those who could not afford to pay for it and the most affected industry was the Real
Estate Sector which collapsed later on. At first, these loans allowed the middle to third class
families to acquire a home while others wanted more houses and its momentum later on
resulted to the sudden increase of housing prices because of demand.
On the other hand, Credit Default Swap was a trick. These were derivatives issued by the
American International Group (AIG). The derivatives were actually a fraud to real investors
but were projected as safe investments while warnings from renowned economists and
journalists were not heard.
In 2008, mortgage loan holders failed to payback their obligations, global stock markets
collapsed, industrial production slowed, American banks stopped making loans, housing
prices dropped and SFC imploded. In the same year, financial institutions started to collapse
and as a result, it led to the bankruptcy of Lehman Brothers and caused a major disruption
in the global markets. The government under President George W. Bush’s administration
bailed these institutions including AIG but the market continued to fall because it only did
not hit the U.S. but the major economies of the world as well.
Many CEO and decision makers who were responsible for the crisis simply walked away
from the situation and at the time they were needed most. Sadly, a few have remained in
power and have even earned an office in the government.
PART 2: CRITIQUE (ON THE SUBSTANCE)
I am not a big fan of financial and political related films and documentaries but this has
caught my attention from start to finish. I can clearly remember during my economics class
back in college, this was brought up by our professor but was not thoroughly expounded. At
that time, the U.S. was in the midst of the crisis and investigations were being conducted.
This movie explained the great recession in depth and was very informative to everyone
who watches it. It is a detailed analysis on determining the root-cause of the crisis by
carefully assessing the pre, during, and after the catastrophe. It was able to unfold where it
all began, who benefited, who were affected and who were accountable. The financial crisis
in 2008 which cost trillions of dollars and millions of people who lost their jobs and homes
was the second largest financial crisis since the Great Depression. Through extensive
research and interviews of major journalists, politicians and economists, the film was able to
pinpoint the causes and unveiled how massive corruption in the financial and political sector
in the U.S. was and its huge impact on global economies.
APPLICATION (RELEVANCE TO THE AREA OF STUDY)
Every organization operates in a certain environment. This movie was an eye-opener for me
that managing and controlling environments mean planning and ensuring that all factors are
considered in decision making. We need to broaden our knowledge, determine and
understand the constantly changing factors – both internal and external – that affect an
organization. We cannot always control these factors but we need to be aware of it, be
proactive and be ready on how to respond to it.
Technology advancement, rise of new competitors in the market and continuous product
innovations are only a few of the contributing factors that a company would need to cope
up with additional safety measures, precautions and compliance to the regulations.
The documentary “Inside Out” touched and portrayed all the different types of
management environments in terms of Economic, Political, Socio-Cultural, Scientific and
Ethical environments.
OTHER LESSONS LEARNED
The key to sound management practice is to be proactive right from the beginning of the
track. From this film, I realized the huge importance of being equipped with managerial
knowledge and being aware of the environment where you work and you live in. It also
talked about the relevance of creation, growth and survival of an organization.
Everyone wants to maximize and diversify their resources for higher gains but a long with
are risks. In the market scene, it has always been based on how companies introduce
innovative products as a result of multiple competitions and how the general public
responds to it. You need to be able to identify the benefits against costs and its pros and
cons. Decision making is not an easy task especially when you talk about hundreds,
thousands and even millions of dollars that are at stake. It needs further assessment and we
need to be responsible to determine what is essential, and identify and compare
alternatives if there are. As I always say, I have to be frugal and to live within the budget.
Save up but make sure that we know well where we put our money at. Corruption does not
just cut and limit our freedom to choose but it has already corrupted the minds others too.
It has to stop!

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ANALYSIS ON THE DOCUMENTARY “INSIDE JOB”

A film directed by Charles Ferguson

APPLICATION (RELEVANCE TO THE AREA OF STUDY)

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