November 2, 2010

"Inside Job"

From my review in Taki's Magazine:
Typical documentaries, such as Waiting for “Superman” and Freakonomics, are made by people who know more about lenses and lighting than about their subjects. In contrast, Inside Job, a competent condemnation of Wall Street’s role in the recent economic unpleasantness, is the work of Charles Ferguson, a smart, rich generalist who didn’t get into the movie business until he was 50.

After obtaining a Ph.D. in political science from MIT, Ferguson cashed in on the dot-com bubble. In 1996, he sold FrontPage, a mediocre web-development program (which I, unfortunately, used for years) to Microsoft for $133 million. Not surprisingly, Inside Job contrasts Wall Street’s ethical cesspool with Silicon Valley’s supposedly shining moral high ground. (No mention is made of the options-backdating chicanery tainting Steve Jobs and other tech titans.)

Ferguson is angry that the Obama Administration hasn’t arrested any investment bankers. He helpfully outlines a hardball strategy for potential prosecutors: Round up Manhattan call girls and persuade them to roll over on their trader johns for putting hookers and blow on company expense accounts as tax-deductible “research.” Then terrify the traders into snitching on the Big Boys.

Instead, Obama has appointed numerous banksters to high office.

Read the whole thing here.

14 comments:

Kylie said...

"The recent economic unpleasantness"??

Love it.

Nenad said...

Steve, why do you think that US and UK investment bankers have been vile, while French, German and even Japanese ones have been 'virtuous' recently?

In reality, there is nothing to 'snitch' on, there is no-one to arrest (unless we want a straightforward witch hunt). House prices in the US and UK crashed, and someone had to bear the losses - the financial system, for example. This was practically impossible to predict, as it has never happened before (one of the characteristics of Taleb's "black swans" is that they seem so easy to forsee after the fact). I personally don't care what any hack thinks (and why is this guy any different from Michael Moore - because he has a PhD in Pol. Sci.?) - I was there.

And, by the way, the government made money by bailing out the Wall St. firms. It is not going to do that well on its bailout of Fannie, Freddie and GM.

Evil Sandmich said...

In 1996, he sold FrontPage ... to Microsoft for $133 million

Well this guy obviously knows what it takes to pull off a scam :-)

Anonymous said...

House prices in the US and UK crashed, and someone had to bear the losses - the financial system, for example. This was practically impossible to predict, as it has never happened before

Are you crazy?  There have been quite a few housing bubbles in the USA, albeit regional rather than national.  California has seen more than one in the last 40 years.  I remember defense cutbacks leaving some areas full of former employees who were badly upside-down on their mortgages (no jobs, no buyers) and liable for huge taxes if they defaulted.

RKU said...

Hardball? Hardball!? That's not "Hardball"---ha, ha, ha. Here's some real hardball:

It said in the paper that Goldman Sachs has around 30,000 employees. Now family sizes for banker-types are pretty small, but counting their wives and children, I'd say we're talking about well over 100,000 bodies. So round 'em all up, and ship 'em all off to the Organbanks!

Now I'm not too sure about the price-elasticity curve when such a large supply of a valuable and scarce commodity suddenly comes onto the world markets, but I'd think they'd fetch close to $100B. And since disconnected livers and kidneys can't own property, all their assets---from NYC real estate to mutual funds---naturally become government property, surely providing several hundred billion additional dollars, given how lucrative their recent misbehavior has been (though admittedly there'd be a sharp drop in Manhattan housing prices). So overall, I'd say we could count on $400B, maybe even $500B, of net revenue which is really pretty nice for just one measly transaction.

And since their role in the American and world economies has been almost entirely parasitic, I'd say their removal will probably generate close to another $100B or so in net economic growth every year going forward, which given any reasonable financial deflator can be capitalized at a net present value worth many, many hundreds of billions more, a portion of which would surely be captured in tax revenues.

Finally, don't forget the incalculable value of the object lesson to the remaining banksters at the other big Wall Street firms. Every time one of them considers getting a little too close to the line of impropriety, he'll take a look at his liverwurst sandwich, think of his poor old friend Syd, and decide "better safe than sorry"...

Anonymous said...

> options-backdating chicanery

Come on, Steve. Did you grow up yesterday? When it comes to a politically motivated government agency like the SEC vs. an entrepreneur (let alone Steve Jobs), 99 times out of 100 it's absolutely baseless persecution.

Anonymous said...

your envy and resentment of rich-bankers is one of your most glaring flaws.

your insistence that Bankers and financial-types do not create much value may or may-not be accurate, I cannot say for sure.

because it undermines your argument that the weak and poor (minorities) should not resent and hate the more successful (whites).

Eric said...

The last thing the Obama/Pelosi types want is major players from Wall St. with nothing to lose going public with all they know. It would only confirm that the left was up to their eyeballs in creating the conditions for the mortgage insanity.

Anonymous said...

Looks like Enron boys got a raw deal for stealing a lot, and Wall Street boys got a sweet deal for stealing superduper a lot.

Whiskey said...

Steve, you forget to mention the role that European banks, particularly the German Landesbanken, played in the crisis. As state-supported entities, responsible for financing much of the State (Lander) goodies like new rail/road projects, the Landesbanken were hungry for yield.

Remember Bob Citron? The OC Treasurer who promised he had a near-perfect way of beating the market? Advised by Merrill Lynch to trade heavy in derivatives?

The FT has many clueless aspects, but they covered (particularly Gillian Tett and Wolfgang Munchau) the total fiasco of the German Landesbanken taking on idiotically risky assets to get yield in some detail.

The same thing is going on with equities and bonds in the developed world. Single A rated Malaysian bonds cost less to insure against default than triple A rated Austria. And offer more yield. Where I come from, Austria is a better credit risk than Malaysia, and risk is related to reward (or yield a function of risk). But try telling some "sophisticated" (read: Hedge) investors that.

The real drivers of the crisis were European buyers of the junk securities looking for easy returns without risks. So they could finance regional government goodies without raising taxes (AGAIN).

Svigor said...

your envy and resentment of rich-bankers is one of your most glaring flaws.

your insistence that Bankers and financial-types do not create much value may or may-not be accurate, I cannot say for sure.

because it undermines your argument that the weak and poor (minorities) should not resent and hate the more successful (whites).


Translation: we shouldn't hate thieves, because we've been falsely accused of thievery. Thanks for that.

I love it when the bankster-defenders slither out of the woodwork. Let's tally up how many are "Anonymous Anonymous."

Anonymous said...

How many times, Mr. Sailer, have you cheated yourself out of enjoying a good movie because you didn't agree with what you perceive to be its perhaps-non-existant 'political message?'

The Anti-Gnostic said...

How many times, Mr. Sailer, have you cheated yourself out of enjoying a good movie because you didn't agree with what you perceive to be its perhaps-non-existant 'political message?'

FINALLY an anony-mouse to ask the hard questions!

ANSWER HIM, SAILER ... if you even count yourself a MAN!

gwern said...

> (No mention is made of the options-backdating chicanery tainting Steve Jobs and other tech titans.)

If this is the worst you can pin on them, then they *do* have that shining moral high ground.