Inside Job
22nd February 2013: Introduced by Dr. Gabriel Palma
Winner of the 2011 Academy Award for Best Documentary, ‘Inside Job’ is a critically acclaimed documentary exploring the events of the financial crisis. The film seeks to find and explain the causes of the crash and tackles subjects reaching from the regulation of banks to the state of academic economics while ruthlessly dissecting the causes and culprits. We were honoured with the presence of Dr Gabriel Palma, Cambridge Economics lecturer and expert on the history of financial crises, to provide an introduction to the event and set the context for the film to come.
Dr Palma’s first remark was to make a plea for us not to get too angry, despite the content of the film’s inevitable tendency to elicit this emotion, and instead focus on the mechanics of crises that the documentary shed light on. In particular, Dr Palma, continuing the theme from his barnstorming address at CSEP’s earlier, ‘Are Financial Crises a Necessary Evil’ event, focused on the importance of liquidity as a root cause of financial crises. All the fraud and malpractice that ‘Inside Job’ exposes, he suggests, are symptoms of an excess of liquidity that needs to find somewhere to offload. The problem with financial markets is that they have to clear, and Madoff pyramid schemes or selling mortgages to uncreditworthy consumers are therefore simply a means of conjuring up demand when supply of liquidity is excessive.
Dr Palma’s economic insights notwithstanding, it was the story of the people behind the crisis that was most striking about the film. Ferguson’s deceptively confrontational approach claimed victim after victim as he interviewed academics, lobbyists and policymakers, all of whom were in some way implicated in the crash, and exposed their hypocrisies. Typical was an interview with a Harvard academic who initially denied that the practice of Economists in academia being on the payroll of banks and consultancies a problem. When Ferguson followed up by asking him whether he had the same opinion of medical researchers being on the payroll of pharmaceutical companies he was left red-faced and fumbling for words.
As A. O. Scott concluded in his article for the New York times Ferguson has truly summoned the scourging moral force of a pulpit-shaking sermon. That he delivers it with rigor, restraint and good humor makes his case all the more devastating.
Dr Palma’s first remark was to make a plea for us not to get too angry, despite the content of the film’s inevitable tendency to elicit this emotion, and instead focus on the mechanics of crises that the documentary shed light on. In particular, Dr Palma, continuing the theme from his barnstorming address at CSEP’s earlier, ‘Are Financial Crises a Necessary Evil’ event, focused on the importance of liquidity as a root cause of financial crises. All the fraud and malpractice that ‘Inside Job’ exposes, he suggests, are symptoms of an excess of liquidity that needs to find somewhere to offload. The problem with financial markets is that they have to clear, and Madoff pyramid schemes or selling mortgages to uncreditworthy consumers are therefore simply a means of conjuring up demand when supply of liquidity is excessive.
Dr Palma’s economic insights notwithstanding, it was the story of the people behind the crisis that was most striking about the film. Ferguson’s deceptively confrontational approach claimed victim after victim as he interviewed academics, lobbyists and policymakers, all of whom were in some way implicated in the crash, and exposed their hypocrisies. Typical was an interview with a Harvard academic who initially denied that the practice of Economists in academia being on the payroll of banks and consultancies a problem. When Ferguson followed up by asking him whether he had the same opinion of medical researchers being on the payroll of pharmaceutical companies he was left red-faced and fumbling for words.
As A. O. Scott concluded in his article for the New York times Ferguson has truly summoned the scourging moral force of a pulpit-shaking sermon. That he delivers it with rigor, restraint and good humor makes his case all the more devastating.