This film is bad, really bad. If you were an alien transported to this planet today and were told that there was an economic crash in 2008 and then you watched this film which claim to answer "What exactly caused the world s greatest economy to crash and burn?" You still would have not a clue.
Let me give you come terms that HAVE to be in any film that wants to know why the economy crashed but were NEVER mentioned in this one.
Derivatives - That is the general disease that the patient had (cancer).
CDS (Credit Default Swaps) - That is the specific type of cancer cell the patient had
FIRREA (Financial Institutions Reform, Recovery and Enforcement Act) - That is what implanted the cancer cells into the patient undetected
CFMA (Commodity Futures Modernization Act) - The is what let the cancer grow undetected
BISTRO (Broad Index Synthetic Trust Offering) - This allowed the cancer to metastasize at a furious rate.
These are the five keys that are crucial to understand WHAT happened but this film doesn't mention a single one, nada, zip, zilch.
Let me blunt, if you think that the world's economy nearly faltered just because a relatively small amount of people didn't pay their mortgages you have been sadly misled and films like these are leading the way in misleading people. The fact is we paid more in tarp funds than all of the fore-closed and late paying assets were worth and then some.
Here is some math, The US government could come in pay for ALL of the troubled mortgages at a cost of 2.5 billion per month, currently we have paid over 2.4 TRILLION to stabilize the economy without touching the troubled mortgages. They could have paid off every single mortgage for about 1.5 Trillion in one lump sum. But they didn't and you know why - they were NOT the real problem, CDS's were.
Compare these numbers 1.5 trillion = ALL troubled mortgages vs 62.2 Trillion of CDS's at the end of 2007. The CDS market is what imploded and took down economies all over the WORLD, that is what caused this problem, not some foreclosures in the US.
Anyhow here are just some of my notes that I wrote down while watching this dud of a film.
Dumbest thing said in the film:
"Capitalism started with Ronald Reagan and Margaret Thatcher"
LOL - Capitalism was "identified" in the 17th century even though it's dates back to at least 2000 BCE. That is just a wee bit before Ronald Reagan but I understand the partisan political hack job the filmmakers were doing by trying to attribute capitalism to Reagan.
The film Tries to link income inequality with the derivative crisis. This is downright ludicrous, first off it gets it data wrong. Income inequality started growing in the 1960's according to the IRS but that's just a minor point. The fact is the rules were completely different back then and uber rich were still rich it's just that they owned their money in trusts, businesses or other vehicles and it didn't count towards their personal income. The actual 'effective' inequality of all money created hasn't changed very much from the 50's to today. This talking point is one only used to gin up emotion, dumb people down and start class warfare rhetoric.
The filmmaker also put forth the revisionist history that the stock market crash and subsequent depression of 1929 was the result of a credit bubble. Not only do they do that they then claim that rising credit loads are a symptom of a credit bubble but there is plenty wrong with that analysis. While it is true that credit was at an all-time high (back then) the credit loads of the average American family was LESS than they were in the 1950's, that means the symptom of the credit bubble was worse in the 1950's then before the great depression. However the viewer would have no clue about this because when they make that claim they show a chart that would seem to back up what they are saying but in reality the chart has NOTHING to do with credit to individual households, instead it was a income chart.
The film also got it wrong when they said that banks ROI is higher with low rates, that is 100% false, in fact their ROI falls precipitously as rates get lower and lower and they must make that up in volume. The film then goes on to show misleading figures that conflate and confuse banks with investment houses and then it interviews ONLY people from investment houses but keeps talking about banks. This purposeful misdirection only adds confusion to the average viewer of what really happened and who they players really are.
I got a great chuckle at the so-called expert saying that middle class people HAVE to match what the rich are doing, so when the rich are buying bigger houses then all the housed for middle class people are manufactured larger and they have NO choice. This is pure poppycock and doesn't reflect the real world at all.
The filmmaker totally skips over why the rules that governed home lending were revoked and new rules implemented which led to the flooding of the market of low-cost loans that were sold to low income people. Ironically the goal of revoking the legislation was to allow more low-income people to get loans and now that they were the very people who masterminded this plan and applauded it before the implosion, now claimed it was predatory lending. BTW the person who makes the charge of predatory lending is using it as a talking point and has NO clue what the term actually means.
Zero Sum Economics - It's FALSE people, don't buy into the claptrap of this movie. NO economist believes that we live in a zero sum economy. In fact ALL economic theories are predicated that the economy is expanding (usually). But much of this film is predicated that a zero sum economy is a reality.
It never asked why housing prices were rising - BUT only in some areas, which is one of the key elements to understanding the housing bubble.
Virtually everyone of this films claim is a correlation equals causation error.
It totally got the trigger event to the collapse wrong to - it claimed it was the lowering of the credit rating on MBS, but in fact the only reason they were lowered was because delinquencies were going up because the fed raised interest rates. It was the raising of rates that was the match that struck the primer cord, aka the trigger. The clueless experts then proclaim that the events unfolded "extremely fast" and with lightening speed. But the historic facts say differently the first signs of trouble were in mid 2005, by 2006 the credit rating agencies were downgrading and foreclosures were increasing , by 2007 the fed was dropping interest rates to control the foreclosure rate and the economy finally collapsed in August of 2008. There were hundreds of articles and warnings all through 2006 and 2007, in fact I got out of all of my residential investments in 2006 because of the likelihood of a collapse. It really wasn't very hard to see this coming. What was hard was for the average person to know anything about CDS's and how they would collapse too bringing the economy to it's knees.
Bottom Line: You won't learn anything about why the economy collapsed from this film and what you do learn is mostly wrong.