Flaw

Capitalism will not continue to work effectively if all it does is create a disproportionate amount of wealth at the top without creating the jobs for those of us consumers below who need the capital in order to make the economy grow. That is the critical message behind this excellent documentary on why we, as a civilization, are on the edge of a financial cliff ready to fall off into oblivion. The filmmaker here takes us through a vivid description, with the help of a cast of economists, distressed homeowners, and mortgage brokers, of how we have got to where we are on the basis of pumping assets that are slowly but surely losing their value because of refinancing. Years ago, we could trust the markets to work efficiently; that is, they could determine true value of goods and services and act accordingly. Since the Reagan-Thatcher years, economies have become global and real money (backed by gold) has become securitized paper that circulates the globe looking for investment opportunities to latch onto. In the first decade of the 21st Century, with incomes in the western world lagging and less and less money being invested in industry, banks went into the housing market with new instruments for lending money with the idea of inflating the value of the home as a personal asset. I remember President Bush saying in 2003 that Americans should invest more of this new-found capital in the stock market as a way of growing the overall economy and getting wealthy into the bargain. In this short-lived bonanza, capital grew but couldn't keep ahead of personal debt. As Americans withdrew money from the equity in their homes to refinance this debt at a time when incomes were seriously dropping, we see mortgage brokers and bankers extending the myth that all is not lost by offering even more generous terms to keep the mortgagee afloat. As long as the property, which really belongs to the bank, is generating capital based on monthly payments, everyone should be happy, so the reasoning goes. The critical flaw in this thinking is that ultimately the music will stop and someone will be left holding the proverbial bag: the penniless consumer/homeowner who essentially has no functioning capacity in the everyday economy. I truly believe this is the error that Alan Greenspan made in his thinking back in 2005 when he suggested that asset prices had security built into them because they obeyed, like other commodities, the law of supply and demand. I recommend this film to anyone who is interested in seeing where the economy has gone since the 2008 meltdown.