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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.Read more ›
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27 of 30 people found the following review helpful
An Informative Financial Documentary That Charts Some Of The History And Trends That Preceded The CrashMarch 31 2012
- Published on Amazon.com
I've seen so many documentaries and news programs about the current financial crisis and the collapse of our economy that I'm starting to feel like an expert and analyst. With all the coverage available, it is becoming increasingly difficult to put a new spin on things or offer up content that feels fresh. David Sington's "The Flaw" takes these familiar concepts and weaves an interesting look at the history that preceded that fateful event. I'm wary to call a serious documentary entertaining, but Sington does a nice job putting together an economic portrait that combines facts, trends, and personal accounts in a way that will really engage even the casual viewer. Let's be honest, there is only so much that can be covered efficiently in an 82 minute film. If anything, the movie attempts too many angles to go into much depth. But what it does provide is a lively look at how capitalism has changed within the last thirty years (compared to the rest of our history) and how our entire consumer structure was based on a fallacy. And once things went south, they did so at an alarming rate!
"The Flaw" provides the usual financial sources, of course, giving commentary about the events that led to the collapse. But in addition to stock interviews, the film utilizes other visual elements quite effectively. Graphs are employed to show historical trends (this was perhaps my favorite tool) and archival TV footage and animation add punch to the presentation. We also spend time with personal stories, most notably a former Wall Street Bond Trader now giving guided street tours to those visiting the financial district of New York. Another major component to the film is footage of Alan Greenspan as he testified before Congress in 2008. While the movie juxtaposes all these threads well, remember this is more of a lay-person introduction to the topic that seeks to combine facts with flesh and blood. As such, it works quite well.
With the evolution of the real estate market, the credit bubble, and the redistribution of wealth, it seemed inevitable (in retrospect) that we were in for hard times. The movie doesn't offer much in the way of answers for the future, and paints a portrait of a system that is pretty well broken. But this historical financial analysis ably points out where we went wrong. Let's just hope we've learned something from our mistakes. "The Flaw" is engaging, smart, and breaks key concepts down into easily understandable components. KGHarris, 3/12
26 of 31 people found the following review helpful
"Entertaining" Documentary on the financial crisis - no answers but a lesson + nice bonus interviewApril 13 2012
- Published on Amazon.com
I came to this film a bit later than others and you'll see some more detailed reviews here, including one by my fellow reviewer K. Harris. But I wanted to add some info not previously provided by other reviewers.
This moderately short (81 minute) documentary on the "recent financial crisis" was the idea of the three Executive Producers who (we learn from the director) had lots of money but no Director. (Guess they were part of the "haves" who survived the monetary meltdown. They found British Director David Sington, who knew little about banking but specialized in science documentaries, to direct the film. Sington tells a lot in the 48-minute Q&A session which appears as a "bonus feature" (and he's almost as entertaining as his film).
The film was released in 2010 and is now on DVD from Docurama - a DVD label I have always admired for giving exposure to small documentary films that fly "under the radar.).
You don't need to know much about banking, mortgages or real estate to enjoy this film. (After all, the Director didn't.). There are lots of quick edits to keep things going and a nice original score. Older folks will enjoy the clips taken from 1950s educational films on finance that Sington inserts.
If nothing else, you will learn - after watching the film - the difference between buying an "asset" (something people buy more of when the price goes up - like real estate and stock) and "goods" (like gasoline or coffee, where people stop buying when the price increases). That one lesson is worth the two hours (including the Q&A) on this DVD.
I hope you found this review both informative and helpful.
Steve Ramm "Anything Phonographic"
38 of 50 people found the following review helpful
Doesn't even attempt to answer the question it raises.July 23 2013
- Published on Amazon.com
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.
23 of 30 people found the following review helpful
Income Inequality and the 2008 Economic CollapseFeb. 8 2012
- Published on Amazon.com
Good movie - highlights the role of income inequality in the US in shifting capital from "goods" to "assets" creating the housing bubble and resulting in a huge redistribution of assets to the investor class and the 2008 collapse. See it to gain a fact-based understanding of what happened. With income inequality rising again, it isn't over!
28 of 38 people found the following review helpful
Tells only half of the storyAug. 3 2012
- Published on Amazon.com
The detail and explanations about the banks exploitation of the mortgage markets was very well done. What was glaringly left out was how those markets were manipulated and left wide open to corruption and greed in the first place. There is little to no mention of Freddie/Fanny/Countrywide et al and the MASSIVE amount of taxpayer dollars that have gone into buying subprime mortgages in the secondary market. Government sowed the seeds of corruption by agreeing to buy overvalued mortgages, and the banks were quick to sweep in and take advantage. Without taxpayers backing the loans there would have been no subprime mortgages made in the first place.