The Film, Inside Job

Thought Activity

The film, Inside Job, was a very informative and insightful documentary that revealed the origins of the Global Financial Crisis and the financial and accounting issues that face our world today. It was interesting to see first hand the various opinions and attitudes of different stakeholders involved such as top investment bankers, CEOs, economists and advisors. These witnesses highlighted the complexity of the financial sector and unveiled destructive relationships, which corrupted regulation, academia, politics and most of all, employment. It was rather disturbing to see the tens of millions of people who suffered most, losing their homes, savings and job security whilst the rich became richer.

One of the most intriguing parts of the documentary was the explanation of the borrowing and credit process, the selling of loans to investors. REP. Barney Frank, Chairman of the House of Financial Services Committee, stated “The people that make the loan are no longer a risk for a failure to pay.” This was because lenders would sell the mortgage to investment banks where they would gather thousands of mortgages and other loans such to create complex derivatives called Collatoralized Debt Obligation (CDO). The investment banks would then sell these to investors. Thus, when home owners pay their mortgages, the money went to investors all over the world. Investment banks would also pay the rating agencies to evaluate the CDOs and many of them were given a Triple A Rating (highest possible investment grade). This continuous system clearly facilitated some of the major problems leading to the GFC. Essentially, consumers were buying houses they couldn’t afford and lenders became rash as they conducted riskier loans. Greed also overtook investment banks as they focused on becoming profitable and reputable as opposed to realistic, fair and genuine. Inside Job proved that the financial collapse was largely due to the lack of regulation and government scrutiny of the sector.

Post-Thought Activity        

Tertiary Australian education consists of both government and private institutions. Universities are self-accrediting institutions and the government provides funding for these universities to perform well in order to boost our education, and in turn, our economy. Education take part within the Federal Budget for example, the government announced a 20% cut in funding, changes in the interest rates for student loans and a new scholarship scheme. However generally, Australia expects and hopes to remain globally competitive, thus there is an urgent need to stimulate and support Australia’s research and development capacity. This includes providing high quality learning content for students through textbooks and high-accredited teachers, practical experience and innovative, updated technology for students to utilize. Investment in these services is essential and beneficial in the long-term for Australia.