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Of course a movie titled "Inside Job" is going to be biased. That doesn't mean that the movie is wrong, though. Some of your comments strike me as a little nai

by gizmo 16y ago

Of course a movie titled "Inside Job" is going to be biased. That doesn't mean that the movie is wrong, though. Some of your comments strike me as a little naive and ill informed. For starters, it wasn't just the housing bubble the caused the collapse. Secondly, it wasn't long ago that banks wouldn't lend to people who didn't have a stable income. Patronizing? Maybe. But did you know that they specifically targeted loans at people without an income? No bank can profitably loan to people like that! In Germany the banks are far more regulated; there really is no comparison. Telling people they can afford something when they can't isn't fraud. Never has been, either. I agree that better education is a step in the right direction, but no education is going to compensate for group behavior. When you earn roughly as much as your friends do and they all buy big houses in good neighborhoods (that they obviously can't afford) then you're going to want a similar house too. It's human nature. If nobody in the group could get a big mortgage the problem would disappear. Regulation has kept banks from acting irresponsibly in the past and regulation can keep banks from acting irresponsibly in the future.

hga 16y ago
"In Germany the banks are far more regulated" That may be true but it hasn't kept them out of serious trouble or from requiring bailouts. As I recall, the major trouble they avoided was direct risk from German home buyers, but e.g. commercial real estate has been another matter. I'm not familiar with this movie and only skimmed the fine article, but it's worth pointing out the systemic global nature of this bubble and crash. The US wasn't the only place to have a residential housing bubble or solvency and liquidity bank crises. I think we pretty much have to acknowledge that there was a global credit bubble that expressed itself in different ways in different places (e.g. the Japanese didn't really exit their lost decade) and work backwards from that.
- brazzy 16y ago
  Actually the German banks got into trouble mostly because they bought big time into the American subprime mortgage and CDS card house. Because those things promised low risks and high profits. Pressure from investors and politicians (who loved the idea of their regional banks becoming big players in the global market) did the rest.
Tichy 16y ago
"For starters, it wasn't just the housing bubble the caused the collapse." I was referring to the theory put forward in the article. "Telling people they can afford something when they can't isn't fraud. Never has been, either." But saying something has an AAA rating when it really is junk might be fraud? I still don't get how a bank can be irresponsible. At worst, they should just go broke. If they decide to give a loan to somebody with no income, it is their risk. If that person can't pay, the bank loses the loan. If they manage to insure it (in a legal way), OK.

by gizmo 16y ago

hga 16y ago

"In Germany the banks are far more regulated" That may be true but it hasn't kept them out of serious trouble or from requiring bailouts. As I recall, the major trouble they avoided was direct risk from German home buyers, but e.g. commercial real estate has been another matter. I'm not familiar with this movie and only skimmed the fine article, but it's worth pointing out the systemic global nature of this bubble and crash. The US wasn't the only place to have a residential housing bubble or solvency and liquidity bank crises. I think we pretty much have to acknowledge that there was a global credit bubble that expressed itself in different ways in different places (e.g. the Japanese didn't really exit their lost decade) and work backwards from that.

brazzy 16y ago
Actually the German banks got into trouble mostly because they bought big time into the American subprime mortgage and CDS card house. Because those things promised low risks and high profits. Pressure from investors and politicians (who loved the idea of their regional banks becoming big players in the global market) did the rest.

Tichy 16y ago

"For starters, it wasn't just the housing bubble the caused the collapse." I was referring to the theory put forward in the article. "Telling people they can afford something when they can't isn't fraud. Never has been, either." But saying something has an AAA rating when it really is junk might be fraud? I still don't get how a bank can be irresponsible. At worst, they should just go broke. If they decide to give a loan to somebody with no income, it is their risk. If that person can't pay, the bank loses the loan. If they manage to insure it (in a legal way), OK.