BBC2 now - Inside Job.

[Eric Mc]

fido said:

That's solely your opinion. Hundreds of thousands of people are happy to work in this industry (or as happy as in any other industry), are well paid and enjoy their work.

Edited by fido on Thursday 8th December 23:10

Just because people are happy in their work doesn't mean that the industry in which they work is good and in fine shape.

I'm sure there are lots of thieves and robbers who enjoy what they do.

[Eric Mc]

Pommygranite said:

There's a lot of 'knowledgeable' comments going on here on the back of watching a film

Everyone, I mean everyone, got greedy and had the unobtainable become obtainable and took the easy option.

The consumer may not have created the rules but they certainly learnt to play to them.

So blame the consumer?

I keep saying this.

Why were the rules changed?
Who changed the rules?
Who allowed the rules to be changed?

[chris watton]

munky said:

So there you go. Stuff that the TV programme did not tell you, because it was biased and had an agenda and gullible viewers accept it as fact, because they want to believe it.

I have just watched this, and although no expert, I have to agree. Labour and Gordon Brown wasn't mentioned once throughout the programme, too.

[Eric Mc]

tonym911 said:

some highly selective viewing going on in your house

We all know that it wasn't "criminal" - simply because the law was silent on such issues so in these cases law wasn't broken.

But where were the morals and ethics in all this?

[Digga]

munky said:

Some parts are true however, such as Paulson not having to pay tax on selling his shares in Goldman. He took advantage of a law that is supposed to prevent conflicts of interest, i.e. someone in public office having a large financial interest in a company. Because such a person is forced to sell their shares, they are excused from tax on any cap gains.

It is a great concern really - there is no effective Chinese Wall between financial instituations, government and regualtors. Moreover, it seems to be (especially with the tax breaks) a nice, cosy revovling door for the lucky few, but the problem is not that some of these little piggies get fat on the system - I have no envy in that regard - but that it demonstrably creates moral and systemic hazard.

Anyone who thinks it was the work of every__ banker and that bankers __alone are to blame is a halfwit, but equally anyone who works in the financial services industry and percieves no problem at all is probably to close to see it. All of which is why I felt Solomon Asch's experiments were peritnent.

Looking at it the other way round, if you're on the bus and you can't spot the loony, then it's probably you.

[Derek Smith]

munky said:

Ah good, we have a legal expert.

The other point that the programme failed to point out is that the buyers of these instruments were professional investors, not grannies. They knew what they were buying, had an insatiable appetite for it and queued up for more. Goldmans just sold them what they wanted. Is that criminal? If however they misrepresented what they were selling then yes, that's fraud and they shoud go to jail, but as far as I know there has been no proof of this so far. Yes, there were some stupid internal emails at Goldies describing what they were selling as "crappy", but that's no different from Ratner describing his jewellery as crappy.

Therein lies the problem. The 'they knew what they were buying' argument. In many industries of course this would be criminal. Equating banking with retail outlets sort of confirms what the programme was all about.

Bankers used to have a good name. They were trustworthy and, in my experience, deserved that trust. How things have changed. They are now, it seems, barrow boys, the big difference being that barrow boys knew that their customers were local so they couldn't go too far.

'. . . just sold them what they wanted' is not a defence, it is a plea of guilty.

Deregulation, trusting people to behave morally in the presence of such temptation, was the act of the really gullible.

[Otispunkmeyer]

Best thing about this film is the NYC intro to Peter Gabriel's Big Time. Beautifully shot.

[johnfm]

One point that was made briefly was that other big global businesses (computers, software, oil) don't seem to have the same density of legal action.

There seemed to be lots and lots and lots of fines being paid ( while not admitting liability) - though I am sure this happens quite a bit in oil (contamination cases) and tech (patent infringement) I expect there is a cloture in finance ( at the very top) of doing what you like and just paying the fines later.

[Digga]

Otispunkmeyer said:

Best thing about this film is the NYC intro to Peter Gabriel's Big Time. Beautifully shot.

Have to say that it was beautifully shot throughout.

I loved the way the ariel panning shots had the same feel in both Rekyavik and NY. Stunning shots of the Icelandic highlands and central park too.

I did struggle with Matt Damon's low-energy narration though. It was good because it gave gravitas - was apart from the Micheal Moor style hysteria - but I think was contributory to me having to re-watch 10 mins of footage on iPlayer yesterday morning.

[tonym911]

johnfm said:

One point that was made briefly was that other big global businesses (computers, software, oil) don't seem to have the same density of legal action.

There seemed to be lots and lots and lots of fines being paid ( while not admitting liability) - though I am sure this happens quite a bit in oil (contamination cases) and tech (patent infringement) I expect there is a cloture in finance ( at the very top) of doing what you like and just paying the fines later.

I thought that, it's a bit like footballers being fined two weeks' wages, ie a risk that makes commercial sense.

[tonym911]

Digga said:

Have to say that it was beautifully shot throughout.

I loved the way the ariel panning shots had the same feel in both Rekyavik and NY. Stunning shots of the Icelandic highlands and central park too.

I did struggle with Matt Damon's low-energy narration though. It was good because it gave gravitas - was apart from the Micheal Moor style hysteria - but I think was contributory to me having to re-watch 10 mins of footage on iPlayer yesterday morning.

Didn't realise it was Damon, I rather liked it. What was surprising was the number and quality of interviewees they managed to secure - and the overweening self-confidence of those who were horribly underprepped and tripped up but who still didn't exercise any right of veto.

[munky]

johnfm said:

munky said:

johnfm said:

Car deaths per user mile are not significant.

Tell that to the relatives of the dead, you heartless sod!

johnfm said:

In the UK and US it is in the thousands per year - combined population of a few hundred million.

There is not a likelihood that millions will be killed AND that these deaths with then trigger millions of deaths in other areas.

The regulators weren't asleep at he job - they were outgunned by wall street power and money.

outwitted, maybe. Did you know that AIGFP were not regulated and why?

Fact remains, derivatives used properly in a controlled manner by the right people, are perfectly safe tools to manage and reduce risk. AIG - an insurance company - were trading derivatives from their AIGFP subsidiary without having a clue what they were doing. They were the wrong people.

I agree totally that derivatives, options, futures and other 'exotics' that I know little about primarily exist to hedge against risk and so are a good thing.

Seems the heads of banks, insurers, rating agencies etc got too caught up in maths and lost sight of some fundamental 'sense checks'

Exactly! One should never forget "mark-to-common-sense" as we call it, a mantra that has served us well, unlike some firms.

[munky]

chris watton said:

munky said:

So there you go. Stuff that the TV programme did not tell you, because it was biased and had an agenda and gullible viewers accept it as fact, because they want to believe it.

I have just watched this, and although no expert, I have to agree. Labour and Gordon Brown wasn't mentioned once throughout the programme, too.

Although, that was a lot to do with it being a very US-centric programme. What happened in the UK was quite different, although the trigger was the US sub-prime debacle.

[munky]

Derek Smith said:

munky said:

Ah good, we have a legal expert.

The other point that the programme failed to point out is that the buyers of these instruments were professional investors, not grannies. They knew what they were buying, had an insatiable appetite for it and queued up for more. Goldmans just sold them what they wanted. Is that criminal? If however they misrepresented what they were selling then yes, that's fraud and they shoud go to jail, but as far as I know there has been no proof of this so far. Yes, there were some stupid internal emails at Goldies describing what they were selling as "crappy", but that's no different from Ratner describing his jewellery as crappy.

Therein lies the problem. The 'they knew what they were buying' argument. In many industries of course this would be criminal. Equating banking with retail outlets sort of confirms what the programme was all about.

In which industries is selling the customer exactly what they asked for, criminal? Please name some.

Customers (professional investors, by the way) queued up to buy this stuff. They wanted higher return, higher risk, leveraged investments because interest rates were so low post-911. They knew exactly what they were buying. Are you saying companies shouldn't sell customers what they want? Not a perfect analogy, but If you go to William Hill and put 50 quid on Merv the Swerve in the 4.11 at Newmarket, do you then complain of criminal acts by the bookie when it doesn't win? What if the Sporting Life (ratings agency) said it would romp home? You knew what you were doing and the risks of doing so, and you were wrong and you should get over it. It is a different thing however if investors were purposely misled about what they were buying. If that did happen, then there is certainly a case to answer but too frequently examples are seen of some professional investors taking legal action because they made a bet, and the outcome didn't go in their favour. Funny that they never sue when they're on the right side of it. They want to take the money when they're right, but not pay up when they're wrong, claiming they didn't understand they would lose money on an interest rate swap if rates went down, even though they expressly bought the thing to profit if interest went up. Hmmm..

Professional investors do not get the same legal protection as retail investors, precisely because the law assumes they know what they're doing, just like property developers should understand that prices can go down as well as up.

[crankedup]

Eric Mc said:

So blame the consumer?

I keep saying this.

Why were the rules changed?
Who changed the rules?
Who allowed the rules to be changed?

Rules changed to free up the market.
Financial experts and Government Officials. who sat around the tables I have no idea.
Regan and Thatcher were in Office and take the credit for deregulation.

[Piersman2]

munky said:

In which industries is selling the customer exactly what they asked for, criminal? Please name some.

Customers (professional investors, by the way) queued up to buy this stuff. They wanted higher return, higher risk, leveraged investments because interest rates were so low post-911. They knew exactly what they were buying. Are you saying companies shouldn't sell customers what they want? Not a perfect analogy, but If you go to William Hill and put 50 quid on Merv the Swerve in the 4.11 at Newmarket, do you then complain of criminal acts by the bookie when it doesn't win? What if the Sporting Life (ratings agency) said it would romp home? You knew what you were doing and the risks of doing so, and you were wrong and you should get over it. It is a different thing however if investors were purposely misled about what they were buying. If that did happen, then there is certainly a case to answer but too frequently examples are seen of some professional investors taking legal action because they made a bet, and the outcome didn't go in their favour. Funny that they never sue when they're on the right side of it. They want to take the money when they're right, but not pay up when they're wrong, claiming they didn't understand they would lose money on an interest rate swap if rates went down, even though they expressly bought the thing to profit if interest went up. Hmmm..

Professional investors do not get the same legal protection as retail investors, precisely because the law assumes they know what they're doing, just like property developers should understand that prices can go down as well as up.

I don't have any problem with any company leveraging and making money where it can. But that compnay needs to understand, like a gambler in a bookies does, that if he overstretches, he loses everything.

I'd seen and read up most of the content in the programme previously so there was nothing new in there for me, however it was well presented and some of the spluttering talking heads had me screaming at the tv as they tried to justify/excuse themselves.

They know they did wrong, they know they've been part of a huge global swindle and have taken the dirty money to enable it. But they care less about their reputations than they do the money.

To be fair, if I'd been in their shoes, I'd have probably done the same. But I'd now be hding out on a yacht in the Bahamas drinking champagne and laughing at the poor people, not appearing on shows like this trying to rescue my reputation and patently failing to do so. wkers!

[Sticks.]

munky said:

In which industries is selling the customer exactly what they asked for, criminal? Please name some.

Prostitution;
Drugs;
Arms;
Food/meat;
Pharmaceuticals;


Hth

Your assertion that it's just a case of 'Prices can go down etc' made me laugh. 'It happens'

[johnfm]

munky said:

Exactly! One should never forget "mark-to-common-sense" as we call it, a mantra that has served us well, unlike some firms.

I quite like that - " mark-to-common-sense"

[Otispunkmeyer]

johnfm said:

I quite like that - " mark-to-common-sense"

Shame some people don't. The best bit from the Enron film was about mark to market. They started building a power station in India. I think they completed it and then speculated at the profits based on electricity sales 10 years into the future. They invested a billion I believe. Bush bash bosh, it was all marked down, mark to market. Showe up as huge profits on the balance sheet and those involved got nice bonuses.


Only problem was, no one did the research and no one realised the people they intended to sell the leccy to couldn't afford to buy it. So they didn't. The power plant was simply moth balled and left to rot, the entire investment down the drain. It didn't make a penny for them.

But thanks to mark to market it had been hailed a great success!!! And everyone got paid extremely well.

I understand the need for mark to market. However it appears easy to abuse.

[996c2]

munky said:

Simple answer is, it didn't happen that way. As already mentioned on this thread, the storyteller of the programme in question neglected to say that the 'bank' (more correctly, broker-dealer, it wasn't actually a bank) in question, Goldmans, did NOT bet against it because they were sure the risk was bad. They bet against it, rather sensibly one might add because they avoided a bailout, in order to hedge the risk on their books while they were packaging the deals.

I thought Goldmans bought lots of CDS for CDO that they did not own. I agee that buying CDS for CDO that you own is hedging your risk. However, buying CDS for CDO that you don't own is just betting against that CDO surely?