Charles Ferguson is Pissed!

Filmmaker Ferguson is an angry Ph.D.

Thanks to the Canton Palace Theatre Thursday art film series, tonight I finally got to see Inside Job, the documentary film on the global financial crisis of 2007-2008 that I called "The Most Important Film of 2010" in an earlier post (even though I hadn't seen it yet).

Thankfully, now I can say that my judgment, however premature, was warranted. This is an amazing, devastating, illuminating, captivating, and compelling film. Anyone who cares about what happened to our economy in the last few decades needs to see this.

What drives the film and gives it such power is the barely concealed rage of its sole interviewer, writer, director, and producer: Charles Ferguson, who should be nominated not only for an Oscar for best documentary, but also for the title of "the academic Michael Moore."

Ferguson, who has a Ph.D. in political science from MIT and went on to make some money in the software industry before an early buyout/retirement, made his first-ever film on the bungled postwar occupation of Iraq. He got curious and started interviewing people with a camera, and pretty soon he had a film on his hands.

Despite being broadly supportive of regime change in Iraq into early 2003, he was appalled at the disasters that followed: looting, suicide bombings, insurgency, economic collapse, and so on. So, like a good political scientist, he tried to figure out what had gone wrong in the policy process, by interviewing as many decision-makers as he could. With their help, he made the counterfactual argument that it could have been different. Instead of agreeing with then-Secretary of Defense Donald Rumsfeld that "stuff happens" and that looting was the price of freedom, Ferguson assembled dozens of interviews to show that officials of the U.S. government made several critical errors that, if avoided, would have prevented the disasters that followed.

Ferguson has taken the same approach with Inside Job, right away dismantling the lazy assumption that the economic crisis that began in late 2007 was somehow either inevitable or unexpected. Instead, he plays clips from interviews of Charles Morris and Nouriel Roubini, who both predicted the crisis beforehand (or at least understood its main causes in the very early stages). Later, he shows Ben Bernanke denying to a TV anchorwoman in 2005 that a housing market problem could contribute to a recession (oops, sorry about that).

And he makes the convincing case that a number of people knowingly contributed to the crisis through their appalling action or inaction. This wasn't an accident of history but the result of greedy people pursuing their own private gain--at the expense of the public treasury and the public good.

While making his case, Ferguson has a series of testy exchanges with Glenn Hubbard, former economic adviser to President George W. Bush; Martin Feldstein, professor of economics at Harvard; John Campbell, chair of the economics department at Harvard; Scott Talbott, chief lobbyist for the Financial Services Roundtable; Frederic Mishkin, ex-Federal Reserve Board Governor; and David McCormick, former U.S. Treasury Under Secretary for International Affairs. (Watch the trailer for the best ones.)

Apart from these Michael Moore-like, on-camera confrontations, Ferguson tells a good story. For his hook, he starts with Iceland's parallel economic collapse and a short synopsis of the onset of the crisis in the September 15, 2008 bankruptcy of Lehman Brothers. Peter Gabriel's punchy song "Big Time" is the perfect accompaniment to aerial shots of the financial district in Manhattan, evoking upbeat emotions, with lyrics that could be telling the story of Wall Street bankers making it "Big Time".  From there he tells the story in five chapters.

Part I is "How We Got Here." Short answer: our political leaders allowed the financial industry to concentrate its operations and get too big, without proper oversight, especially in the $70 billion a year "derivatives" market, where the famous collateralized debt obligations and credit-default swaps were hatched, all without supervision. Alan Greenspan comes in for special scrutiny here.

Part II is about the housing bubble of 2001-2007, which a number of observers were able to detect by 2005 (although not Ben Bernanke, by then the new Chairman of the Federal Reserve Board of Governors). Among these high-level observers and on-camera interviewees were both the managing director and the chief economist of the International Monetary Fund, hedge fund founder George Soros, journalist Allan Sloan (who documented mortgage-related rot in an October 2007 article), and French Finance Minister Christine Lagarde. This bubble was entirely predictable.

Part III is a straightforward narration of the crisis of September-October 2008, stemming from the bankruptcy of Lehman Brothers and the near-collapse of the giant insurer AIG. Henry Paulson, Secretary of the Treasury, and former CEO of Goldman Sachs doesn't look so great by the end of this section.

Part IV--"Accountability"--seeks to figure out who should have taken action during or after the crisis. Stan O'Neal, the former head of Merrill Lynch, which tanked and had to be bought out by Bank of America, walked away with a total compensation package of $161 million. Who is allowing this? It turns out that the board of Merrill Lynch and other corporations' boards are not very effective checks. What about the government? The financial industry has the equivalent of five lobbyists for every member of Congress. The Obama Administration appointed Tim Geithner and Larry Summers, both with close ties to the financial services industry, to top positions. What about the economics profession in top universities? Here Ferguson digs up some of his juiciest material, pointing out that many top economists draw up to 80% of their income from sitting on financial service companies' corporate boards, consulting with them, or collecting speakers' fees from them. So much for truth-seeking academics speaking to power!

Part V--"Where Are We Now"--helps us assess the situation as of early 2010--a situation that, sadly, has barely improved. Unemployment has dropped a bit from the 10% level but we definitely suffered through a global recession that has devastated the lives of the poorest people more than the lives of people like me. (One of the more haunting segments in this section of the film is a small Chinese plant with empty tables, a vivid picture of how this worldwide recession affects migrant laborers in China making $80 a month.)

Ferguson ends with a shot of the Statue of Liberty and the hope that someone will fight to bring Wall Street bankers to justice. Could we imagine criminal or civil prosecutions of these characters? It's hard to imagine, when we have what one interviewee called "a Wall Street Government."