Ezra Klein has a piece over at The Washington Post about the film "Inside Job" that is worth reading. Mr. Klein says "Inside Job" is a good documentary if you don't want to understand what happened. He says:
Watching it, you’d think that the only people who missed the meltdown were corrupt fools, and the way to spot the next one is to have fewer corrupt fools. But that’s not true. Worse, it’s dangerously untrue.
He continues by pointing out that "Inside Job" is similar to the book The Big Short by Michael Lewis. It is interesting and entertaining, but it doesn't get it right. The financial crisis didn't occur simply because of a group of "bad actors." (See my previous post about Paul Krugman and Robin Wells.) Let me give Mr. Klein the well-earned last word here.
What’s remarkable about the financial crisis isn’t just how many people got it wrong, but how many people who got it wrong had an incentive to get it right. Journalists. Hedge funds. Independent investors. Academics. Regulators. Even traders, many of whom had most of their money tied up in their soon-to-be-worthless firms. “Inside Job” is perhaps strongest in detailing the conflicts of interest that various people had when it came to the financial sector, but the reason those ties were “conflicts” was that they also had substantial reasons — fame, fortune, acclaim, job security, etc. — to get it right.
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