Wall Street's Role in Economic Crisis

The stock market is a basis for how the economy of the United States, and essentially the whole world, is doing as a whole. This means that whenever it crashes, the unemployment rate dramatically increases and life gets harder for the middle class (aka the majority of society) ”Inside Job” is a documentary about the financial crisis in 2008. This detrimental event took many years in the making and happened before the general public even saw it coming. Many people believe that the heads and CEO‘s of major stock market companies are the sole reason to why the financial collapse occurred, why the destruction was so big, and why it never even affected the affluent 1% of the United States who worked on.

Wall Street, Charles Ferguson uses logos and expository mode during “Inside Job“ to evoke emotion from us, as the audience, to show the guilt and responsibility that major companies had on the financial collapse.

One the techniques that made the film so successful in getting its point across was through the use of rhetorical strategies and appeals, one of those being logos.

Throughout the film, there were many causes & effect scenarios that were put forth that were also combined with statistical evidence such as graphs and charts, All of this information that is involved with logos supports the points being made with statistical evidence. One example of this is with rating agency profits A rating agency is paid to rate securities. These companies gave very high ratings to risky securities and ended up quadrupling its profits from 2000-2007 (which the graph shows).

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There was a sufficient amount of proof that shows that the securities were extremely risky and the only reason why they were not sued was that the rating agencies claimed that the ratings were only their ‘opinions.’

The graph of the top 5 executives at Lehman Brothers is another example of logos. It shows you how much they made (over $1 billion) from 2000-2007. This is not only shocking to see how much those big-name executives made, but also the fact that even though they plunged their company into bankruptcy, they got to keep all of the money, There was no cause & effect for them from the bankruptcy even though they claim that they lost just as much the community around them when it occurred. Ferguson puts these charts in the film to anger us and give us the real data of how much profit the people who are being held accountable for the crisis were really making. Another rhetorical appeal that was included in the film was pathos (the appeal to our emotions). There is one scene in the courtroom that questions the heads of Goldman Sachs Before the scene occurred, it was talking about other companies that were selling toxic CDO‘s to investors and making them believe that they were of the highest rating, when really they were extremely unstable.

The scene talks about how Goldman Sachs took what those companies were doing and took it one step further. They did this by bidding against the same type of CDO’s that they were recommending their investors to buy, so that the more money the investors lost, the more money Goldman Sachs made, The scene is set in a courtroom where the heads of Goldman were forced to testify to Congress. The person questioning the prosecutors is Carl Levin who is the Chairman of Government Affairs Subcommittee on Investigations. The questions that he asks are challenging, but very fair and ones that have sufficient amount of evidence to support them. For example, Levin asks Lloyd Blankfein (Chairman & CEO) about selling securities that his own company thought was ‘crap’r This is an extremely fair question considering that is exactly what Goldman Sachs was doing.

Their top priority was Timberwolf securities, which is a company that their sales team was calling “a shitty deal.” The camera angle in this shot is a medium close-up to show a little bit of the background, but mainly the detailed facial expressions of the people being interviewed As Lloyd struggles to answer Levin’s questions, he is perspiring and stuttering which are signs of a person who knows that they are guilty, He finally answers Levin’s question by stating that he thinks that there is nothing wrong with betting against the same securities that his company are selling, without disclosing that information to their clients Another person that Carl Levin interviewed in this scene was David Viniar (Executive Vice President). Levin asked if he, as a Vice President of the company, felt anything about his sales team saying “what a shitty dealt” His response was that it is “very unfortunate to have on e-mail” and then after realizing what he had just said, starts stuttering to find words to counteract it.

This shows the lack of consideration that even the Executive Vice President of a major corporation had for the investors and the general public They did not care if the people went bankrupt or about the repercussions of their actions which was shown on how Goldman Sachs bought $22 billion in credit default swaps and then, knowing that AIG would probably go bankrupt because of the transactions, spent another $150 million ensuring themselves against the potential collapse This scene in the film was included to affect our emotions. It showed that the major corporations (in this scenario Goldman Sachs) knew precisely what they were doing to the stock market and their investors, yet continued right along with it. They were purposely jeopardizing the market in order to increase their own personal financial gain as they watched 90% of the population loose their money go into debt.

They are the reason why there were 6 million foreclosures on houses from 2008-2010 in the US alone, why unemployment rose to 10% in the US, and why 10 million migrant workers lost their jobs in China. Ferguson finishes off the documentary with one more final statement: “The financial industry turned its back on society, corrupted the political system, and plunged the world into crisis, We are recovering but the people responsible are still in power and that needs to change. It won’t be easy, but some things are worth fighting fort” Those last sentences were the whole point of the documentary; it was meant for us to ponder the information that was put forth and formulate an opinion about it. Since the documentary was put out in 2010 (just two years after the crisis), there is a kairotic appeal from the film since lots of people were and are still feeling the impacts of the crisis.

This appeal makes us more inclined to take action, So, what can we do? How can we prevent something like this from happening again? These ‘simple-sounding’ questions require the collaboration of society as a whole. The utmost part of the financial crisis that angers me and probably many other citizens the most, is the fact that the people responsible were never fully convicted and nothing was done to prevent another one from happening again later on in the future. I was personally one of the initial supporters of the Obama campaign that was centered around one word: Change. However when he was elected as President and it was time to make that ever-so-needed change, nothing significant was done at all, The financial reforms did virtually nothing compared to what was promised during election time and he did not change ‘Wall Street’s culture’ as he claimed would happen. The question though is why?

As the film stated and proved, it is a Wall Street government. Some of the financial leaders that Obama chose included the president of the Federal Reserve at the time of the crisis (who decided to pay Goldman Sachs 100 cents on the dollar from the AIG bailout), and many others such as the new president of the Federal Reserve (being the former lobbyist of Goldman Sachs at the time of the crisis). It’s almost impossible to put in reforms to change Wall Street’s culture, when you have the former leaders of it on your financial board. So I guess in retrospect, we are limited to the control that we have over changing the economy into not favoring the affluent 1% of society as it has done.

Some things that we can include making smarter decisions in electing our presidents and make our pick based on who can help control our economy. Although personally I believe that Obama was the right pick in his first election, I firmly believe that he should not have been reelected based on the lack of ‘Change’ that his whole campaign was focused on the first time. Another option that we posses as investors of the stock market or dissociated members of society, is to gain knowledge of what we are truly investing our hard-earned money into rather than trusting what the big companies tell us.

This is because they essentially do not care about what happens to us, Whether we gain or loose money, the company still takes home major gains, and the CEO’s of those companies take bonuses of $500 million If society did this as a whole, our money would be in better hands and our economy would be much more reliable. The last possibility would be a class action lawsuit, which I have no idea how effective it would be in the long run. The reason why I suggest this, is that it takes the similar views of all the people that were affected and combines it all into one massive lawsuit. This lawsuit would voice the opinion of many and at the very least would get recognition and provoke better reforms. And so the question still remains, what are you going to do?