Inside Job (film)

I haven't found a movie I like a lot for a long time. But this is really a good one. I never pay too much attention on those financial news. I don't really feel what those people in Wall Street did can affect my life. But actually it did. It'a a chain. Maybe the 2008 meltdown also partly contributes the current status of computational chemist in industry. 

House buyers <=> lenders <=> investment banks <=> investors

Before 1980s, the chain stopped at the second arrows. Regulation. After that , deregulation

lenders (predatory lenders) provide subprime loans (risky loans), which have high interests, to house buyers. Then they sell the mortgages to investment banks. Along with other debts, these are called the collateralized debt obligations (CDO). The investment banks can sell these CDO to investors (e.g., the retirement fund). They investors could buy the kinds of CDO based on rating companies' "opinions", which are paid by the investment banks. Many toxic CDO are sold  by investment banks with AAA rating. 

In this way, lenders don't care if the house buyers can buy their loans or not. They just want to get the mortgages to sell to the investment banks. And investment banks prefer subprime loans because they have higher interests and higher CDO values. More and more subprime loans. Everyone can get a house. Because of the need, the price of houses skyrocketed. 

Unfortunately, when the house buyers can't buy the loan, they face the foreclosure. They lost their houses. And the investors are also losers because they bought the toxic CDO.

There's another branch. The insurance company (e.g., AIG). They sell the credit default swap (CDS), which is insurance to the CDO. If the CDO went bad, they need to pay the insurer. However, CDS is not like the general insurance, which insurer can only insure their own property. Everyone can insure CDO. 

So if the CDO is good, the insurance company can earn short-term money (bonus to the workers) but if the CDO went bad, this would be a disaster. Because the insurance company needs to pay many people.

Moreover, before the 2008 meltdown, the investment banks even insured their own CDO. That's crazy. They even didn't believe their products.

Finally... the bailout of AIG... with money from taxpayers. 

The part that make people angry most: none of those "economist" or "directors" were convicted. They still have their bonus. They are still the major roles in administration. When they were forced to confess, none of them showed any regrets. 

For some of the killers, at least they admitted what they did is bad.