YOU NEVER NOW THE T R U T H Many people believe that banks are extremely trustworthy. Yet, there's an incentive known as MONEY, which not only affects the way people think, but it actually empowers these powerful companies to destroy the system. After understanding the process of securitization, I finally understood how everything works. Basically, this made me relate banks with gamblers, because at the end they en up playing with money just because of the interest they will receive. | Documentaries can give you precise and detailed information about topics you have no clue about. The Inside Job talks about the financial crisis and economic crash of 2008, which was brutal. By having seen just 30 minutes form this 1 hour 50 film I've been critically informed about the happenings. Before even seeing the film I had no idea about an important event in 2008, for me, it was another simple year, yet, I was wrong. The 2008 crisis happened due to ambitiousness and the wrong incentives. The "Inside Job" shows the whole idea of maximizing your profit, which consequently took the whole system to crash. There were unfair trades with money, and you never knew where your money ended. |
Yet, predatory loaners sold the sub-prime loans to investment banks, where they had no risk of loosing money, instead they earned profit and actually made money they didn't have. However, investment banks new that this loans where unsafe investments (CDO's) that's why they where associated with rating agencies. They hired agencies such as Fitch, Moody's or S&P, which rated this investments as triple A's, even if they new how risky the investments where. Because of this supposedly "trusty" ratings, the investments transformed from risky to low-risky, affecting the investors at the end. | It all began when people started buying homes (home buyers). In other words, banks started facilitating the process of loans, offering them to anyone, even if they knew that their economic support was not enough to reach the final loan price. Due to the easy requirements you had to follow in order to receive a loan, many people started purchasing homes, thinking that over years they would be able to sell their property for a much higher value. In fact, banks new exactly about people who couldn't pay the loans, yet they just wanted this game to continue. As people started buying homes, the demand of these shifted up, creating a whole "non-functional" system. Precisely, the loans where offered by the predatory loaners, which had as an objective to recruit as much possible people in order to gain a greater profit, MORE MONEY. Moreover, this loaners where giving out more money than what they actually had. Finally, investors where constantly investing, yet since the homes where over-valued, home buyers couldn't pay the loans, having as a result people crashing economically or finding themselves in debt. Therefore, the investments where not reaching there forecasted value, due to the fact that loaners and banks where playing with "fake" money. |