Conflict Of Greed: The 2008 Market Crash

Conflict of Greed: The 2008 Market Crash In 2008, Lehman Brothers and Bear-Stearns, two of the largest investment firms in America shut down due to the financial bubble. This caused a global economic crisis which affected billions of people. And it all started with a tiny country with a population of 300,000.

Inside Job, directed by Charles Ferguson and narrated by Matt Damon, starts with the Icelandic meltdown. In the years before the 2008 financial crisis, Iceland privatized its three banks, removing them from the government’s control and letting them run independently. Five years later, these three small banks had borrowed $120 billion dollars, which was ten times more money than Iceland’s economy. This meant more loans given out causing

A very large portion. When Reagan became President, he took a free-market stance on the economy. He argued that taxes, government spending/intervention, the printing of money/inflation, and regulation of the financial district were impeding the nation’s ability to grow economically. In some sense, Reagan was right about this and the economy began to grow and do better. But Reagan also deregulated savings and loan companies, an irreversible mistake that eventually snowballed to cause the downfall of the economy in 2008. These companies took advantage of the deregulation and began using people’s savings to give out risky loans which may or may not be returned. These loans piled up, and at the end of the decade, many of these companies didn’t get their money back and either failed or were bought out by other banks. Wall Street went from many small private banks to only a few firms that were became huge. These firms became too big, large enough that their failure threatened not only the United States’ but the world’s

Economic studies at prominent universities such as Harvard and Columbia are often taught my economic consultants and advisors who fully support and emphasize the ideology of deregulation. These advisors often have conflict-of-interest issues and are often either involved in government, or involved in the board of chairmen for large financial corporations. They knew better than to deregulate banks and knew the instability that would rise from it, but they let it happen anyway because they were making money off of it just like the banks were. The main reason that our government works the way it does is because of checks and balances. The each branch has the power to check the other branches’ actions and we have a balanced government because of this. Who is checking the banks? The Securities Exchange Committee was created after the Great Depression in order to regulate investment banking. During the internet stock bubble in 1990s into the 2000s, it didn’t do anything to regulate. It was noted that the SEC was so useless, it eventually went down to one single employee for awhile. Banks had so much money that they were able to manipulate the government through lobbying and campaign donations. In this way they are able to buy political favor and continue the deregulation of the financial sector. But they are also able to sneak their way into the government themselves, creating a huge conflict-of-interest. Except this isn’t a