Tuesday, 8 November 2011

The Flaw - essential viewing

PE doesn't generally post film promos - but we're making an exception in the case of The Flaw, which airs tonight (November 8th) in the True Stories slot on More4 at 10 p.m. The film delves into the root causes of the financial crisis, telling the story of what happens when the rich keep getting richer. To quote Stephen Lambert, writing in the Huffington Post:

The title refers to Alan Greenspan's admission in his testimony before Congress that he had discovered "a flaw in the model that I perceived is the critical functioning structure that defines how the world works so to speak." A humbled Greenspan admitted that it had been a mistake to put so much faith in the self-correcting power of free markets and that he had failed to anticipate the self-destructive nature of wanton mortgage lending and the housing and credit bubble it generated. Greenspan had taken the view that the central bank shouldn't question increasing asset prices, it should only take action when they started to fall. He cut interest rates and tried to boost activity whenever there was the slightest drop. And, of course, boosting economic activity is just a euphemism for trying to encourage consumers and businesses to borrow even more.

The film highlights the fact that the only other time in the last century when top earners had such a high share of total income was just before the Great Crash. The share of total American income going to the top 1% peaked in 1929 at about 22%. After the Crash and the start of World War II it fell steadily so that by the 1970s the top 1% were receiving only 9% of national income. But then it started to rise again; in the last ten years it has shot up like a 4th of July rocket to about the same level as in 1929. This increase can largely be explained by the credit bubble that Greenspan presided over.

Click here to read the rest of Lambert's review, and here to watch a trailer.

1 comment:

disgruntled observer said...

I look forward to seeing the Flaw

I also highly recommend "The Inside Job"

For a well constructed narrative that places everything in its correct context, it'll be hard to beat. It also correctly shows how it really was all a fraud.