In the market competition environment, the lack of necessary supervision will lead to very irrational personal short-term profit-seeking behavior. After the CEO of Goldman Sachs won a higher leverage ratio, competitors in the same industry will definitely follow up without hesitation. After Goldman Sachs buys more CDOs and makes more CDS insurance, the industry will definitely follow up and make a difference. There are only regulators, but after the regulators have also become the spokesperson of Wall Street, this sword of regulation cannot be wielded.
This film mentioned that investment banks (consortiums), insurance and rating agencies constitute a trillion-dollar securities trading food chain, which inspired me a lot. This food chain has a great risk of collapse, but this does not prevent the operators of this food chain from earning profits. This food chain has prompted the bankruptcy of the bottom people and the transfer of wealth like the 1% of the rich, making the gap between the rich and the poor even more ignorant. Unwittingly expands. Even if the food chain is broken, for the rich there are more options, such as rebuilding a brand new food chain, still at the top, while for the poor there is only one option, bankruptcy, loss of housing, unemployment, loss of educational opportunities, etc.
The trillion-dollar securities trading food chain includes: five major investment banks (Goldman Sachs, Morgan Stanley, Lehman Brothers went bankrupt, Merrill Lynch was sold to Bank of America, Bear Stearans was sold to JP Morgan), two major consortia (Citi Group, JP Morgan), three Big insurance (AIG, MBIA, AMBAC), three major rating agencies (Moody's, Standard&Poor's, Fitch), operating mechanism? I won't write anymore.
About the issuance of CDS: In the insurance field, you can only insure what you own, and only once; but in the financial derivatives field, this rule is broken, anyone can buy it, which makes the insurance company's funds use The rate of increase rapidly, the leverage ratio may be infinitely magnified, but if the insured thing defaults, then the insurance company's compensation will be expanded accordingly, expanded to the inability to repay - in fact, the film mentioned that the insurance company only wants to make enough money Sales commissions have never been thought of to be repaid at all. This is greed, and this is self-stealing. Without the sword of supervision, there will be arbitrary actions.
View more about Inside Job reviews
