Financial Documentary 'Inside Job' Reveals Shocking Truths About Financial Crisis

If you want to watch a movie about the real Wall Street, forget Oliver Stone fiction and watch 'Inside Job.' 'Inside Job', a 2010 film production Directed by Charles Ferguson is a candid look at the professional influences that led to the financial collapse of 2008. 

Revealing interviews and information about the financial network that extends from economic academics to Wall Street and government are presented in the movie. These interviews and narrative reveal how the inner workings of profit hungry motivations can skew high level and influential people whose decisions make them richer, but negatively affect the lives of millions of people on Main Street.

Trailer for Inside Job (2010)

The film starts out in Iceland, a former stable, wealthy, smooth running Democracy with low unemployment. Iceland fell into financial chaos with its deregulation, a storyline that is then transposed to the United States and the beginnings of financial crisis of 2008 which had its roots of deregulation as far back as the Reagan era. The story illustrates how what may have been a logical economic decision swung out of control when the wrong people got involved.

Many interesting characters are interviewed in this movie, however several others who form the basis for the movies premise were purported to have declined interviews. Some of those interviewed such as Glenn Hubbard of the Columbia Business School and former Bush Administration economic advisor seem to have been caught off guard with some of the questions and provide revealing, and priceless responses. 

These interviews alone add value to this movie and provide multiple angles regarding the cause and effects of the financial crisis. Among the individuals interviewed in 'Inside Job' are Eliot Spitzer, Andrew Sheng, David McCormick, Christine Lagarde, John Campbell, Emanuel Roubini, Glenn Hubbard, Charles Morris, Raghuram Rajan and more. 

'Inside job' provides good insight into the character and human related causes of the 2008 financial crisis, but largely covers old ground in terms of the financial reasons, causes and results. In some ways it echoes Michael Moore's 'Capitalism'. Nevertheless, the message is clear, and the point well taken by the time the movie is over. As Andrew Sheng says via paraphrase, toward the end of 'Inside Job', "real engineers build bridges, financial engineers don't, but get paid more."

What is lacking in 'Inside Job' is the other side of the story and a more context regarding the post-crisis period. Not all financial decisions are wrong, nor are all business people are bad and corrupt. Neither are all economists, academics and politicians. Unfortunately however, enough of them were either too gullible, powerless, naive or greedy to have been able to prevent millions of Americans from losing their livelihoods, homes and country. 

The perpetrators of these losses to the American people and others around the world were the same people who received golden parachutes, slap on the wrist fines, and were lying financial pundits, influenced a diluted financial reform and virtually non-existent criminal proceedings which followed in the wake of the financial crisis. This is one of the main points of the movie that as of October 31, 2010 had grossed over $600,000 in revenue according to the Internet Movie Database (IMBD). 

Sources:

1. http://bit.ly/awsRpr (Inside Job)
2. http://imdb.to/cOKTDr (IMBD)
3. http://bit.ly/9TPIz5 (Denver Post)

Finding Good Real Estate Investments During a Financial Crisis

Depending on the conditions within any given housing market, determining whether to invest in real estate is a variable decision. When a real estate market is hit by a financial crisis, housing inventory can go up and prices can come down. Additionally, when it's not just the housing market that's affected, but the whole economy, sales of new and used homes also decline making the housing market more of a long-term buying opportunity than a short-term flip.  Real estate opportunities with potential still exist during a financial crisis, but an investor may do well to think carefully about his or her decision. Real Estate markets invest in many places, one such example is the United Arab Emirates (U.A.E) which has a real estate market that has also been influenced by financial crisis.

To illustrate how even during a financial crisis, investors still invest, Donald Trump, a well known real estate investor allowed his "Trump" trademark to be used in the branking of hotels within the UAE. In other words, Donald Trump didn't just choose to allow his trademark to be used in the United Arab Emirates (U.A.E) because he likes hotels; he did it because he saw a real estate investment and marketing opportunity. This article will illustrate some of the reasons why the U.A.E. is a real opportunity for real estate investors.

For starters, U.A.E. properties are currently a good investment due to strong political, business and income sources within the country, and especially Abu Dhabi and Duabai as a whole. The U.A.E. has a very favorable business regulatory environment, and significant expansion and development within the emirates themselves. "Take the money and run" property developers have been weeded out and the existingdevelopments are Sheikh i.e. government sponsored. What's more, the process of purchasing property overseas from the United States hasn't been easier.

The reason for this is that companies located within the United States, such as property marketing firms with offices in several large U.S. cities, perform the leg work, feasibility studies, and networking with property developments for U.S. clients, so those clients don't have to spend money on related travel expenses and multiple property consultations with different brokers. These types of businesses also provide property and business consulting services at considerable rates and/or as part of the investment price.

Since 2004, the Emirate of Ajman, a neighboring emirate within a few miles of Dubai, has legalized freehold housing. This allows foreign investors to own title to property and pursue investment interests such as rental agreements and/or resale at later points in time. There are several advantages to investing in U.A.E. real estate, including the emirate of Ajman. Some of these reasons as of the writing of this article are listed below:

In an article written by nubricks.com, an overseas real estate property blog, C. Mahida writes "With all property in Ajman benefiting from a freehold status, as well as the same enticing personal taxation environment as Dubai, Ajman is a secure and safe emirate in which to invest. Located just 20km north of Dubai, Ajman has seen a high number of reputable property developers undertaking construction projects in the emirate.

With its ideal location and easy access from the continuation of the Emirates Road and Dubai Metro system which is currently underway, Ajman will be a first-class location for long-term residents and visiting tourists alike." The news on this real estate market is out because of what it is, an enterprising, business friendly, tourist attraction within a growing international commercial hub.

Real estate investment in the U.A.E. is quite simply a good prospect during a financial crisis in other parts of the World. The U.A.E.'s population is growing at a rate of 3.83% in population, and housing supply is expected to be lower than demand (www.ameinfo.com). Moreover an expanding in infrastructure and an attractive holiday location with its palm lined golf courses, amusement parks, and warm water coast line.

When considering real estate investments or places to visit in the cold winter, the warm U.A.E. has something to offer for both U.S. and international investors seeking new investment horizons, employee housing, and international housing. It's time to consider real estate once again, and not just as an investment but an exciting place to take the family and kids for vacation.

1. http://bit.ly/dsUzcL (Emerald View Group)
2. http://bit.ly/b7S8Ub (The Economist)
3. http://bit.ly/caFbQ6 (Property Showrooms)
4. http://bit.ly/ajqcb8 (Ameinfo.com)

Why gold goes up in value when there is a financial crisis

Gold goes up in value when there is a financial crisis because it protects against inflationary pressures, serves as a hedge against currency devaluation and assists central banks in preserving financial integrity. This is evident in a January 2010 report from the World Gold Council that recorded a sharp inflow of capital into gold related holdings during the financial crisis of 2009.(1)

Image source: Kinross Gold

In many cases gold holds its value better than multiple forms of liquid currency such as cash, stocks and mutual funds. However, in cases such as the Australian dollar, gold has been recorded to have a positive rather than negative correlation with currency because of the large amount of gold produced by the country.(3) This however, serves to support the notion that gold goes up in value during a financial crisis because the relationship between the Australian dollar and gold is based on the notion Australian currency is somewhat supported by gold mining output.

The relationship between gold and paper currency is established via correlation which is a statistical measure of related events and the statistical outputs themselves are tested for validity using additional indicators, for example P-values. Correlations have been measured between currency and gold numerous times, and generally indicate financial instability leads to a rise in gold prices. This is evident in history several periods of economic instability have occurred with simultaneous, or closely timed upswings in the price of gold.(2)

Since currency like the dollar is backed by the economic strength of its economy, it loses value when financial events occur that weakens its spending power. For example, printing too much money leads to an overabundance that causes inflationary pressure on costs such as a rise in the cost of goods and services. There are many factors that can lower the strength of a currency such as excess national debt, large trade deficit, government deficit spending, collapse of a key industry or economic sector or lack of competitiveness in the international marketplace. In such cases investors and consumers benefit from financial instruments that offer inflation protection.

To better understand why the value of gold goes up when there is a financial crisis it helps to be clear about what a financial crisis actually is. A Department of State Congressional Research Service study broadly concurs the definition of financial crisis is a tightening of credit to both households and businesses to the point of adversely affecting goods and services.(4) In such case the strength of an economy becomes questionable as both businesses and households experience financial difficulties that were previously not as present.

Even though central banks may try to make access to money more cost effective during a financial crisis, banks aren't necessarily as willing to follow through with the credit risk. This can exacerbate the problem of the financial crisis, leading to lower national spending due to weakened asset values which in turn can affect corporate employment statistics, and market performance. In such cases gold investing tends to increase because it is seen as a safe haven like bonds; this causes its value to rise.

Sources:

1. http://www.gold.org/assets/file/rs_archive/GID_Jan_2010.pdf
2. http://www.gold-eagle.com/editorials_05/milhouse021307.html
3. http://www.investopedia.com/articles/forex/06/CommodityCurrencies.asp
4. http://fpc.state.gov/documents/organization/103688.pdf