“Inside Job”,Property And The World Economic Crisis
It is just so completely fascinating. Why does the Paris property market appear to defy gravity. Sure, France has it’s economic problems and a large national debt just like everyone else. Yet, one can argue that the real estate market is a window into the health of a nation.
In fact, in the book ‘The Mystery of Capital‘ by world-famous Peruvian economist Hernando de Soto who makes the argument that property and the “legal structure of property and property rights” is the very foundation of capitalism and continues “In the West we’ve forgotten that creating this system is also what allowed people everywhere to leverage property into wealth.”
Some say the French are just behind the curve and they are in their own real estate ‘ballon francaise’ which will pop one day just like it did in America. But there are other indications that France is not behind but ahead of the curve.
The 2010 and documentary ‘Inside Job’ narrated by actor Matt Damon chronicles the recent history of American banking and describes in explicit detail the factors behind the economic collapse in 2008. It is a scathing indictment of many in the United Sates government that appear to have aided abetted a banking system which went wildly out of control. The filmmakers make the case that large international mega banks through the use of derivatives, deregulation and fraud have manufactured the economic ‘crisis’ of 2008 for personal gain. It asserts that what is being presented as an economic calamity is nothing more than a worldwide ponzi scheme created by bankers and politicians to rob nations of their wealth.
It’s a compelling story but whether or not one subscribes to this argument of wide spread conspiracy and intrigue is irrelevant. What is notable and fascinating are the appearances of the then Head of the IMF Dominique Straus-Kahn and French Finance Minister Minister Christine LaGarde. While many officials named in the documentary declined to be interviewed both Strauss-Kahn and LaGarde accepted to appear and both say they were warning that a financial meltdown was eminent before the collapse. When Strauss-Kahn was asked to name exactly who he voiced his concerns to he retorts, ‘…the Government, the Treasury, the Senate, the Fed. Everybody.’
Is this why the Paris Property and French Real Estate market is so resilient? For sure, many in French banking and government were feeding at the tough as well. That is for certain. And some are wary of LaGarde who has a long finance history and connections to Wall Street. But is France, because of it’s politics and history, decoupled from the Western banking and financial system? And is it decoupled because of people like Strauss-Kahn and the reforms he was beginning to implement at the IMF?
We will explore more about the Paris property market and the Strauss-Kahn saga in the next installment – DSK? WTF (Part Two)
Inside Job is the newest documentary from Charles Ferguson, the Oscar-nominated filmmaker behind No End in Sight, a documentary that pondered the long-term impact of the US invasion of Iraq. With Inside Job, Ferguson once again performs a much needed…