Blog Two: Inside the Meltdown

In September of 2008 an emergency financial meeting was called by government officials. The meeting informed everyone that within the past seven months the government had bailed out one bank, let another one fail, and watched the credit market freeze. The documentary, “Inside the Meltdown,” detailed the days and weeks leading up to the 2008 crash of the U.S. economy. It began when major mortgage company, Bear Stearns’ stocks suddenly fell at a rapid rate because the housing market was declining. Once this was reported, everyone who had money in their stocks immediately took their shares out, causing the stocks to fall even further. The closing of Bear Stearns would have negatively impacted the U.S. economy far too much so the government made the tough decision to bail the company out through JP Morgan. 

The next victims of the downfall were Fannie Mae and Freddie Mac. In this case, the government had to fire all of the general managers and take over the companies. The failure of these companies showed other businesses that no company is too big to fail and that anyone can fail. In the wake of the Fannie Mae and Freddie Mac catastrophe, the investments that made the Lehman Bros. company so rich began to drag them under. Due to the fact that the government bailed out Bear Stearns, Lehman Bros., which was a far bigger company, assumed they wouldn’t let them fail. This introduced moral hazard, which means that if the government bails someone out of something they caused themselves, that person or company has no incentive to not get themselves into the same trouble again. However, Ben Bernanke, chairman of the Federal Reserve, declared that the government would not be bailing out Lehman Bros. so they ended up going under. This caused the rest of the economic crash because banks then refused to lend any money to anyone out of fear. This led to everything freezing, and then crashing.

AIG, the world’s biggest insurance company, was the next to fall. They invested money in a lot of risky housing market businesses and when the housing market began to fail, AIG didn’t have the money to stay afloat. They assumed Lehman Bros. could never fail and when they did, all hell broke loose. The government had to throw out moral hazard and save AIG within a matter of days or the U.S. and world economy would crumble into nothing. They lent AIG $85 million and ended up owning it. Wall Street needed $700 billion in order to rebuild, and the government had a matter of days to come up with the money. A bill was written up and sent out with hopes of being passed. When it initially failed, the markets fell even further which opened up the eyes of those in the House and the Senate. When a revised bill was sent out, it had to pass and it did. With that money, the government gave tens of billions of dollars to the companies and banks that fell, in an effort to get them back on their feet. Neither the government nor the companies wanted this outcome because it resulted in the government being primary shareholders. Through interviews and videos, “Inside the Meltdown” takes viewers day by day through the economic crash of 2008 and shows how it really happened.

Geographically, the documentary mainly took place in New York City on Wall Street and in Washington DC. However, the economic crash affected the entire world. The failures on Wall Street caused the entire country of Iceland to go bankrupt and even China’s economy started to fall. The repercussions of the events on Wall Street were felt around the world. It’s amazing that one iconic street can hold the fate of the entire economy.

Demographically, the people the documentary centered around were predominantly white, between the ages of 30 and 60. It mostly consisted of men, although there were a few women. The interviews were with some new reporters, but mostly with business people, economic experts, and government officials. Due to the aforementioned careers of the interviewees, it’s safe to say that they are all relatively comfortable financially. Although the documentary took place on Wall Street for the most part, I was surprised to see so few multicultural people featured. Since the U.S. economy is so involved with the economies of other countries, I would think that government officials from other countries would be interviewed to express how the crash affected their countries’ economies. Interestingly enough, the people that were interviewed are the exact people that stereotypically represent and run America - rich, white, middle-aged men. I suppose it’s true, then, that all stereotypes are based on some sort of truth.

Economics is the basis of the documentary. All of the people featured either work in the government or in a business or bank on Wall Street. They are all middle to upper class citizens. This documentary is incredibly eye-opening because it shows just how interconnected Wall Street is, which is called systemic risk. As mentioned in the video, bank to bank lending is the heart of the banking system. I think it would be nearly impossible to have each business and bank work solitarily, and even if it were possible, the crash was inevitable. It may not have happened as quickly as it did, but there was no avoiding it. It is also very eye-opening to realize how much the U.S. economy affects the rest of the world. Even before the worst part of the crash in the U.S., the entire country of Iceland went bankrupt as a result of the events on Wall Street. It goes to show how much of a super power the U.S. is and how detrimental it would be if the government hadn’t stepped in and bailed out AIG.

Politics also played an incredibly important role in the documentary. Typically, the government does not like to get involved with businesses except to regulate them, and even that is a stretch. When they bailed out Bear Stearns it was an impulse decision in an effort to save the economy. After that bail out, they realized the moral hazard that they started. They made a statement by letting Lehman Bros. fail, but had to throw moral hazard out when AIG was on the brink of failure. The failure of those banks and companies on Wall Street forced the government to pass a bill giving them $700 billion to bail those businesses out. Who paid for that huge check? The American tax payers. The government bailed out and subsequently became primary shareholders of nine major companies. Neither the companies nor the government wanted that to happen, but that was the only option.

Culture had a more active role in the documentary than one might expect. The culture of Wall Street was one of greed and profit seeking. Those businesses would do whatever it took to get rich, including lying and cheating. Some investment banks were unregulated and hid toxic assets, such as Bear Stearns. The ideology of getting rich at any cost possible created a psychology of optimism and the thought that the market could never collapse. When it did, nobody knew what to do and the country went into a panic. It is also a part of the culture to have all of the companies and banks on Wall Street completely interconnected, creating systemic risk. That is just how Wall Street works and when one business fails, it creates a domino effect taking down all other businesses.

This Frontline documentary gave viewers an inside look at how the economic crash of 2008 happened. It explained day by day the economics and the politics that went into every decision that was made. I couldn’t help but notice it seemed to be a little biased. It portrayed the businesses and the government as the victims. Even though it is pointed out in the video that these businesses brought this upon themselves, it made it seem as though they had no idea that this possibly could have happened. If this was filmed from the perspective of someone who wasn’t a big fan of Wall Street or of the government, I’m sure they could have been portrayed as the villains and the American people who had to pick up the $700 billion bill would have been the victims. That aside, I thought the documentary was very informative and gave the perspectives of the businesspeople and government officials that were involved.

Bibliography

Inside the Meltdown. Michael Kirk. Frontline, 2009. Web video.

Blog One: The Most Hated Family in America

In the heartland of America resides, “The Most Hated Family in America.” British broadcaster Louis Theroux traveled across the pond to spend some time with the Westboro Baptist Church in Topeka, Kansas, a group which consists almost entirely of one family. Many of the members live together in a small community next door to the church. They worship together regularly, just as any other congregation of a church would. All of the members have their own jobs, but they spend any free time they have serving God in one way or another. Their beliefs and ideas are so extreme and radical that they are the only people who accept and tolerate them. The rest of America dislikes them so much that they honk and yell at them as they drive by their demonstrations. One person even threw a drink in a plastic cup at them and hit a child in the head. What exactly are their extremist beliefs? Basically, they think that God hates America and it is thus doomed because the people of America sin. Primarily, they oppose homosexuality which is an accepted concept in America. Because it is so widely tolerated, they picket military funerals and other events with a lot of media coverage in order to “enlighten” America. Anyone who does not believe what they believe is considered a fag, and anyone who falls into this category is hated by God.

Louis Theroux lived amongst the Church for a short period of time in an effort to learn about them and try to understand them. He even tried to change their minds, but in the end both parties retained their beliefs. Most events that he joined them at were military funerals. They protest these funerals because they believe that anyone in the military is fighting for a doomed country. They rejoice when soldiers die because they believe that is God’s way of showing America that, if it continues behaving in the way that it is, He will destroy it and pretty much everyone who is not a part of the Westboro Baptist Church. Although Louis did not keep his opinions to himself during his interactions with the members of the Church, the documentary itself is about as objective as it can be. It is hard to not portray them in a bad light since their beliefs seem so morally wrong to us, but I think the documentary does its best to strictly show them as they are.

Geographically, the Westboro Baptist Church is stationed in Topeka, Kansas. They have an advantage being located in the Bible Belt because more people share similar views as them, compared to the liberal Northeast. If they were located in New York or Connecticut, they would be much less accepted. When they travel they experience that intolerance of their beliefs. They are very rarely kindly greeted when they travel, even less so than at home. It is hard to believe that they spend such large amounts of money on traveling to protest and speak the “word of God” when they are never accepted. It really emphasizes how much they believe in what they are doing and that they believe they are saving America.

Demographically, there are men and women in the Church and it is predominantly white. Although one may think that men would be the leaders in this group, it is dominated by women. Theroux followed the group as a whole, but he really shadowed one woman who seemed to be driving force within the Church. They have very little interaction with people outside of the group besides work and school. Even at school, the girls said that they only have acquaintances and they do not consider people at school real friends. The fact that they are a part of the Westboro Baptist Church is such a barrier that neither the girls at school, nor the girls in the Church can get past it to form a real friendship. Additionally, the Church is very ethnocentric. They believe that their way is the only acceptable way to live. For example, the girls think all of the girls at their school are “sluts” because of how they dress. Conversely, Theroux and the rest of us who are thrown off by their lifestyle are ethnocentric because we think their behavior is weird. We see it as out of the ordinary and we reject it. However, all of the picketing and the demonstrating is not in an effort to convert people and gain new members. The Church is simply telling the public what is going to happen to them if they continue living the way they’re living. They are serving God in the way they believe is necessary.

Economics was less relevant in this documentary. The Westboro Baptist Church does not really effect the economy, as shown here. However, when boarding their flight to Chicago to picket a soldier’s funeral, Theroux asked how much, on average, is spent each year by the Church on travel. Shockingly enough, around $200,00 is spent on traveling around the country to “preach the gospel,” as one woman said. It is hard to believe that that much money alone is spent on travel, not even counting their other expenses.

The things the Westboro Baptist Church says and does may seem so totally morally wrong that one wonders to themselves, how does the government not step in and end this? However, politically, they are practicing their rights to freedom of speech and freedom of religion. This group is technically seen as practicing a religion. And even though the things they say and the signs they hoist in the air seem disturbing to us, they have every right to express those opinions. Although America as a nation does not yet totally support gay rights, many states and individuals do. This is the primary focus of the Church and they believe that America is doomed because it tolerates homosexuality. They picket in front of soldiers’ funerals because they believe those people dying is a good thing. They believe that is God’s work and that they deserved to die because they were fighting for a country that supports homosexuality. This thought is so morbid to us, but those are their beliefs and they are entitled to them.

The Church has had a huge cultural effect on America. Almost everyone in America dislikes them, hence the title of the documentary, “The Most Hated Family in America.” They have, in a way, created their own culture and they have created a cultural phenomenon. Although they’ve been around for nearly 60 years, just in the past ten years they have been all over the media. Essentially, they are famous for being so widely hated. They truly believe they were put on Earth to enlighten people; they are here purely to serve God and preach the gospel. They believe that anyone who has ever sinned in their life is going to Hell, even some members of the Church. If they have ever had impure thoughts or done something secretly that is a sin, they understand that they are going to Hell. It is unacceptable in their culture to get married and have kids. They are to focus on preaching the gospel and any thoughts of having a relationship with someone, getting married, having sex, and having babies is a sin that will send them straight to Hell. This thought baffles me because I could not understand how they expected the Church to survive if they never repopulated. They expect to constantly get new members and carry on the Church that way. This particular aspect seems so unnatural to me. It is human nature, no matter what you believe in, to be attracted to and to think about other people. It seems totally impossible to me for people to think that teenage girls aren’t going to think about their classmates, or even celebrities, in a sexual way. They may never act on those feelings, but I cannot believe that they have never had those thoughts and, even more, that they are expected to not have those thoughts. The Westboro Baptist Church is certainly a culture all its own.

I can confidently say that there is no other group like the Westboro Baptist Church. They march to the beat of their own drummer. The things they do and say seem so wrong they should be illegal, but they practice their “religion” legally. And no matter how much we may disagree with them, they have every right to express their thoughts. After seeing Louis Theroux’s rather thorough documentation of just a couple of weeks in their lives, it’s hard to believe that some people are still so closed minded, even if that is the way they were raised. However, even though they do not accept or tolerate anyone that is different than them, it is important to do the opposite and tolerate them. I found so many of the things they said offensive, but I understand that they are entitled to those opinions and beliefs and I cannot change it. All I can do is tolerate it and let them be, which is far more than what they are doing.

Bibliography

The Most Hated Family in America. Louis Theroux. BBC, 2007. Television.