Felicity Glover sits down with a group of students from NYU's Abu Dhabi campus to hear their thoughts on the global financial crisis.
On the Money: Students' perspective on the global financial crisis
I was recently invited to spend a morning with a small group of university students at New York University (NYU) in Abu Dhabi. Their topic that day was Inside Job, a 2010 Oscar-winning documentary written, produced and directed by Charles Ferguson, backed up with a US senate report and IMF analysis on the causes of the financial crisis.
Back in 2008, when the global financial crisis "officially" began, the 15 students were about 14 or 15 years of age. Today, almost four years later, they are 18 or 19 years old. So their insights into the worst economic crisis since the Great Depression are a revelation, more so because they were teenagers when it began - and still are, although now with a unique ability to dissect and analyse it thanks to their choice of degree.
Their professor, Mary Poovey, is an exceptionally insightful visiting professor from NYU in New York. Here for just eight weeks, Professor Poovey is teaching a course called Financial Systems as Social Institutions: The Theory and Practice of US and UAE Banking and Finance, hence last weekend's topic.
Professor Poovey had asked her students to watch the movie before last Sunday's class, which was dedicated to a roundtable-type discussion about the financial crisis, its early signals and major causes.
I know that every time I see a film about the global financial crisis, I get angry. At the so-called experts who are responsible for it, at the governments for doing nothing about it and letting the bankers get away with it, not to mention the lack of regulation (also the fault of the governments). I'm also angry for the tens of millions of people who lost their jobs, their homes and their livelihoods because of a bunch of greedy, unethical bankers.
I rail against the fact that not one person was prosecuted for their role in the debacle that set off the economic meltdown in the US. And I am incredulous that US congress in 2000 passed an act that banned, yes, banned, government regulation of the highly unstable derivatives industry - at the urging of the banking sector, of course. And one of the major contributors to the crisis.
I am angry that George W Bush, the former US president, used US$700 billion (Dh2.5 trillion) of taxpayers' money to bailout the banks, which, despite their promises in return for the lifeline, continued their relentless drive to foreclose on as many homes as possible in a desperate bid to claw back some of the losses they incurred from the sub-prime mortgage mess they created. Or perhaps that was to ensure they got their bonuses that year?
But, most of all, I am angry that the financial crisis has not come to an end as its insidious tentacles continue to spread their way around the world. And millions more are now suffering because of that.
That woman who recently teetered on a ledge of a building in Athens because the pressure and desperation was too much; the families who are still living in their cars and in tents; the people who can't find work to pay for even the basics in their lives. The parents who have to borrow money to buy food for their children. There's a personal story in all of this. But those bankers who are responsible for where we are now are still living the high life. They didn't lose the bonuses they continue to pay themselves and they certainly didn't lose their life savings.
It's a good thing, then, that the students in Professor Poovey's class are a little less emotional than me. They are also more to the point.
"Was profit motivation the cause of the financial crisis?" asked one in their summary of Inside Job. Another wondered about the close relationship between Wall Street and politics.
That's easy. "It's a Wall Street government," said one of the people interviewed for Inside Job. Is it no coincidence that the majority of President Barack Obama's financial advisers worked at some of the biggest investment banks on Wall Street - and were directly involved in the collapse of the modern-day banking system as we know it?
I think not, despite President Obama's pre-election promise to introduce more regulation, which is unlikely to happen if his advisers have anything to do with it. Pretty much all of them are on record as opposing banking regulation, although few would admit it these days.
Two guests were also invited to the roundtable; one an economist affiliated with NYU and another who is a London-based trader. The economist said profit motivation was the fault of the financial crisis. That's obvious. But there's nothing wrong with profit itself, he added.
Of course there's nothing wrong with that. But not at the expense of the majority, better known these days as the 99 percenters, who lost so much more than the 1 percenters.
One student wanted to know if there was a point to the movie. I missed the discussion on this, but Professor Poovey says the consensus was that it was both "intended to make money" and "designed to educate the public about what caused the financial crisis".
"The 'experts' at the front of the room preferred the first answer, but some of the students clung to the second," Professor Poovey says. "The experts also said that they thought that the causes of the crisis were complex and that the proposed solution [the Dodd-Frank Act and the Volcker Rule, in particular] were unlikely to have much effect, beyond curtailing the use of some of the most dangerous practices [proprietary trading]."
And here's an interesting insight. "One of the experts said that he thought that what is now going on in Europe, particularly in Ireland, where the government has absorbed the banks' debt, is definitely the 'second stage' of the sub-prime housing collapse in the US," Professor Poovey adds.
"When I asked him if he thought there would be a third stage, he said: 'Possibly high inflation'."
So there's more to come. But if the students I met last Sunday are anything to go by, there is hope. After all, they are our future global economists and financial experts.
And I think Professor Poovey agrees. "I am generally impressed with the students' grasp of complex issues like the ones that led to the crisis, but I also know that they [and we] wish there were simple answers, so all of this would not happen again."
Don't we all.