The Big Short

Greed is the first answer but it is too simple to be useful. Greed existed at every level (brokers pushing loans on unqualified people, banks packaging garbagke into AAA rated securities, rating agencies rubber stamping everything the banks needed). What made it systemic wasn't an unusual level of greed, but more that the system itself made recklessness a rational choice. Mortgage brokers got paid per loans closed, not loan repaid. Banks collected fees for packaging MBS and then sold the risk off their books and nobody in the chain held the bag when things went wrong so nobody had any reason to care about the quality. The real issue was being able to profit from risk without having to bear the consequences if it doesn't work out, when this is the case you'll take as much risk as possible.

The info was publicly available so anyone could have seen it. In practice not many people did because homeowners were told by every institution of authority that they were safe and prices would only go up. Bankers were profiting too much to look closely or care. Regulators were committed to the theory that markets self correct eventually and the media reinforced this repeatedly, Makes you think about the AI and Crypto bubble...

At the individual level we should learn to search out knowlege and learn these things for ourselves and not to trust everything you hear. Complexity is often used to hide risk but now with AI and everything we have at our fingertips it is very ignorant to not educate yourself on these things. Yes sometimes things are hard to know where to start but in the age of google, chatgpt, so many cheap financial help things, this learned helplessness not just in finance but also in general that we see is not really an excuse. As future business leaders another lesson from this is that short term structures of incentive cause these long term catastrophes. Everyone involved wasn't stupid, but were people whose compensation was tied to short term incentives and you kind of get what you build your foundations on.

Many many. Commercial real estate is showing familiar stress and theres tons of borrowing and payday loans and apps like klarna which I foresee ending terribly especially as the squeeze on the average person gets worse and worse. Shorting might not be a bad idea. The key difference is post 2008 regulations so hopefully it might turn out differently. The risk of AI and Crypto bubble bursting I haven't made my mind up on yet, I feel it is different to the.com bubble but really not sure