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Teachers & SchoolsRules and Order
We like to think that the world operates in a fair and orderly manner, but after reading The Big Short, a post-mortem of the 2008 stock market crash, we've gotta admit that we're not so sure. The book looks into the many converging factors that led to this worldwide crisis, and nowhere does this investigation turn up more dirt than when it's looking at the people who were supposed to enforce the rules. The ratings agencies? Criminally negligent. Big bank CEOs? Completely uninformed. The SEC? Ditto. In all three instances, we see rules and order totally ignored in favor of—you guessed it—short-term profit.
The government cannot be blamed directly for the subprime crisis, but its ignorance of the CDO market certainly contributed to the rise of the crisis.
Like the Wall Street firms, the ratings agencies failed to do their due diligence because it was more profitable not to.