I just finished reading the
The Big Short, by Michael Lewis. Basically it details how a few really bright men figured out that the sub-prime mortgage market was going to implode causing the worst financial crisis since the great depression. These few people shorted the market (made a bet against it) and made billions while all the major banks and brokerage houses went belly up. What disturbs me about this whole story is where were the really smart guys in the government to see the same data and therefore head off the whole crisis. They were either a sleep at the switch or they just don't exist. Why were the regulators allow to classify these really worthless bonds as AAA? Why didn't government just freeze the teaser rates? Why were people with no income told how to lie to get a ridiculously high loan when they had no means to repay them?
What insentive do the banks have to make good loans when they can make billions by making bad loans. If all hell breaks loose, the government just bails them out.
When I am King, a lot of these assholes are headed to prison.
