Economic Inequality In The Big Short

The economic collapse of 2008 was a result of the economic inequality in the united states. The banks were issuing high-risk subprime loans on house mortgages. The Big Short is a film that helps understand the collapse from when it is first noticed to when it ultimately comes to be. Essentially, banks were providing high-risk loans to anyone seeking to purchase a home. This became a common practice and contributed to the inflation of the housing market bubble. The housing market bubble continued to grow until the high-risk loans began to default in early 2007. Unfortunately, not everyone who was offered loans could afford to pay them off eventually causing a collapse in the unstable housing market, crippling the global economy. The banks then
long-term debate the tension between the responsibilities of companies to make a profit and the social responsibility of feeling guilty while making a gain when hundreds of people lose their homes and jobs. The tension between the social and corporate responsibilities is called the corporate social responsibility debate also known as the CSR debate. During one particular scene in the movie the character Ben Rickert brings the two young men he is helping back down to reality after they made “the deals of a lifetime”. He explains how the American economy is going to fail, how people will lose a lot more than just their jobs and houses, they will lose their retirement savings, pensions, and he also reveals the scary statistic “when every 1% of unemployment goes up 40,000 people die”. Immediately after Ben tells the 2 young men this they automatically feel guilt and become scared. They feel guilty about betting and hoping that the housing market will crash, in this case the corporate responsibility is greater than the social responsibility. Them not say anything to the people who can help fix the problem, the real estate and housing companies, instead they are interested in making a profit. So then the question becomes, was it ethical for them to make a profit while millions of americans were about to suffer from the house market crash? Most would agree that a better alternative could be found to help out both sides, which will be discussed
Lenders in the banking industry should be held responsible due to their obliviousness of the future effects that their actions placed on the world economy by allowing such a large number of mortgages to be approved inappropriately, as well as selling mortgage backed securities full of subprime loans. At the end of the movie, Mark knows that the reason the banks didn't care was because they knew the taxpayers would bail them out. There should be a law that prevents banks from getting bailed out by the general public, regulation to stop such a disaster. Managers in the industry should have become more conscious when giving out mortgages and also should have improved their evaluations of potential home-buyers’ income and credit history, to ensure that the owners are able to pay their mortgage. Regulation of the lenders and the mortgages that were being given, as well as early recognition and response to signals of an imminent crisis may have prevented the crisis that still affects the world today. Essentially, it is important for managers to recognize that nothing is indestructible, especially the housing market, as the crisis has proven, and managers should have done more research instead of relying on the presumption that a housing market bubble is unlikely because it has not happened in