My friends and I walked out of the Big Short several years ago feeling like a group of global financial crisis experts. We were shocked, how could no one have seen the collapse coming? It all seemed so clear. Many an economics and finance course later, I see that the layers of complexities to the […]
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The age old tale of financial crises
The story of the 2008 financial crisis begins somewhere shortly after the death of Jesus Christ himself. Not 33 years after Christ’s passing did Emperor Tiberius of the Roman Empire have to rescue his constituents’ financial sanctity through the age-old process of quantitative easing. The Roman Empire was in shambles following a severe economic downturn […]
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Bank Bailouts and other Moral Hazards
In the previous post on Moral Hazard, we learnt that Moral Hazard refers to any situation where a person is not fully responsible for the consequences of their actions. As a result, they may take greater risks than they would have otherwise. Here are 6 examples of situations where Moral Hazards arise in practice. 1. Insurance […]