Week 8: The Big Short 2008 Financial Crisis
In the movie The Big Short that was really during 2016, the movie explains about the process on how the 2008 financial crisis actually happened from the start till the end. In one of he scenes of the movie, what happen is that the bank increases the credits ratings of the Collateralized Debt Obligations (CDO) as they provided triple A bonds to investors but the bonds are actually worth lower than triple B bonds. At the same time they provided mortgages to families that can't actually effort to pay the long term loan in the future. This results to the banks not being able to receive payment form the poor families and also not being able to repay the bonds issued to the investors even though the bank pronounce the bonds as "Triple A" bonds with the most unlikely bonds to default or impossible to default but in the end the bonds defaulted.
Obviously the cause of the financial crisis in 2008 is due to fraudulent system by the banks, thus the corporate valuation and the asset valuation is manipulated by all companies and credit rating agency. As an example there is Lloyds bank changes their corporate valuation that consist of ; stock market valuation, asset valuation, and income based valuation during the 2008 financial crisis. There's a big possibility that the bank changes the long term debt of the company in is changed in the asset valuation after the incident of the 2008 financial crisis, to show investors after the 2008 financial crisis that their business is still doing well and fine. While this method fools a lot of investors in actually choosing to invest in the company, thinking that the company's doing well but it's actually the other way around in where the investors won't receive any dividends for a long time. In my opinion, this is a very unethical way for the company to actually attract investor to invest in the company, as if their asset valuation is poor there's no way that the investors will want to invest in the company, but the company decided to manipulate and change the numbers in the financial report that results in the investors getting fooled by the company. Do you think that in the future that the government should increase or add more regulations in terms of accounting and financial laws to prevent this incident again?
In the future, my dream job was always to be a accounting manager in a banking industry. As in the future if i got a job in a baking industry as an accounting manager, the company that i work for will definitely receive more laws and regulation in terms of financial or accounting laws as i want to influence and teach the workers and accountants in the company to not do such things as of what the workers and accountant did during the 2008 financial crisis. As i myself don't want to experience the 2008 financial crisis again as that time of the year our family really have limited money to spend on a daily basis and that year was personally the toughest year that i have been through during my whole entire life. As for me, its better to prevent and working hard to prevent it rather than doing nothing and in the end the financial crisis happens again.
I still don't understand why some people would actually commit fraud till today, as i believe that there is no advantages in a person committing fraud to a company resulting in financial crisis. as some people that actually did it might think that by doing it they can achieve power or gain more money for themselves, but i believe in the end those type of people committing fraud will end in jail for their behaviours.
As i believe that a case like the 2008 financial crisis won't ever happen again. Do you think that the government should add another banking law in the future? Should the government implement in the hire of trustworthy auditors to audit major company's financial report? Should major company's provide more training to accountant and the financial manager to influence them to not commit fraud to the company? But what do you guys think? Will there actually be another financial crisis as big as the one at 2008?
Reference List:
Obviously the cause of the financial crisis in 2008 is due to fraudulent system by the banks, thus the corporate valuation and the asset valuation is manipulated by all companies and credit rating agency. As an example there is Lloyds bank changes their corporate valuation that consist of ; stock market valuation, asset valuation, and income based valuation during the 2008 financial crisis. There's a big possibility that the bank changes the long term debt of the company in is changed in the asset valuation after the incident of the 2008 financial crisis, to show investors after the 2008 financial crisis that their business is still doing well and fine. While this method fools a lot of investors in actually choosing to invest in the company, thinking that the company's doing well but it's actually the other way around in where the investors won't receive any dividends for a long time. In my opinion, this is a very unethical way for the company to actually attract investor to invest in the company, as if their asset valuation is poor there's no way that the investors will want to invest in the company, but the company decided to manipulate and change the numbers in the financial report that results in the investors getting fooled by the company. Do you think that in the future that the government should increase or add more regulations in terms of accounting and financial laws to prevent this incident again?
In the future, my dream job was always to be a accounting manager in a banking industry. As in the future if i got a job in a baking industry as an accounting manager, the company that i work for will definitely receive more laws and regulation in terms of financial or accounting laws as i want to influence and teach the workers and accountants in the company to not do such things as of what the workers and accountant did during the 2008 financial crisis. As i myself don't want to experience the 2008 financial crisis again as that time of the year our family really have limited money to spend on a daily basis and that year was personally the toughest year that i have been through during my whole entire life. As for me, its better to prevent and working hard to prevent it rather than doing nothing and in the end the financial crisis happens again.
I still don't understand why some people would actually commit fraud till today, as i believe that there is no advantages in a person committing fraud to a company resulting in financial crisis. as some people that actually did it might think that by doing it they can achieve power or gain more money for themselves, but i believe in the end those type of people committing fraud will end in jail for their behaviours.
As i believe that a case like the 2008 financial crisis won't ever happen again. Do you think that the government should add another banking law in the future? Should the government implement in the hire of trustworthy auditors to audit major company's financial report? Should major company's provide more training to accountant and the financial manager to influence them to not commit fraud to the company? But what do you guys think? Will there actually be another financial crisis as big as the one at 2008?
Reference List:
- Adam Mckay. (2016). The Big Short
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