The Movie Name Is The Big Short Discussion 5

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The movie name is THE BIG SHORT Discussion 5: The Big Short. After watching The Big Short, submit a post that addresses one of the following questions:

- In your opinion, who—if anyone—was morally responsible for the crash? As you address this prompt, be sure to discuss the relevant material in Ethics, § 1.

- In your opinion, was it unethical for Scion Capital, FrontPoint Partners, and Brownfield Capital to profit from the crash? As you address this prompt, be sure to discuss the relevant material in Ethics, § 2.

- In your opinion, which view of a manufacturer's duties to consumers—contractual, due-care, or social costs—should have been applied to Deutsche Bank? As you address this prompt, be sure to discuss the relevant material in Ethics, § 6.

- In your opinion, was there a conflict of interest for Standard & Poor's? As you address this prompt, be sure to discuss the relevant material in Ethics, § 8.

After you submit your post, respond to the posts of two of your classmates. Ideally, you would respond to one post with which you agree and to another post with which you disagree; in any case, be sure to explain in each of your responses the reason that you agree or disagree. Note that, in each post, you do not need to write more than one paragraph. However, you may—and probably should!

Paper For Above instruction

Introduction

The 2010 film "The Big Short" offers a critical look at the causes and ethical considerations surrounding the 2008 financial crisis. As viewers, we are prompted to reflect on moral responsibilities, corporate ethics, and regulatory oversight. This paper explores the question of moral accountability for the crash, examines the ethics of profiting from a disaster, discusses the appropriate duties of manufacturers toward consumers, and analyzes potential conflicts of interest within credit rating agencies, particularly Standard & Poor's. Through an ethical lens, it becomes evident that a combination of individual, corporate, and systemic factors contributed to the crisis, raising complex questions about morality and responsibility in the financial industry.

Moral Responsibility for the Crash

In my opinion, the primary moral responsibility for the financial crash lies with the financial industry executives and risk managers who knowingly engaged in risky behaviors and deceptive practices. Ethical theories, such as consequentialism, emphasize actions that maximize overall well-being; however, these actors prioritized short-term profits over long-term stability. Ethical principles outlined in Section 1 of Ethics argue that individuals and institutions bear a duty to act honestly and with integrity, especially when their actions significantly impact society. The failure of regulators to effectively oversee risky mortgage practices and the complicity of rating agencies further exacerbated moral lapses. Consequently, the moral responsibility is shared among those who deliberately or negligently disregarded the societal consequences of their actions.

Profit from the Crash: Ethical Considerations

The profits made by hedge funds like Scion Capital, FrontPoint Partners, and Brownfield Capital from betting against mortgage-backed securities during the crisis raise important ethical questions. According to ethical frameworks discussed in Section 2, profiting from an event that causes widespread harm is ethically dubious if it results from exploiting systemic vulnerabilities or information asymmetries. While some argue that these firms operated within legal boundaries, their actions arguably conflicted with the moral obligation to contribute to societal well-being. Ethical theories such as deontology emphasize duties that include not using others' misfortunes for personal gain. Therefore, their profits, though legally earned, may be viewed as ethically questionable due to the harmful context in which they were obtained.

Manufacturer Duties to Consumers: Deutsche Bank

Applying the three perspectives on manufacturer duties—contractual, due-care, and social costs—raises questions about Deutsche Bank's responsibilities. The contractual view emphasizes honoring agreements, but this alone neglects broader ethical considerations. The due-care perspective suggests that banks have a moral obligation to ensure the products and services they offer do not harm consumers. The social costs approach focuses on minimizing negative externalities on society at large. I argue that the due-care and social costs views should have been prioritized, urging Deutsche Bank to assess the risks of mortgage products more responsibly and to avoid engaging in practices that could lead to economic harm for consumers and the wider society.

Conflict of Interest for Standard & Poor's

Regarding Standard & Poor's (S&P), there was a clear conflict of interest highlighted in Section 8 of Ethics. As a credit rating agency, S&P was paid by the same financial institutions whose products they rated, creating a financial dependency that could compromise objectivity. This dual role, as both evaluator and paid service provider, presents a moral dilemma: the potential bias toward maintaining lucrative relationships at the expense of providing honest, unbiased ratings. Empirical evidence during the crisis demonstrated that some ratings were inflated to please clients, which contributed to the proliferation of high-risk securities and the eventual market collapse. Therefore, the conflict of interest significantly undermined the ethical integrity of S&P and the rating industry in general.

Conclusion

The ethical analysis of the financial crisis reveals that multiple actors, guided by self-interest and systemic flaws, bore responsibility for the catastrophe. Moral accountability extends beyond individual malfeasance to encompass systemic failures within financial regulation and corporate governance. Addressing these issues requires stricter ethical standards, transparency, and accountability to prevent similar crises in the future.

References

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