Part 6/12:
Hidden Risks and Historical Parallels
A relatable analogy was drawn to the financial crisis of 2008, notably the collapse of certain auto loan-backed securities. The situation with auto loans mirrors the subprime mortgage crisis, where underlying assets—cars in this case—lost value, yet bonds tied to these assets continued to trade at par for a time. This scenario was vividly depicted in the film "The Big Short," where financial institutions ignored the deteriorating collateral value, leading to a catastrophic collapse.