I found the reading for this week to be a very insightful read on the economic/financial crisis of 2008. However, I must be honest and state that I also found it to be very confusing. Most of the information in All the Devil are Watching was over my head, as I have little background knowledge in economics and the crisis. Therefore, it is hard for me to write about something that is still very confusing. Despite the all of this confusion, I did find parts of the book to be very interesting. The book explains the factors that led up to the crisis, starting in the late 1970s when the Baby Boomers were starting to buy houses. Economists were afraid that there was not enough money to fund all the mortgages people were taking out, so the Mortgage-Backed Security was formed, as well as Sub-Prime Mortgages and Credit Default Swaps. It fascinates me that people actually thought that CDS (passing the risk of default onto a 3rd party) and Sub-Prime Mortgages (lending money to people who could not afford a regular mortgage plan) were a good idea and would not harm anyone, including the economy. It seems like many people during this time were concerned with making money themselves, and not about the people who they were supplying with mortgages and a dream of owning a home. It also interested me that the government did not know how bad off these companies were and that they would have to bail them out! Regulation of some sort needs to occur!
This whole topic has present-day relevance to my practice as a secondary school social studies educator. It seems to me that this crisis will still be occurring when I get a job and many students may have questions about how the crisis started. As with other crises in history (i.e. The Great Depression) many of them are comprised of many factors. It is important for students to understand that it takes time for things to “build up and explode” today, as well as in the past. For an American History teacher, comparing the economic/financial crisis of today to the Great Depression may allow students to see how complex many issues are and help them relate past events to the future.